Collaboration
across the Supply Chain through
ERPS
24 September 2007
1
Overview of
Business Support Services
2
Hospital Authority Structure and Organization
3 Regional
Advisory
Committees
Executive
Management
40 Hospitals
47 Specialist
Outpatient Clinics
74 General
Outpatient Clinics
38 Hospital
Governing
Committees
Hospital
Authority
Board
Audit
Finance
Committee Committee
Medical
Human
Public
Services
Resources
Complaints
Development
Committee
Committee
Committee
Main
Tender
Board
Supporting
Services
Development
Committee
Planning
Committee
Staff
Committee
Staff
Appeals
Committee
3
Executive Management
Structure and Organization
Mr Shane Solomon
Chief Executive
Cluster Services
Division
Hospital Clusters
Other Divisions in
HA Head Office
Dr W L Cheung
Director (Cluster Services)
Service
Transformation
Cluster
Performance
Chief Pharm
Office
Integrated Care
Programs
Medical Grade
Business
Support
Services (BSS)
Nursing Grade
Allied Health
Grade
China Office
IHC
4
Business Support Services Department (BSSD)
• BSSD is a corporate multi-skilled team under the
Cluster Services Division of the Hospital Authority.
• BSS encompass a wide range of non-clinical
support activities and operational systems
development for the provision of :
– hospital support services (e.g. food service, linen &
laundry, transportation, domestic service, security.)
– procurement and materials management services
– biomedical engineering services and medical equipment
maintenance
– medical equipment planning and management
5
Organization of BSSD
Biomedical
Engineering Service &
Medical Equipment
Maintenance
Medical
Equipment
Planning &
Management
Support Services
Development
Procurement &
Materials
Management
Support
Services
Management
at Clusters
BSS Systems
Development
6
Development of Commodity Group Purchase
Mr. Raymond Wong
Chief Manager
(Business Support Services)
Procurement
Team A
Non-medical &
Information
Technology
Supplies
Procurement
Team B
Nursing Care &
Operation
Theatre Supplies
Procurement
Team C
Support
Services &
Laboratory
Supplies
Procurement
Team D
Medical
Devices
& Supplies
Procurement
Team E
Pharmaceutical
Supplies
7
Procurement & Supplies Management Section
Mr. Raymond Wong
Chief Manager
(Business Support Services)
Procurement
Team A
Procurement
Team B
Procurement
Team C
Procurement
Team D
Procurement
Team E
Non-medical & Information
Technology Supplies
Nursing Care & Operation
Theatre Supplies
Support Services &
Laboratory Supplies
Medical Devices
& Supplies
Pharmaceutical
Supplies
Ms. May Yip
Mr. Stephen Siu
Ms. Cindy Chu
Mr. Dennis Chan
Mr. Stephen Lee
Chief Supplies
Officer (PTA)
Senior Nursing
Officer (PTB)
Senior Supplies
Officer (PTC)
Manager (PTD)
Chief Supplies
Officer (PTE)
8
Roadmap of HA Procurement and Materials Management
Objectives
Vision
1.
To establish VFM
and seamless supply
chain operation with
maximal risk
management
To explore and implement improvements to procurement
services by raising the skills and competency of staff,
pursuing service excellence and industry best practices, and
achieving best value for money.
2. To provide the best value-added products and services
to end-users and patients through the supply chains in
healthcare.
Our Strategies – Five Elements of Success
Business
Transformation
Sharing of
information
with vendors
Hospitals
Relationships
Management
Enhancing
communication
Partnership
with
Stakeholders
Change
Management
Establishing
partnership
with vendors
Staff Training
and Education
Market Research
and Product
Standardization
Our Target / Key Results Areas
Procurement
Warehousing
saving in price; saving in operational cost; user lower inventory; lower operational cost; near-zero
interface & satisfaction; reduction in lead time wastage; just-in-time delivery; high product safety
Delineation of Roles and Responsibilities
HA Head
Head Office
Office
HA
Procurement
Planning
Policies and
Guidelines
Formulation
Product
Standardization
And Setting
Standard
- Product
Standardization
- Bulk Contracting
Risk
Management
- Tendering Support
Systems
Development
- Suppliers
Partnership
Performance
Monitoring and
Review
Risk and
Information
Management
Order Cycle
Planning
Tendering/
Tendering/
Purchasing
Purchasing
Support
Support
Inventory
Control/
Logistics
Support
Vendor
Performance
Monitoring
Clusters/Hospitals
Clusters / Hospitals
10
Organizational View of Supply Chain Management
Patient Care
Patient
Care
Healthcare
Delivery
Supply
Management
People Skills
Value-based
supply selection &
standardization
Equipment
Supplies
Systems Structure
Procedures
Processes
Managing Inventory
Vendor collaboration
Purchasing controls
& efficiency
(e-procurement)
Strategic view of
supply chain
management
11
Performance Review on
Procurement & Supply Chain Management
in HA against a Maturity Model (2001 - 2007)
Dimension / Critical Success Factors
1
Customer Service Management
2
Strategic Supply & Sourcing
Planning
3
Materials & Service Requirements
Planning Process for all Hospital
Supply Activity
4
Forecasting & Demand Planning for
Hospital Activity
5
Relationships with Suppliers &
Service Providers
6
Information & IT Capabilities,
including Electronic Commerce
7
KPI Management & Measurement
Stage 1
Stage 2
Stage 3
Stage 4
(Total Solution)
(PPP)
(With ERP)
(With ERP)
12
Performance Review on
Procurement & Supply Chain Management
in HA against a Maturity Model (2001 - 2007)
Dimension / Critical Success Factors
8
Workplace Culture & Leadership
9
Organizational Structure & Supply
Positioning
10
Improvement Focus within Business
11
Staff Competence
12
Process Management (e.g.
procurement process, inventory
management)
13
Supply Infrasturcture (e.g.
warehouse, office location)
Stage 1
Stage 2
Stage 3
Stage 4
(With ERP)
(With ERP)
13
Procurement & Materials Management
Critical Milestones :
Take-over of procurement from Government Logistics Department
– Non-drug (July 2003)
– Drug (April 2006)
• Centralized procurement
• Strategic outsourcing
– Total solution contract on general consumables
– PPP Project on food service
– Bulk contracts on medical equipment maintenance, domestic services,
security, landscaping, pest control etc.
Areas of Continuous Enhancement :
•
•
•
•
•
•
Inventory management (since 1998)
Vendor Managed Inventory/Consignment Stock (since 2002)
Internal/external partnership (since 2002)
ISO9001(QMS) accreditation (since Nov 2003)
Professional services – legal, auditing, advertising, telecommunications
(since 2006)
Green procurement (2007)
14
Strategic Milestones in Procure to Pay Process
Supply Chain
Component
Sourcing
P
R
O
C
U
R
E
Cost
Management
Collaboration
• Significant savings
• PPP for Food Service
achieved through “Bulk • Total Solution Contract
Purchase” - $163M
for general items
$113M (non-drugs) p.a. • Outsourced equipment
$50M (drugs) p.a.
maintenance services
Standardization
• Bulk contract coverage
( for non-drugs ) increased
from 26% to 44% from
Year 2002 to Year 2006
• > 90% for drugs
Procurement
• 1,304 Bulk Contracts
- 925 for drugs
- 379 for non-drugs
• Clinical Interface
• Specification of
• Drug Selection Committee Equipment & Consumables
Materials
Management
• Stock turnover rate
increased from 3 to 6
• SKU reduction by 5%
• VMI and Consignment
stock for critical items
• Cluster Warehousing
• Auto-refill at Point of Care • Electronic transmission for
• Central monitoring of
all internal supply chain
Personal Protection
processes
Equipment (PPE)
• Centralized Payment
• E-Invoice
• E-Payment
Logistics
P
A
Y
Payment
• Common supplies items
100% standardized
15
Non-drug Stock Management and Supply Chain Initiatives
Commodity Group
Supply Chain Model
Procurement & Materials
Management Strategy
Cleansing materials,
office supplies,
stationery and linen
Distributor –
Ward/Department
General medical and
non-medical
consumables
In-house inventory
Vendor – HA Bulk Store management supported
by VMI
Specific surgical
consumables (e.g. OT,
Pathology and X-ray
Vendor – Department
Store
PTCA and O&T
consumables
Consignment
Low value and low risk
consumables
Vendor –
Ward/Department
Outsourcing logistic and
inventory management
In-house inventory
management
Zero inventory
supported by Product
Tracking and Tracing
Direct non-stock
purchase
16
Implementation Progress of
Enterprise Resource Planning
System (ERPS)
17
ERPS Implementation Plan
Phase I/II – 1st April, 2008
Asset
Management
Patient
Billing
Clinical
(Phase I/II –
Non-drug items only)
18
Procure-to-Pay Process
Develop &
Implement
Procurement
Strategy
Receive,
Inspect &
Accept Goods
& Services
Ma
int
ain
&
Ev
alu
ate
Su
ppl
ier
s
Ma
nag
e
Dis
pos
itio
n
of
Inb
oun
d
Go
ods
Identi
fy
Procure to Pay
Need
Devel
op
Specs
&
Solicit
Bids/
Propo
sal
Ma
nag
e
Acc
oun
ts
Pay
abl
e
Ma
nag
e
Con
trac
ts
Creat
e&
Maint
ain
Purch
ase
Requi
sition
s&
Order
s
Or
der
Go
ods
&
Ser
vic
es
En
ab
le
Pa
y
me
nts
19
Adoption of ERPS Better Practices Through
Business Process Re-engineering
Sub-Process Area
Product Codification
and Classification
Best Practice
• Standardized nomenclature and classification
to facilitate procurement planning, inventory
control and data analysis.
Regulatory Compliance • Adoption of UMDN / GMDN for medical devices
in compliance with the MDACS program.
Sourcing Strategies
• Rationalization in overall numbers of suppliers
and concentrated spending to leverage
purchasing power.
• Maintenance of central database of spend
information.
Procurement Function
Management
• Single integrated procurement system to enable
quick and easy sharing of data and definitions
across HA
20
Adoption of ERPS Better Practices Through
Business Process Re-engineering
Sub-Process Area
Best Practice
Requisition &
Purchase Order
Processing
• Routing and approval verification
automated through workflow.
On-line Goods
Receipt
• Embedded bar code information used to
record receipts in purchase orders.
Payment
• Three-way / Four-way matching with
automated delegation to speed up
payment.
Vendor Master
• Centralized vendor master file maintenance
across HA.
Supplier Selection
and Negotiation
• Contracts for high value and strategic
purchases centrally negotiated and
monitored.
21
Market Interface & Supplier Engagement
Moving Towards E- Commerce
Use of Technology
• Electronic exchange and transaction of supply
chain data which include purchase orders, delivery
notes, invoices and inventory information using
standard protocols, i.e. EDI, XML, Fax, email, etc.
• Use of comprehensive universal data standards
such as UNSPSC, and E-Healthcare data
standards such as EAN and HIBC.
Collaboration with
Suppliers
• Extension of business / supply chain models
to enhance information sharing
e.g. Vendor Managed Inventory (VMI )
22
Product Codification & Classification
• Item Classification – United Nation Standard Product
and Services Code (UNSPSC)
• Item Description Nomenclature
– Drugs : International Non-proprietary Name (INN)
– Medical Device :
Primary - Universal Medical Device Nomenclature
(UMDN)
Secondary - Global Medical Device Nomenclature
(GMDN)
– Non-Medical Device : AUSLANG
• Product Identification Standard – EAN / HIBC
23
Vendor Master Maintenance
• Central vendor creation and maintenance by
Procurement and Materials Management
Section in Head Office with effective 1
September, 2007
• Designated multiple currency bank account to
receive remittance from HA
• Vendors to provide update information, if any
before October, 2007
24
e-Transmission of Purchase Order
E-mail
Fax
EDI/XML
25
ERPS Rollout Plan
• 1st Rollout (1st April, 2008)
– Kowloon East Cluster
– Hong Kong East Cluster
– Hospital Authority Head Office
• 2nd Rollout (1st July, 2008)
• 3rd Rollout (1st October, 2008)
26
Payment Documentation Requirement
effective 1st April, 2008
• Suppliers to send invoices direct to Head
Office/Cluster Finance Offices
 PO number must be specified
 Name of the staff, name of his/her department, and
hospital (for direct invoices without PO) be
provided
• Payment will be settled in the specified currency in the
PO (local and foreign currencies)
• For purchase with Trade-in, suppliers to split invoice
lines into
 Gross amount for the new purchase equipment
 Trade-in amount for the old equipment
27
Medical Device Administrative Control
(MDACS)
• Regulatory compliance with the
MDACS requirement on purchase of
medical device
• Requirement to register with
Department of Health under
consideration in HA
28
Q&A
29