Implementing GS1 Global Standards to streamline procurement processes John Szabo Consulting Manager, GS1 Australia Feb 18, 2015

Transcription

1 Implementing GS1 Global Standards to streamline procurement processes John Szabo Consulting Manager, GS1 Australia Feb 18,

2 Today s Topic Evaluating the costs of different supplier procurement processes in the absence of standards Exploring the impact of standardization on the relationship between contractors and suppliers How to implement successful standards in procurement processes or to put it simply the Cost, Impacts and Implementation 2

3 Session Outline Who is GS1 Australia Setting the scene Impacts of poor data on procurement processes exploring a few Case Studies Implementing for success 3

4 About us 1 - A not-for-profit organisation 2 - An international community of 112 national member organisations 4 - A standards organisation 3 - An industry driven organisation with millions of members across 24 industry sectors 6 - Dedicated to continuous improvement in supply chain end to end for industry 5 - The most widely used supply chain standards system in the world 4

5 GS1: A global system of standards

6 Setting the Scene Common challenges for the supply chain and procurement A lack of standards (internal, external) Multiple part numbers Multiple units of measure Poor product identification (both physical and data) Poor product data records (master data) Mis-aligned product data between buyer and seller Lack of interoperable systems Varying degrees of systems and process capabilities System limitations (legacy systems) No systems 6

7 Shoe sizes around the world 7

8 Defining a Product The Surgical Glove 8

9 Glove example Supplier Part Number: AB123 Brand: John s Product Description: Latex Examination Glove Medium White 50 Pairs of Gloves in a Box 6 Boxes in a Carton 9

10 Glove example Scenario 1: Hospital ward is running short on latex gloves. They estimate that they need 400 pairs for the next month. Question: What information do they put into their order? Answer: 400 pairs or 8 Boxes or 1 carton? To further complicate the issue, the supplier recently changed the number of boxes in a carton from 8 to 6 and did not bother to tell his customers. He also forgot to mention that a new glove was replacing the old glove and AB123 was now obsolete. How does a lack of aligned (or shared data) and application of the GS1 Standards to identify products impact the procurement process? 10

11 Procurement process without data alignment and application of GS1 Standards 11. Delayed Settlement 5. Adjusted Purchase Order 4. Query Order Errors 3. Purchase Order Supplier / Broker 1. Product Info sent Errors in transposition Fax/ Mail/File transfer 6. Despatch Advice 2. Product Info entered Errors in Translation Errors in Delivery / Transmission Buyer Incorrect Item #s Prices Desc Qty 7. Goods Delivered 8. Query Delivery Errors / Claim for credit 9. Return Incorrect Goods 10. Adjusted Delivery 11

12 Health Purchasing Victoria Case Study..There was a 60% improvement in data matching with items from the current contract, significantly increasing the confidence in financial impact statements for the Victorian Hospitals pharmaceutical costs. 12

13 Western Australia Health Case Study Since 2008 HCN has commenced eprocurement implementation with a number of companies including Baxter Healthcare, B.Braun Australia, Bunzl Australasia and KCI Medical. Discussions are continuing with a number of other suppliers including Western Biomedical, Becton Dickinson and Medical Sales and Service. HCN have decided to function as their own HUB giving them the flexibility to manage their messaging flows and simply and easily connect with the HUBs selected by their trading partners and move data into their ERP System. 13

14 Western Australia Health Case Study Benefits seen since implementation are: More accurate identification of ordered products due to the use of GTINs. There is no confusion as to what pack size, colour, etc is being ordered. When using internal part numbers such confusion is common. With prompt receival of a purchase order response, problems can be resolved more quickly. For example, if an item is out of stock, this can subsequently be sourced from an alternative supplier. Prompt notification of any price discrepancies means issues can be identified and addressed immediately. 14

15 Data Crunch Report By conservative estimates, more than $100 million in potential savings can be achieved by addressing product data quality issues by making only minor adjustments to existing processes. Manual intervention to double check the quantities ordered has the potential to add $8.8 million per annum to overall Australian healthcare supply chain costs. 15

16 Applying GS1 Standards to the Glove example Supplier Part Number: AB123 Product Description: John s Latex Examination Glove Medium White GTIN Pairs of Gloves in a Box Product Description: John s Latex Examination Glove Medium White X 50 prs GTIN: Boxes in a Carton Product Description: John s Latex Examination Glove Medium White X 50 prs X 6 GTIN:

17 Procurement process with data alignment and application of GS1 Standards 11. Delayed Settlement 5. Adjusted Purchase Order 4. Query Order Errors 3. Purchase Order 1. Populates Vendor Catalogue 2. Auto Updates Supplier / Broker 6. Despatch Advice Buyer 7. Goods Delivered 8. Query Delivery Errors / Claim for credit 9. Return Incorrect Goods 10. Adjusted Delivery 17

18 Home Hardware Case Study Home Hardware and Timber supply 250 Home Hardware stores consisting of currently 30 company owned stores and over 220 independently owned. Also supply the total independent markets of: 240 Thrifty- Link stores 75 Plants Plus Nursery s Also supply approx 1500 non affiliated independent customers from all Ex 3 DC ( Mel, Syd & Perth) Home Hardware Case Study: Synchronised data with key supplier and found the following: Collected data for 123 products Base unit match was 100%, including base unit barcodes Inner / Case quantities were out on 16 products, Most of the Case quantities and Case barcodes were missing Pallet & Layer quantities now complete for all 123 products, (previously buying by the wrong pallet qtys on 20 SKU s 18

19 Home Hardware Case Study Measurements were 90%+ incorrect Barcodes were collected on several other items that were wrong in their system Pricing was 100%, which was expected to be OK due to recent price updates Manufacturer codes were 87% incorrect Descriptions didn t match.

20 Home Hardware Case Study Savings Benefits to Home Hardware & the Supplier As a result Home Hardware changed 90 Product Minimum Order Quantities for receipting into 3 DC s Ordering in correct Pallet quantity multiples (where applicable) Ordering at Carton level (where applicable) Less receiving time and complexity at their DC s due to receiving cartons and not inners or each s (scanning of carton bar codes) Less Picking & Transport costs for the supplier Measurements for slotted warehouse now allows stock to be accurately put away Easier process for receiving, less put away time, so therefore better service levels & DIFOT

21 Additional benefits beyond procurement Implementation of GS1 Standards in the full supply chain and organisation can lead to the following: Traceability and effective product recall Product Pedigree Asset Management Stock accuracy Ultimately leads to improving patient safety

22 How to Implement successful standards in procurement Start with the basics Product identification is the key that underpins the whole GS1 system of standards. Understand that the procurement function has an important role to play and it s decisions and activities impact a large community Treat data as an Asset Be realistic with your timelines Educate, educate, educate Don t try to do it alone. GS1 Australia is here to assist

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