Intermountain’s Supply Chain Organization (SCO) recently received the #4 ranking in an annual top 25 list of healthcare supply chains ranked by Gartner Inc.” The ranking measures healthcare organizations’ achievements in transforming their supply chains to increase value, improve patient outcomes and quality, solve challenges, and increase efficiency. Intermountain’s SCO efforts have elevated us in Gartner’s rankings from #7 in 2011 to #4 in 2012 – a significant achievement.

“This ranking is evidence of the hard work given by a dedicated SCO workforce,” says Supply Chain/Shared Services VP Brent Johnson. It’s important to note that only two healthcare providers made the top 4 – Mayo Foundation and Intermountain. The other top 4 recipients are all distributers of healthcare products.

 

What is a Supply Chain?

Supply Chain Organization, or SCO for short, is a modern version of what some people in the past may have called a purchasing department. However, a supply chain organization covers far more and becomes a system of organizations including people, activities, information, and resources. “We work together to ensure the right items are available at the right time and the right place.” says Joe Walsh, AVP of Procurement. We employ over 700 individuals who have oversight into approximately $1.3 billion in non-salary spending. Our coordinated efforts save millions of dollars to achieve both cost savings and cost avoidance.  Joe puts it like this: “We are a service organization to our many important internal stakeholders. In this role, we can never become the weak link in the value chain between our suppliers and the point of patient care.” 

What goes into earning the award?

A little over a year ago, (SCO) moved to a newly constructed office space and warehouse in Midvale. Our new building and location gave us the platform to improve on existing processes and enabled us to push those processes a step further

Some of these steps included:

1. Value Creation. Our Strategic Sourcing team identifies over 150 services and products each year where value can be created through improved pricing or even cost elimination. Steve Mikkelsen, Operations Director of Laboratory Services, recently used the SCO to get chemistry equipment. “We received a very favorable long term contract for a great price that provided just what was needed,” says Mikkelsen.  Steve adds, “We worked together as a team to ensure we received a quicker test turnaround time, a top quality product, and a cheaper cost per test."
2. Logical Unit of Measure (LUM) shipping. Hospital and clinic staff place orders for crucial items which are then pulled from stock and placed into over 1000 totes every day for delivery directly to the floors and locations where they will be used. Studies have shown that up to 30% of a nurse’s time is spent in non-patient care activities. LUM created efficiencies that now allow clinicians to spend less time in stocking activities, freeing time for patient care.
3. Value Measurement. “A process can only be improved upon if it is measured,” says SCO Finance and Information Director Tim Goates. A team of analysts work toward capturing data that helps establish the “total cost of ownership” (TCO). TCO looks at every angle of the product or service to establish the cost of acquisition, usage, longevity, and how it affects related usage. It also takes into account the complexities of legal and business requirements. “When TCO principles are applied, we’ll get the most appropriate price for what we’re purchasing,” says Richard Bagley, Director of Strategic Sourcing.
4. IMAT Warehouse (Integrated Materials, Ancillary, and Transportation). The IMAT warehouse and distribution center itself brings an incredible amount of capabilities previously unseen. About 6000 critical items are stocked there and the warehouse fulfills 98.6% of orders with 99% accuracy.
   Additionally, product shelf life has been extended, there is new ability to take advantage of bulk buys, and product waste has diminished since it is no longer necessary to order in case quantities.These capabilities make Intermountain extremely prepared for an emergency or disaster as well as creating a better experience for our patients by having the supplies necessary.
5. Innovation. Three years ago, a project called Procurement Transformation was launched to help position the SCO for the future. What Gartner really liked about this innovation was how it uniquely positions the SCO to serve patients, employees, the organization, and suppliers by adding expertise, focus, and governance that will allow us to be nimble and effective regardless of coming changes.

What is being said?

Gartner describes Intermountain’s Supply Chain like this: “The Intermountain team has worked hard to deliver on the investment made in its supply chain by its board. With the $40 million, 357,000-square-foot supply chain center in full operation, Intermountain has become a flagship of professionalism to the suppliers with which it works. Its development of a strategic sourcing team that is specifically challenged to find millions in non-price-related savings has made Intermountain think and act differently. It has continued executive support, and the organization’s commitment to enabling low-cost and high-quality patient care throughout its supply chain is strong.”

The entire piece can be found at http://www.gartner.com/newsroom/id/2628916.