Case Study: Innovative Methods to Drive Compliance, Automation and User Adoption Across the Supply Chain

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1 Case Study: Innovative Methods to Drive Compliance, Automation and User Adoption Across the Supply Chain Michael DeLuca Director, Supply Chain System & Consulting Services

2 The Environment UPMC is a $7b IDN with 20 hospitals, 4000 beds, and over 50,000 employees. Profile: UPMC Supply Chain Organization $1.8 billion spend 200 team members; centralized supply chain management organization 12,000+ active suppliers Process 4,000+ purchase requisitions per week Receive 1.1M packages per year; central distribution center Manage over 600 point of consumption material carts (avg. 172 items per cart) Process 70,000+ invoices per month 2

3 Target Condition Leverage eprocurement Investment to Drive Adoption and Compliance Maximize eprocurement Platform Adoption Across the Entire Organization Drive Lower Costs Through Compliant, Aggregated Spend and Controlled Consumption Develop Comprehensive Content Strategy That Focuses Equally on Availability and Usability Accelerate Supplier Onboarding Weeks vs. Months 3

4 Business Challenges eprocurement Adoption/Compliance Lags Healthcare eprocurement Must Facilitate Both Direct (Inventoried/Stocked Hospital Items) and Indirect Supply Chain Teams Focused on Maintaining 60K+ Item Master of Direct (Inventoried & Cart Replenished Goods) Up to 90% of Indirect Spend Non-Compliant ( Off Contract ) or a Special Request Because Preferred Supplier Content was Not Available/Accessible by End-Users 4

5 Supplier Enablement Requirements Maximize Supplier Hosted Content While Simplifying End User Shopping Experience Reduce Number of Items Internally Maintained in Item Master Take the Pain Out of Item Master Management While Maintaining the Control Standardize and Simplify User Navigation/Shopping Experience Single UI to Access Item Master and Supplier Hosted Catalogs 5

6 Supplier Enablement Options Pros and Cons + Buyer Controls Supported - Cost Burden for Buyer and Supplier Transaction Fees Suppliers Must Connect to Multiple Networks + Enables Broader User Search - Inefficient Search (One by One) and Lost Control - Heavy IT Involvement to Set-Up + Single UI, Single Cart Search of All Catalogs (Stored Local and Supplier Hosted) + Full Buyer Controls No Added Cost or Complexity for Supplier Participation UPMC Selected a Single Punchout emarketplace to Aggregate Disparate Data Sources Into One View 6

7 How it Works Users connect from the ERP (or other) system to a single user interface, then search across multiple sources of CONTRACTED content to build a shopping cart. Users then return to the ERP system purchasing workflow. Search agents scour your contracted supply base in seconds, returning relevant, high quality results. Hosted content (xls/csv files) Supplier web sites Users log in to the ERP system and connect to the emarketplace to build a shopping cart The shopping cart is built in the emarketplace and returned back to your ERP system workflow. Supplier ecommerce sites / punchouts Item Master files GPO sites The emarketplace solution enables you to harness the power of your complex base of supplier content. 7

8 Value Proposition Providers Users now have a simple, familiar interface to source materials. They enjoy the enhanced shopping experience and save time on their transactions. Focus is now on the primary mission: patient care. Supply Chain can move toward world-class by improving compliance, maintenance and automation. New supplier onboarding is accelerated and A/P exceptions are minimized. Sourcing specialists / buyers now spend time on sourcing, instead of timeconsuming (and expensive) transaction processing (e.g. special requests, ad-hoc orders, calls, s, etc.) CFOs drive more value from the ERP investment and now have tangible savings and ROI to report due to increased spend under management, higher contract compliance and increased automation, and a sourcing organization that is truly strategic. Suppliers No transaction fees Improved connectivity Improved visibility Rapid implementation More accurate pricing Suppliers with technology constraints can now play in the eprocurement space Small suppliers now have the ability to play on a level playing field with other suppliers CIOs have only one connection to maintain, not with traditional supplier connections. Overall IT impact is minimal. 8

9 KPIs Show Substantial ROI Key Performance Indicator Ease-of-Use Search and REQ > PO Time Compliance On-Contract Spend Efficiency Automated Transactions Cost to Manage Supplier Content Improvement 33% Less Time 60+% Less Maverick Spend 38% Automated Lights Out POs 40% Lower FTE Cost to Maintain Ease of Use Key to Adoption, Compliance, and Efficiency 9

10 The Future: Accelerate Benefit Capture Continue Aggressive Push to Access Supplier Hosted (and Local) Content Through Single emarketplace Punchout Incorporate Services Into Marketplace Add More Direct Connects Through Marketplace for Configurables (Furniture, Clinical Equipment, Catering) Leverage Content and Supplier Enablement to Drive Back-End Procure-to-Pay Automation (ERS) Segment Supply Base and Funnel Toward Appropriate Automated Flowpath Using the PeopleSoft SRM as the Foundation 10

11 Contact Michael DeLuca (412) Jack Colletti, Prodigo Solutions, LLC (412)

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