Collaboration Track. In Pursuit of Meaningful and Tangible Customer- Supplier Collaboration

Transcription

1 Collaboration Track In Pursuit of Meaningful and Tangible Customer- Supplier Collaboration Presenters: Ed Hardin, System Vice President, CHRISTUS Health

2 Content Learning Objectives CHRISTUS Health Overview Performance at a Glance Tenets of Meaningful Collaboration Strategies for SRM Future Considerations Quick Hits to Start Tomorrow 2

3 Learning Objectives 1. Discuss what meaningful and tangible collaboration is and what it could mean for your organization. 2. Differentiate between a vendor and supplier partner. 3. Identify strategies that work to build a higher performing customer-supplier relationship. 4. Identify tactics that you can apply today to begin this journey. 3

4 Content Learning Objectives for this Session CHRISTUS Health Overview Performance at a Glance Tenets of Meaningful Collaboration Strategies for SRM Future Considerations Quick Hits to Start Tomorrow 4

5 Who We Are International Catholic, faithbased, not-for profit health system comprised of almost 350 services, more than 50 hospitals and long-term care facilities, 175 clinics and outpatient centers, and dozens of other health ministries and ventures Our Mission: To extend the healing ministry of Jesus Christ 5

6 CHRISTUS Health Geographical Coverage 6 states in the United States Recent expansion into East Texas with additions of Trinity Mother Frances and Hopkins County Memorial Hospital International Operations 9 acute care facilities in Mexico 3 acute care facilities in Chile 2 acute care facilities in Colombia 6

7 We operate in six states with corporate headquarters in Irving, TX, including 1,600 associates 30,000 associates working in our patient care serving regions $5b in total assets Largest % charity care of any Catholic provider By the Numbers in the US $1.2b in supply chain spend, including med/surg, PPI, pharm, capital and purchased services Nearly 300 supply chain associates, including 50 residing at our corporate offices 7

8 Content Learning Objectives for this Session CHRISTUS Health Overview Performance at a Glance Tenets of Meaningful Collaboration Strategies for SRM Future Considerations Quick Hits to Start Tomorrow 8

9 Beating Expectations Moved from bottom 50 % of Catholic hospitals to top 25 %, an approximate 40-point jump in three years < 1.25% annual growth in supply (non-pharm) spend per CMI adjusted discharge each of the last three years > 6% decline in pharmaceutical spend per CMI adjusted discharge the past two years Key performance indicators have declined each of the last two years and on track for a third consecutive year: Supply Expense per CMI-Adjusted Discharge = $1269 Supply Expense as a % of Net-Patient Service Revenue = 18.9% Supply Expense as a % of Total Operating Expense = 15.9% 9

10 Industry Recognition

11 Content Learning Objectives for this Session CHRISTUS Health Overview Performance at a Glance Tenets of Meaningful Collaboration Strategies for SRM Future Considerations Quick Hits to Start Tomorrow 11

12 Our Dilemma in 2013 Unreliable Irrelevant Customer Non-Compliance Poor Communications Lack of Leadership Support Broken Promises Transactional 12

13 A Brieft History of Toyota SRM Devastated from the effects of WWII, Japan aggressively seeks to change its fortunes In August 1950, W. Edwards Demming delivers a speech on what he called "Statistical Product Quality Administration and inspires the Japanese Post-War Economic Miracle The distinguishing characteristic of the Japanese economy during the economic miracle years included the cooperation of manufacturers, suppliers, distributors, and banks in closely knit groups called keiretsu (translation: set of companies with interlocking business relationships and shareholdings) With its adoption of Demming s concepts around quality and supplier collaboration, Toyota (as a customer) rises from the ashes in 1950s to become the largest and most successful keiretsu 13

14 History of CHRISTUS Health SRM Distinctly different than a Japanese keiretsu in that there is not a direct financial link Rolled out in early 2012, the CHRISTUS Health version of SRM was founded on the following: Create relationships built on trust, synergy, and strategic alignment Improve the performance of ourselves and our vendors Recognize and reward both parties for exceptional performance Culminates in late 2012 with the formation of the industry s first vendor board, the Partner Advisory Council Five years later, the PAC has seen successive growth in its membership (14 25) and dollars represented ($150m $350m) In 2014, applied these learnings to form the industry s first diversity supplier board 14

15 Number of Vendors Definition: Supplier Relationship Management Supplier Relationship Management (SRM) is the discipline of planning for and managing all interactions with strategic third-party organizations that supply goods and/or services to the customer organization in order to maximize the effectiveness of those interactions by collaboratively identifying and working opportunities for all parties to realize new value Many Tier III Arm s Length Cost-Driven Availability-Driven Performance managed Long term Mutual benefits Shared resources Open communications Shared risks and rewards Senior leadership involved Relationship managed Few Transactional Type of Relationship PAC Strategic 15

16 What We ve SRM Unwittingly Tenets Learned 1. Selection of the relationship must be defensible* 2. The relationship must be exclusive but not entitled* 3. The relationship must be measurable with a formal* rewards/recognition process based upon 4. The relationship must be intentional 5. The relationship must be relentlessly and internally socialized (while avoiding entitlement messaging) 6. What is learned must be codified and adopted by the rest of the vendor community 7. Expectations for the relationship must grow 16

17 Defensible Relationship Through Segmentation 17

18 Exclusive Relationship High level of intimacy with and access to CHRISTUS Health influencers Involvement in the development and approval of ALL decisions related to vendor relationship Minimum two semi-annual business reviews with SCM executive Quarterly Council meetings that include access to proprietary information, system strategies, and organizational status 18

19 Measurable Relationship Sample Data Not Actual 19

20 Rewards & Recognition 20

21 Content Learning Objectives for this Session CHRISTUS Health Overview Performance at a Glance Tenets of Meaningful Collaboration Strategies for SRM Future Considerations Quick Hits to Start Tomorrow 21

22 Key Strategies to Create a Transactional to Strategic Watershed Involve vendors in your strategic planning efforts, thus creating ownership for your success Regularly release organizational information, historically kept from vendors, and provide the context so that vendors can walk in your shoes Annually identify 2-3 collaborative projects that can receive internal and external visibility Embed large dollar and highly interactive vendors into your organization Remove underperforming vendors from your ranks and provide the context to rest of your vendor community so that they learn your expectations 22

23 Content Learning Objectives for this Session CHRISTUS Health Overview Performance at a Glance Tenets of Meaningful Collaboration Strategies for SRM Future Considerations Quick Hits to Start Tomorrow 23

24 Future Considerations Expansion of VBSC to top 100 Supplier satisfaction survey of key customers and incorporation of this into PAC selection and annual vendor recognition Contract terms and conditions standardization initiative Vendor credentialing and access initiative in conjunction with the Consortium for Universal Healthcare Credentialing 24

25 Content Learning Objectives for this Session CHRISTUS Health Overview Performance at a Glance Tenets of Meaningful Collaboration Strategies for SRM Future Considerations Quick Hits to Start Tomorrow 25

26 Starting Tomorrow 1. Ask your direct reporting executive to support an experiment on enhancing your supplier relationships with a select group of vendors 2. Run report of your top 50 supply vendors by spend 3. Share this report with your SCM colleagues, key influencers and value analysis members, asking them what 5 vendors most demonstrate Great customer service Consistent quality of their products Value of their products for the money 4. Identify 10 standout vendors and ask them to participate in an initial group discovery meeting, include select individuals from #3 above 5. Contact CHRISTUS Health for templates and other materials that you might need involve us if you d like 26

27 Closing & Wrap-Up 27

28 Ed Hardin, FACHE, CMRP Ed Hardin has spent more than two decades serving the healthcare provider industry and today is Vice President, Supply Chain Management, for CHRISTUS Health. Prior to this position, he served as Vice President, Collaborative & Organizational Development for the supply chain operating division of Mercy health system. Prior to joining Mercy, Ed spent 17 years as a consultant with Alvarez & Marsal, Deloitte, and Ernst & Young, where he specialized in performance improvement, strategic planning and change management. He earned a bachelor s degree from Westminster College and a master s degree in healthcare administration from Washington University School of Medicine. He is a Fellow in the American College of Healthcare Executives and an active and certified member of his professional society, the Association of Healthcare Resource & Materials Management. He serves on the national AHRMM Board, IDN Summit, McKesson s Healthcare Executive Alliance, and Stryker s Customer Advisory Board. His passion for Catholic healthcare, particularly its mission focus and successful sustainability have led him to speak and write about the vital need for collaboration and innovation in the supply chain. Ed is married to his grade school best friend for nearly 25 years and a proud parent of two children and two Labrador retrievers. 28