The tone of the Canadian Public Procurement Forum 2013 was set by plenary session speakers Yvon Paris, Koce Kolev and Francois LaRue. The three discussed how procurement and logistics professionals can take the profession to another level.
“Do you think you are important?” LaRue opened the session by asking the room. The positive response he received was then contrasted with an acknowledgement of how undervalued their services often are. The problem, according to LaRue, is that while surrounded by modern technology, supply chain management is stuck in the Palaeozoic Era. Using their experiences as administrators at a Quebec hospital as an example, Paris, Kolev and LaRue explained how to bring purchasing and logistics into the 21st century.
The centre hospitalier universitaire de Sherbrooke (CHUS) is a multi-purpose organisation: part hospital, part research centre and part medical school. With over 6,000 employees and an annual budget of $462 million—of which $100 million goes to purchasing—it’s the fourth largest medical institution in the province
While the service side of the equation may have been working smoothly, that wasn’t the case with supply. As LaRue, the logistics co-ordinator for CHUS, explains: “When a person comes to the hospital you cannot tell them to come back next week because you’re out of something. Without good inventory people were just ordering and ordering to make sure they had enough.” As a result, in 2011, for example, the inventory on the shelf did not match the records 89 percent of the time. As well, about two boxes of ‘stuff’ were disappearing each week.
With a mission to improve accessibility and contribute to the high quality of service at a minimum cost, they took a four-step approach. The first step was to build teams. They needed people working together who had a good attitude, the right competencies and capacity for teamwork.
The second and third steps were to review all processes and put the correct tools in place. They mapped everything that went through the system (which is how they first learned about the poor inventory records and missing ‘stuff’) and amalgamated 13 regional purchasing agencies into one. They built a separate warehouse with a proper warehouse management system and suitable technology, including reading guns and RFIDs just to manage the inventory. As a result, that 89 percent blot on the books dropped to just four percent in 2013. A huge time and cost cutting measure involved charting the hundreds of individual contracts signed each year. Developing a master contract helped them save $2.5 million in 2012/13 through measures such as the saving of $430,000 on a ten-year MRI maintenance contract.
Finally, they established operating rules, outlining everyone’s role, responsibility and authority to increase everyone’s level of effectiveness. Operational audits are ongoing. They consist of many factors including customer surveys, internal audits, external audits and financial indicators.
The result is greater efficiency throughout the hospital, decreased costs and greater job satisfaction—truly the revolution LaRue describes.
Denise Flint is a writer based in St. Philips, just outside of St. John’s, Newfoundland & Labrador.