“Our individual locations were responsible for placing their own orders and negotiating their own local agreements,” says Robert Engle, VP Finance for ESP. “That made it very difficult to manage procurement.”
Additional procurement challenges included:
- Needed better visibility into procurement.
- Inconsistent pricing across facilities.
- Inability to gain the best tier pricing and rebates.
Working with Provista’s experienced procurement team and moving to a centralized procurement system eliminated those pain points. Provista Procurement Solutions also delivered new benefits and additional value. The robust offering includes a team of non-acute healthcare procurement experts, aggregated contracts with industry-leading value, comprehensive data from across the organization and procurement software.
ACTIONABLE PROCUREMENT INSIGHTS UNCOVER BUSINESS OPPORTUNITIES
Before partnering with Provista Procurement Solutions, ESP received basic data from suppliers such as the number of products purchased and annual spend. “You can compile it all together and have a nice bit of data to analyze,” Engle explains. “But it is difficult to collect and becomes stale quickly. Provista Procurement Solutions allows us to have instant access to all purchase data all of the time.”
When the Procurement Solutions team implemented Envi, Provista’s materials management software, across the organization, ESP gained visibility into its products, vendors and spend information in one centralized location. The software, along with the procurement support services provided by the Procurement Solutions’ team, supported ESP in gaining the data it needed to answer specific procurement questions such as year-over-year spend and purchasing habits at an organization view and a location view.
“I’m learning all sorts of opportunities for consolidation. For example, we were ordering 91 types of gloves. I wasn’t surprised, but it’s nice when I’m on calls with facilities managers to have that data. I can say ‘We have an opportunity to scale this back for potential savings,’ ” Engle says.
While ESP doesn’t want to limit choices, it does want to streamline. That’s why an internal team identifies products like gloves that facilities need, creates a subset of that product that meets the company’s requirements and puts that smaller list out for bid to get the best price.
The Provista procurement team also helps source and manage aggregated contracts across an extensive portfolio of products and services. This lets ESP access the most appropriate contracts with the most favorable terms.
CONSOLIDATING PURCHASING POWER DRIVES BETTER PRICING
By providing visibility into the entire organization’s purchasing, the Envi software and Procurement Solutions experts help ESP identify areas to consolidate to reach best pricing through contract compliance.
“On paper, you might have really good pricing, but maybe certain tiers are established so if you buy 1,000 of something you get a 10% discount, but if you buy 10,000, you pay 20% less,” Engle says. “The difficulty is managing those agreements. There was no common place to see what was being purchased, and if we did an ad-hoc review, we discovered that we have this great agreement, but only one-third of our practices were taking advantage of it. Oh, and by the way, because we didn’t hit the benchmark, our rebate just went away.”
The Procurement Solutions team discovered that the company was sometimes buying the exact same product, from the same manufacturer with the same item number, from multiple suppliers at different price points. Those insights led to vendor consolidation and an initiative to achieve price parity across locations.
“We were able to lower prices on some items by 15% or more. This principle works whether you spend $1,000 a year or $5 million,” Engle adds. “A lot of our agreements are done by local reps. In one instance, we had one location paying $237 for a product and another paying $1,077 for the same item. We were able to work with vendors to get consistent pricing.”
The Procurement Solutions team is often able to identify and resolve issues before they happen. This proactively eliminates problems.
“With the team managing us, we get approval on a purchase before that purchase is made,” Engle notes. “So, if I see an order for 80 widgets but the usual order is 40, I can find out why before the order is placed as opposed to after it’s been received and invoiced.”
