By Jan Malasek
•
June 12, 2024
Strategic Sourcing is often associated with driving down cost, efficiency improvement and increased service levels. There are some situations where Strategic Sourcing is needed to help rebuild supplier relationships while enhancing trust all the while securing additional resources for core capabilities. Such is an example of work that OnDemand Professional Network member Chris Vu did for post-bankruptcy period at a hospital serving a major metropolitan area. SITUATION OVERVIEW A hospital in New York had emerged from bankruptcy and needed to stay afloat since it was the largest hospital and biggest employer in its Brooklyn neighborhood. The Materials Management/Purchasing Department was able to manage day-to-day activities to support patient care. However, indirect and ancillary areas were secondary in priority and the suppliers were extremely unhappy losing money as a part of the bankruptcy protection process . Chris was brought in to negotiate new contracts with suppliers to obtain improved terms and ensure uninterrupted service. APPROACH An incumbent approach was taken to help prevent disruptions in service and allow stakeholders to focus on their day-to-day responsibilities. In addition, it was difficult finding new suppliers willing to work with a financially distressed organization. As a part of the approach, Chris not only had to negotiate improved terms, but rebuild trust and rapport with suppliers . Expectations were reset with suppliers encouraging them to view the hospital as a new organization and to look forward and not backwards. The hospital’s group purchasing organization was leveraged as a baseline for pricing and terms . In addition, Chris met with current and potential new suppliers, where available, to support operational improvements for the future. CRITICAL SUCCESS FACTORS Leveraging the current supplier base Rebuilding trust with incumbent suppliers Developing custom pricing outside of the hospital’s GPO Identifying innovative opportunities for the longer term RESULTS Pricing and terms were negotiated to provide annual recurring savings of 11% across 36+ suppliers . 2 to 3-year terms were secured with suppliers to ensure continuous service, and in most instances, pricing better than the hospital’s GPO. Stakeholders were also pleased since they were able to maintain their current supplier relationships and didn’t have to trial or switch to new products/services . Furthermore, a pipeline of potential opportunities was left for the hospital to explore in the future. For example, the hospital could invest in new disposal containers for used needles that optimized storage capacity. Or the hospital could review several rent vs. buy scenarios from wheelchairs to floor mats to mops. Meet CHRIS VU - OnDemand Professional Network Member Since 2020
