Melbourne Health
Procurement Transformation Plan
6th August 2015
Jim Kirkup – Director Procurement & Supply
Bruno DaSilva – Non Clinical Procurement Manager
Debra Birznieks – Clinical Procurement Manager
Britte Kent – Procurement Service Delivery Manager
Introduction
• Melbourne Health is one of Australia’s leading public healthcare providers. Our mission is simple – to
provide world-class healthcare for our community by embracing discovery and learning, building
collaborative relationships, and engaging patients in their care.
– Our services are delivered through The Royal Melbourne Hospital, one of Australia‟s preeminent hospitals,
NorthWestern Mental Health, the largest mental health provider in Victoria, and the internationally renowned Victorian
Infectious Diseases Reference Laboratory (VIDRL).
– Melbourne Health is built on a tradition of providing the best possible care for our patients, excellent teaching and
training for staff and future health professionals, and a commitment to clinical research to improve outcomes for
everyone in the community.
– Serving a population base of more than one million Melburnians, as well as regional and rural Victorians and
interstate patients, Melbourne Health is driven by its vision, „First in Care Research and Learning‟ and is committed to
its values, underpinning all behaviour and practice.
• Melbourne Health at a glance:
– The Royal Melbourne Hospital is Victoria‟s first hospital – established 1848
– More than 8,000 staff employed across 32 sites
– Approximately 1,400 beds across hospital and community settings
– 86,926 people discharged from the RMH in 2014/15
– 173,516 outpatient appointments in 2014/15
– 66,155 people presented to the RMH emergency department in 2014/15
• Procurement at a glance:
– Management of 600+ pricing agreements
– Coordination of 400+ contract executions per year
– 140,000 Purchase Orders raised per year
– $300M addressable spend
– 15/16 Procurement Activity Plan to review $100M+ of spend
Transformation - Principles
SWOT VISION
GOALS W
he
re a
re
we n
ow
?
Transformation - Vision & Purpose
VISION “By end 2016, Melbourne Health will be
recognised as Victoria’s leading public
health organisation in providing
Procurement services.”
PURPOSE
“We will transform to grow and deliver
value-creating Procurement outcomes.”
Transformation - SWOT Analysis
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
Transformation - Goals
• Develop the right people and their skills to solve problems and create value PEOPLE
• Introduce processes that deliver consistent, value-adding outcomes for both stakeholders & suppliers
PROCESS
• Implement tools, templates and systems that support stakeholders & suppliers SYSTEMS
PROCUREMENT
OBJECTIVES
“Implement Category
Management service and
mindset”
“Introduce new Category
Management processes to
deliver value & consistency”
“Implement systems and
toolbox to support Category
Management”
Transformation – 3yr Plan
2014
Implement
the Basics
Complete spend analysis
Develop quick wins for our stakeholders
Audit and fix key processes
Collocate all Procurement staff to Parkville
Understand staff capabilities and skill gaps
Refocus resources to reduce recurring costs
2015
Build Credibility and Develop Capability
Build Procurement Activity Plan (PAP)
Restructure Procurement team
Develop training plan
Implement Contracts Management System (CMS)
Introduce Supplier Performance Management (SPM)
Roadshow and improve stakeholder engagement
2016
Become a Trusted Business Partner
Expand the scope of categories under management
Increase collaboration with partner health agencies
Integrate with annual Business Planning process
Compliance to Government Procurement Reform Policies
Transition to Supplier Relationship Management (SRM)
Deliver more innovation
People Goal
Where we were • Unmotivated, satisfied with status quo, risk averse
• Skills gap
What we did • Introduced informal team training
• Committed to formal training (AHSPO and CIPSA)
• Restructure (created and recruited new job roles)
Where we are going • Introduced category management
• Encouraging dynamic, pragmatic thinking
Skills Gap Analysis
Negotiation
Market
Engagement
Strategy
Development
Market Analysis
Opportunity
Analysis
Strategy Refresh Supplier
Relationship
Management
Contract
Implementation
Master Class
SWOT
Porter‟s Five
Forces
Phases of
Negotiation
PESTLE
The Iron
Triangle
Conflict Mode
Instrument
Kraljic‟s Matrix
BCG Matrix
Employer of Choice Casual Loop
Training and development contributes to
staff development
Staff adds value to Procurement
function
Melbourne Health
Procurement builds a
reputation for developing
great people
Staff become “Great place to
work” Ambassadors
High calibre candidates want
to join “great place to work”
Recruitment
Process Goal
Where we were • Unmapped noise
• State of confusion, delays missed opportunities, friction
• Lack of accountability and ownership
• Disconnect between our core business and how procurement can add value
What we did • Established a strategy
• Mapped present state processes (visibility)
• Mapped to-be state with stakeholders as required stripped out non value
added processes automated where possible
• Walked through changes
Where we are going • Further process alignment to support procurement and business
• Taking people along for the journey (don‟t miss the boat)
Automated tools
MH Roadmap
Procurement
Procedure
New innovation
introduction PRC TOR
Procurement Strategy
Delegations manual
MH Strategy
Tell the story
intranet
Recall Process
Procurement Policy
New Product
Introduction Process
MH Vision
Product feedback
Trusted Partner
Complexity
Tool
Building Blocks
Winning the Hearts and Minds of the Business
Procurement is the new Black
Single
bed room
ICU (intensive care unit)
OP operating theatre
Hospital reception
1st floor
2nd floor
Helistop
H
Vision and Governance
Process to support
Tools to empower
People to partner with the business to support core functions
Systems Goal
Where we were • Manual and/or paper processes
• Contract management lifecycle disconnect
• Inconsistent monitoring of supplier performance
• Loss of data capture/Lack of Investment
What we did • Established working teams to capture all specifications for inclusion
• Create automated forms
• Automation of Oracle system through templates
• Catalogue filter implementation
Where we are going • Contract Management System
• Procurement Assessment Tool
16
Procurement Assessment Tool Procurement & Supply
Answers
Equipment.
Yes
No
$10,000.00 - $24,999.99
Yes
Actions
2 Quotes Needed & Application for New Spend
Approval (ANSA) Form
Procurement Assessment Tool
Instructions: Fill in all fields
Based on results of XXXX
Self Managed - Refer to steps below
Question
What is the Total Cost of the Item/Goods/Services?
When purchasing equipment, have the associated
maintenance or other additional costs been
factored in the Total cost of the purchase?
What is the product classified as?
Have you used this vendor before?
Do you intend to purchase these
items/goods/services again over the next 24
months?
Process Classification
Basic
Transformation – Progress against Plan
2014
Implement
the Basics
Complete spend analysis
Develop quick wins for our stakeholders
Audit and fix key processes
Collocate all Procurement staff to Parkville
Understand staff capabilities and skill gaps
Refocus resources to reduce recurring costs
2015
Build Credibility and Develop Capability
Build Procurement Activity Plan (PAP)
Restructure Procurement team
Develop training plan
Implement Contracts Management System (CMS)
Introduce Supplier Performance Management (SPM)
Roadshow and improve stakeholder engagement
2016
Become a Trusted Business Partner
Expand the scope of categories under management
Increase collaboration with partner health agencies
Integrate with annual Business Planning process
Compliance to Government Procurement Reform Policies
Transition to Supplier Relationship Management (SRM)
Deliver more innovation
Transformation Summary
Tips / Advice
Communicate
Change
Consult
Jim Kirkup
Director Procurement & Supply Chain
Tel. (03) 9342 3945
Email [email protected]
Bruno DaSilva
Non Clinical Procurement Manager
Tel. (03) 9342 3948
Email [email protected]
Debra Birznieks
Clinical Procurement Manager
Tel. (03) 9342 3932
Email [email protected]
Britte Kent
Procurement Service Delivery Manager
Tel. (03) 9342 3949
Email [email protected]