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IntroductionThe Project Report is on the basis of :

Strategic Purchasing procedures, systems, policies

and introducing different types of Purchasing.- Hospital Industry.

Purchasing involves in a hospital:

it helps in procurement of materials at low prices,

controls the high rate of inventory turnover,

ensures continuity of supply,

maintains the consistence of quality,

minimizes the acquisition and storing cost of goods,

helps in lowering the administrative cost and maintaining the supplier

relationship.

It also helps in development of new materials and new sources

as well as efficient record keeping and prompt recording of goods and finally indevelopment of personnel

Some addition hereby tried to introduce in existing procedure and systems:

the crucial aspect is to maintain the material cost at low level,

with optimum inventory levels and establish systems and process as per theaccredited standards

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DefinitionHospital: It is an integral part of a social & medical organization. The functions

of which are to provide to the population, complete health care, both curative

& preventive, with out patient services & reaches out to the family in its own

environment. It also fulfills the functions of teaching, training of all the

functionaries and is involved in project management and bio-med and social

research.

Strategy:It refers to plan of action designed to achieve a particular goal, It is

long term goal set by Top Management.

Policy: A policy is a typically described as a principle or rule to guide decision& achieve rational outcome.

System: System have behaviour, which involves inputs, processing & outputs of

material or information.

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Organization

Sahyadri Hospital Ltd. is the largest chain of hospitals in Maharashtra.

Sahyadri was conceived as a dream; a dream to make healthcare available, accessible,and accountable to the community at large. The aim of the group is to provide healthcareservices to the middle & lower community by having hospitals in the remote areas.

We have achieved a center of excellence status in a large number of specialties and superspecialties, yet being the best at everything is the goal that we chase...

Name of the units:-1. Sahyadri Specialty Hospital, Karve Road, Pune

2. Sahyadri Hospital, Bibwewadi, Pune

3. Sahyadri Hospital, Bopodi, Pune

4 .Fatima Convent Sahyadri Clinic, Pune

5. Sahyadri Hospital, Hadapsar, Pune

6. Sahyadri Hospital, Kothrud, Pune7. Sahyadri Munot Hospital, Pune

8. Sahyadri Specialty Hospital, Nashik

9. Sahyadri Specialty Hospital, Karad

10.Terna Sahyadri Specialty Hospital & Research Centre, Nerul, Navi Mumbai

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Scope of Organisation Organisation have developed their own practices and procedures to be

followed for management of contracts & purchases. Over the period of time it needs to correct them & introduced new methods as

a guideline in their policy.

Hereby in this project try to develop some practices such as such areas need to

be improved are: List Price Agreements or Rate Contract

Sub Store Analysis

Decentralised Purchasing for Opex Items.

It needs to implement the supplier certification programmes & Vendor

Evaluation.

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Operational Flow Details at

the Sahyadri Units-Centralised

Every month at each unit, the material requirements from the various

substores are indented to the main store.

The material department store in charge consolidates all the

requirements and prepares a monthly consumption report. The store in charge is the only authorized person to raise purchase

requisitions.

The head office (HO) personnel process all the PO and follow-up with

the manufacturer in order to streamline the delivery process.

Store personnel at the unit prepare the GRN in HMIS after receipt ofthe materials.

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Procurement System & Procedure

The Purchasing Function & Procurement Cycle

Purchase Request : IndentsPurchase Requisiton

Methods of Procurement: Sole SourceSingleCompetitive -Consignment

Supplier Selection : Authorised Registered Vendors,

Request for Quotation: Request not an order Receipt of Quotation, Bid Analysis & Technical Review : Committees

Preparation & Processing of Purchase Order : CPD (HO)

Follow-up (Expediting) : CPD(HO)

Clearing & Forwarding Agent (CFA)

Transportation to site : SHL (weekly) or directly by vendors Receiving of Goods

Payment to suppliers : Capex-HO, Opex-Unit Level, Mode of Payment-Cash, Advance, Credit, TT, L/c

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Challenges Face atSahyadri Hospitals unit - TSSH

as the units are situated in different regions, preferences are diverseand region specific

huge lead time

New unit/project difficult to forecast the consumption

Each doctor has a loyalty or preference to a particular brand ormanufacturer, based on his past clinical experience, in spite of there

being other products of the same functionality and specificationswhich might even help in bettering the bottom-line of the hospital

The another challenge that hospitals face is that vendors giveimportance to healthcare giants, not to small hospitals.

Suppliers situated in Pune not ready to supply to units outside Puneperiphery because of following reasons: logistic cost high, order

quantity too less, restrictions from Chemists & Druggist Associations. The materials department has to maintain a fine balance between

stocking materials, so that it is neither over-stocked or vice-versa.

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Case Study-1 Lilavati Hospital The Lilavati Hospital is the creation of the Lilavati Kirtilal Mehta Medical Trust

formed in 1978, the LKMMT has engaged in charitable endeavors across India.

Lilavati Hospital is committed to provide the best medical facilities in India. Withits state of the art research facilities, researchers from all over the world wouldexplore the future horizons of the bio-medical sciences for effective treatment andcure. They provide effective & efficient super specialty services along with otherspecialties.

Materials Management:-

The Materials department is the only department which serves as the point of

contact between suppliers and the company.Main Store Analysis:

Material is procurred & stored in bulk.

it is the major branch head

It is the major hub for control & flow of material

Sub Store Analysis:

it is done in each and every area as per the hospital functioning It helps in streamlining the flow of materials by the hub and spoke model where

main store is the major branch head.

The patient is treated directly by the Sub Store faster, quicker without losing anyseconds

It avoids delay of the treatment & avoids risking the life of the patient.

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Case Study-2.1Wockhardt Hospital

Wockhardt Hospitals existence is the result of a 40-year tradition of caring

and innovation nurtured by Wockhardt Ltd, Indias 5th largestPharmaceutical and Healthcare company with a presence in 20 countriesacross the globe. Wockhardt Hospitals currently runs 7 hospitals located atNagpur, Nashik, Surat, Rajkot, Bhavnagar and Vashi. WockhardtHospitals is an established chain of super specialty hospitals.

Fortis Hospitals has taken over the following units, formerly of

WockhardtHospitals i.e. Mumbai, Bangalore, Hyderabad, Kolkata,Nagpur, Nasik, Surat, Rajkot, Kalyan

Materials Management: Material is purchased at the HO & directly suppliedat all the units by the supplier.

Centralized Purchasing:

It minimizes duplication and wastage,

develops a strong inventory management system, and minimizes stock in the hospital through a detailed consumption

analysis of various items to ensure that redundant items are not reordered.

C S d 2 2

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Case Study-2.2Wockhardt Hospital

Integrated Purchase System:

Wockhardt hospital has integrated purchase system i.e.Wockhardt HospitalIntegrated Purchase (WHIP) is a process wherein the purchase activity forA category items and critical B category items will be consolidated.

Its a web based portal sitting on top of Wipro HIS. Their aim is tostandardize and control the purchase processes. All the Wockhardt unitsare centrally linked

Wockhardt Hospital Centralized Purchasing Department is at their

corporate office at Bandra Kurla Complex.Operational Flow:

Every month at each unit, the material requirements from the various substores are indented to the main store.

The material department store in charge consolidates all the requirementsand prepares a monthly consumption report.

The store in charge is the only authorized person to login in the WHIPportal and raise purchase requisitions.

HO personnel will aggregate the indents from all the Wockhardt units

The head office (HO) personnel process all the PO and follow-up with themanufacturer in order to streamline the delivery process.

Store personnel at the unit prepare the GRN in Wipro HIS after receipt ofthe materials

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1.2 Implementation1.2) Sub store analysis

It is done in each and every area as per the hospital functioning

It helps in streamlining the flow of materials by the hub and spoke modelwhere main store is the major branch head.

The patient is treated directly by the Sub Store faster, quicker withoutlosing any seconds

It avoids delay of the treatment & avoids risking the life of the patient.

The Head of the department/sub stores is accountable for the Sub-Storestock.

Indents are raised from the Sub Store to the Main Store.

Issue of the material to the Sub Store are done as per the allotted days i.e.one day in a week.

Responsibility of the Sub Stores is to keep sufficient stock to meet

emergency or critical situations. Major Sub Stores: Operation Theatre, Cathlab, Cardiology, Retail

Pharmacy, NICU, ENT, Endoscopy, Wards, Labour-OT etc.

Other Sub Stores: HR, Admin, Front Office, Marketing, Engineering,Bio-medical, Facility, Hospitality.

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Committees Purchase Approval Committee:-Members: Chairman, V. Chairman, HeadSCM, Head - Accounts,

Unit Head, Head of technical Dept.

Drug/Therapeutic Committee:-

Members: V Chairman, HeadSCM, Consultant1, Consultant2,Head -SCM

Condemnation Committee:-

Members: HeadSCM, HeadAccounts, Head of technicalonemember of the respective department e.g. Engineering, Bio-medical,IT, Diagnostic etc.

Technical Approva Committee:-Members: ManagerBiomedical/CSSD/Engineering/IT

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1.3 Implementation1.3) Decentralized Purchasing for Opex items.

It will help to have a close co-ordination between the User & the Purchasing Dept.

It will also help to arrange emergency purchase without the delay involved incommunication between the user & the Head Office.

Procurement procedure for the opex item according to the item category:

Drug & medicine - Drug CommitteeMax. three reputed brands

to be made available based on the effective drug interaction results & the price i.e.

High, Low Medium. Surgical Disposable - Drug CommitteeMax. two standardized brands to be made

available based on quality, usage & the price.

Linen:- The design & material to be standardized from the HO for all units. TheRate contract to be prepared accordingly as per the system.

Printed Stationary:- The design & material to be standardized from the HO for all

units. The Rate contract to be prepared accordingly. Monthly Requirement to be

sent to the CPD for procurement.

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1.4.a Implementation

1.4.a) The supplier certification programmes & Vendor Evaluation

Organization will keep a Certified Suppliers List (CSL) containing the names

and data corresponding to all suppliers-principal & authorized distributors

that have registered with SHL through the supplier certification programmes.

All purchases must be made from suppliers who have been certified by the

company.

The following are the pre-requisite for the Supplier Certification Programme: Registration Certificate or industrial license

Summary of corporate qualification and experience detailing technical and

financial capabilities.

Clear and specific commodities that fall in his scope of supply.

Authorisation letters from the principals. Other additional information as may be required.

The administration & the maintenance of the Certified Supplier List will be

Solely done by the Materials Department.

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1.4.b Implementation

1.4. b) Vendor Evaluation

Commercial Evaluation Technique: Procedure of Vendor Evaluation:- Quality : No of lots accepted (excluding rejections) Upon total no of lots

received

Quality No of lots Accepted / Total No of lots Received x 25

Delivery : no of lots delivered in time Upon Total no of lots delivered

Delivery No of lots delivered in Time / Total no of lots delivered x 25

Credit : Credit given for X item , Max Credit offered for X item.Credit Credit given for the X Item / Max credit offered for Y x 25

Price : Min price , Max Price offered

Price Min price for Y item / Max Price offered for Y x 25

List of approved vendor shall be updated on yearly basis.

Annual award programmes to be announced to reward the high performers.This will help in building long term partnership with the suppliers.

The poor performers will be called & instructed to improve their performance.

Vendor name is to be removed if vendor rating found continuously poor.

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1.1 Achievements Lead Time

Type Broad

Category

CPDLead

Time

TSSH-Lead

Time

Local

Purchases

Equipments 45 Days 45 Days

Medicines 10 Days 03 Days

Surgical

Items

10 Days 03 Days

General Items 15 Days 07 Days

Linen 45 Days 30 Days

Narcotic

Drug

21 Days 03 Days

Import

Purchases

Equipment 16 weeks 16 weeks

Medicines 12 weeks 07 weeks

Surgical

Items

16 weeks 07 weeks

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1.2 AchievementsMargin Analysis

Type Sr.No. Item Category SHLMargins/Cost

TSSHMargins/Cost

Opex 1 Drugs & Medicines 25% 35%

Opex 2 Surgical Disposable 40% 60%

Opex 3 Implants 15% 20%

Opex 4 Stationary

Opex 5 Cathlab Angioplasty

Consummables

Order Consignment

CAPEX 1 Slotted Angle Rack 4,800/- 2,600/-

CAPEX 2 Lead Goggles 7,800/- 6,300/-

CAPEX 3 Lead Glass 65,000/- 54,000/-

CAPEX 4 Heart Lung Machine 54,00,000/- 40,60,000/-

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ConclusionThe following is the advantages in implementation of this purchasing

procedure: Purchasing procedure activities get streamlined, standardized & controlled.

All the units get centrally linked.

Lead Time of the material will be reduced.

The cost of procuring, inventorying & storage cost will be low.

It will be advantageous in keeping multiple suppliers. Contracting with suppliers for minimum annual purchases, by informingsuppliers of the annual demand.

Procurement of item on consignment basis.

Return to the vendors the non-moving items it will reduced the inventorysubstantially, will reduce storage cost, avoid material to obsolete etc.

Direct purchasing from manufacturers or local authorized distributors. Reduction in administrative cost.

Consumption analysis will help to minimize stock.