Melbourne Health

Procurement Transformation Plan

6th August 2015

Jim Kirkup – Director Procurement & Supply

Bruno DaSilva – Non Clinical Procurement Manager

Debra Birznieks – Clinical Procurement Manager

Britte Kent – Procurement Service Delivery Manager

Introduction

• Melbourne Health is one of Australia’s leading public healthcare providers. Our mission is simple – to

provide world-class healthcare for our community by embracing discovery and learning, building

collaborative relationships, and engaging patients in their care.

– Our services are delivered through The Royal Melbourne Hospital, one of Australia‟s preeminent hospitals,

NorthWestern Mental Health, the largest mental health provider in Victoria, and the internationally renowned Victorian

Infectious Diseases Reference Laboratory (VIDRL).

– Melbourne Health is built on a tradition of providing the best possible care for our patients, excellent teaching and

training for staff and future health professionals, and a commitment to clinical research to improve outcomes for

everyone in the community.

– Serving a population base of more than one million Melburnians, as well as regional and rural Victorians and

interstate patients, Melbourne Health is driven by its vision, „First in Care Research and Learning‟ and is committed to

its values, underpinning all behaviour and practice.

• Melbourne Health at a glance:

– The Royal Melbourne Hospital is Victoria‟s first hospital – established 1848

– More than 8,000 staff employed across 32 sites

– Approximately 1,400 beds across hospital and community settings

– 86,926 people discharged from the RMH in 2014/15

– 173,516 outpatient appointments in 2014/15

– 66,155 people presented to the RMH emergency department in 2014/15

• Procurement at a glance:

– Management of 600+ pricing agreements

– Coordination of 400+ contract executions per year

– 140,000 Purchase Orders raised per year

– $300M addressable spend

– 15/16 Procurement Activity Plan to review $100M+ of spend

Transformation - Principles

SWOT VISION

GOALS W

he

re a

re

we n

ow

?

Transformation - Vision & Purpose

VISION “By end 2016, Melbourne Health will be

recognised as Victoria’s leading public

health organisation in providing

Procurement services.”

PURPOSE

“We will transform to grow and deliver

value-creating Procurement outcomes.”

Transformation - SWOT Analysis

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

Transformation - Goals

• Develop the right people and their skills to solve problems and create value PEOPLE

• Introduce processes that deliver consistent, value-adding outcomes for both stakeholders & suppliers

PROCESS

• Implement tools, templates and systems that support stakeholders & suppliers SYSTEMS

PROCUREMENT

OBJECTIVES

“Implement Category

Management service and

mindset”

“Introduce new Category

Management processes to

deliver value & consistency”

“Implement systems and

toolbox to support Category

Management”

Transformation – 3yr Plan

2014

Implement

the Basics

Complete spend analysis

Develop quick wins for our stakeholders

Audit and fix key processes

Collocate all Procurement staff to Parkville

Understand staff capabilities and skill gaps

Refocus resources to reduce recurring costs

2015

Build Credibility and Develop Capability

Build Procurement Activity Plan (PAP)

Restructure Procurement team

Develop training plan

Implement Contracts Management System (CMS)

Introduce Supplier Performance Management (SPM)

Roadshow and improve stakeholder engagement

2016

Become a Trusted Business Partner

Expand the scope of categories under management

Increase collaboration with partner health agencies

Integrate with annual Business Planning process

Compliance to Government Procurement Reform Policies

Transition to Supplier Relationship Management (SRM)

Deliver more innovation

People Goal

Where we were • Unmotivated, satisfied with status quo, risk averse

• Skills gap

What we did • Introduced informal team training

• Committed to formal training (AHSPO and CIPSA)

• Restructure (created and recruited new job roles)

Where we are going • Introduced category management

• Encouraging dynamic, pragmatic thinking

Skills Gap Analysis

Negotiation

Market

Engagement

Strategy

Development

Market Analysis

Opportunity

Analysis

Strategy Refresh Supplier

Relationship

Management

Contract

Implementation

Master Class

SWOT

Porter‟s Five

Forces

Phases of

Negotiation

PESTLE

The Iron

Triangle

Conflict Mode

Instrument

Kraljic‟s Matrix

BCG Matrix

Employer of Choice Casual Loop

Training and development contributes to

staff development

Staff adds value to Procurement

function

Melbourne Health

Procurement builds a

reputation for developing

great people

Staff become “Great place to

work” Ambassadors

High calibre candidates want

to join “great place to work”

Recruitment

Process Goal

Where we were • Unmapped noise

• State of confusion, delays missed opportunities, friction

• Lack of accountability and ownership

• Disconnect between our core business and how procurement can add value

What we did • Established a strategy

• Mapped present state processes (visibility)

• Mapped to-be state with stakeholders as required stripped out non value

added processes automated where possible

• Walked through changes

Where we are going • Further process alignment to support procurement and business

• Taking people along for the journey (don‟t miss the boat)

Automated tools

MH Roadmap

Procurement

Procedure

New innovation

introduction PRC TOR

Procurement Strategy

Delegations manual

MH Strategy

Tell the story

intranet

Recall Process

Procurement Policy

New Product

Introduction Process

MH Vision

Product feedback

Trusted Partner

Complexity

Tool

Building Blocks

Winning the Hearts and Minds of the Business

Procurement is the new Black

Single

bed room

ICU (intensive care unit)

OP operating theatre

Hospital reception

1st floor

2nd floor

Helistop

H

Vision and Governance

Process to support

Tools to empower

People to partner with the business to support core functions

Systems Goal

Where we were • Manual and/or paper processes

• Contract management lifecycle disconnect

• Inconsistent monitoring of supplier performance

• Loss of data capture/Lack of Investment

What we did • Established working teams to capture all specifications for inclusion

• Create automated forms

• Automation of Oracle system through templates

• Catalogue filter implementation

Where we are going • Contract Management System

• Procurement Assessment Tool

16

Procurement Assessment Tool Procurement & Supply

Answers

Equipment.

Yes

No

$10,000.00 - $24,999.99

Yes

Actions

2 Quotes Needed & Application for New Spend

Approval (ANSA) Form

Procurement Assessment Tool

Instructions: Fill in all fields

Based on results of XXXX

Self Managed - Refer to steps below

Question

What is the Total Cost of the Item/Goods/Services?

When purchasing equipment, have the associated

maintenance or other additional costs been

factored in the Total cost of the purchase?

What is the product classified as?

Have you used this vendor before?

Do you intend to purchase these

items/goods/services again over the next 24

months?

Process Classification

Basic

Transformation – Progress against Plan

2014

Implement

the Basics

Complete spend analysis

Develop quick wins for our stakeholders

Audit and fix key processes

Collocate all Procurement staff to Parkville

Understand staff capabilities and skill gaps

Refocus resources to reduce recurring costs

2015

Build Credibility and Develop Capability

Build Procurement Activity Plan (PAP)

Restructure Procurement team

Develop training plan

Implement Contracts Management System (CMS)

Introduce Supplier Performance Management (SPM)

Roadshow and improve stakeholder engagement

2016

Become a Trusted Business Partner

Expand the scope of categories under management

Increase collaboration with partner health agencies

Integrate with annual Business Planning process

Compliance to Government Procurement Reform Policies

Transition to Supplier Relationship Management (SRM)

Deliver more innovation

Transformation Summary

Tips / Advice

Communicate

Change

Consult

Jim Kirkup

Director Procurement & Supply Chain

Tel. (03) 9342 3945

Email jim.kirkup@mh.org.au

Bruno DaSilva

Non Clinical Procurement Manager

Tel. (03) 9342 3948

Email bruno.dasilva@mh.org.au

Debra Birznieks

Clinical Procurement Manager

Tel. (03) 9342 3932

Email debra.birznieks@mh.org.au

Britte Kent

Procurement Service Delivery Manager

Tel. (03) 9342 3949

Email britte.kent@mh.org.au