V.4 Attaining the Elusive E’s in Supply Chain Management:Easy, Efficient, and Electronic

Attaining the Elusive E’s in Supply Chain Management: Easy, Efficient,

and Electronic

Paul PeabodyVice President & Chief Information Officer

Beaumont Hospitals

Royal Oak, Michigan

David WhiteSenior Business Operations Analyst

Beaumont Hospitals

Troy, Michigan

About Beaumont

Opened in 1955 as single 238-bed hospitalOpened in 1955 as single 238-bed hospital

Grew to two-hospital regional medical system Grew to two-hospital regional medical system located in Royal Oak and Troy, Michiganlocated in Royal Oak and Troy, Michigan

Royal OakRoyal Oak – 1,061-bed tertiary care, teaching, – 1,061-bed tertiary care, teaching, research and referral hospitalresearch and referral hospital

Second highest number inpatient admissions, nationallySecond highest number inpatient admissions, nationallySecond highest number surgeries, nationallySecond highest number surgeries, nationally

TroyTroy – 254-bed community hospital ranked among – 254-bed community hospital ranked among nation's busiest smaller community hospitalsnation's busiest smaller community hospitals

Sources: American Hospital Association,Sources: American Hospital Association,Annual Data Exchange SurveyAnnual Data Exchange Survey

About Beaumont

Beaumont Royal Oak

Beaumont Troy

About Beaumont

2005StatisticsAbout Beaumont

American Association of Retired Persons (AARP)“Top 50 Hospitals”

American Hospital Association“Quest for Quality”

American Nurses Credentialing Association“Magnet Status”

Hospitals & Health Networks“Health Care’s 100 Most Wired”

National Research Corporation“Consumer Choice Award”

Solucient“100 Top Hospitals – National Benchmarks for Success”

U.S. News and World Report“America’s Best Hospitals”in 11 medical specialties

Awards & RecognitionAbout Beaumont

ERP/Suite

Infrastructure

Optimization

Projects

Operational

Impact

Financial

Impact

Beaumonte3 Solution

Beaumonte3 Solution

Rolled out Oracle E-Business Suite 11i ERP in July 2001Human Resources

Human Resources, Employee Self-ServiceSupply Chain

Purchasing, Inventory/Order Management, iProcurement Self-Service, Payables, E-Commerce Gateway

FinancialsGeneral Ledger, Cash Management, Fixed Assets

Post-Production Expansion from July 2001 to presentHuman Resources

iRecruitment Self-Service (2004), Benefits Self-Service (2005)Supply Chain

GHX expansion (2002), Handheld Ordering module (2004),Patient Supply Charging module (2005)

FinancialsMiscellaneous Cash module (2003)

Reengineered over 600 business processes

Beaumonte3 Solution

ERP ProjectCommittee Structure

ERP/Suite

Infrastructure

Optimization

Projects

Operational

Impact

Financial

Impact

Beaumonte3 Solution

Supply ChainOptimization Projects

Supply ChainOptimization Projects

ERP/Suite

Infrastructure

Optimization

Projects

Operational

Impact

Financial

Impact

Beaumonte3 Solution

Why focus on process?

Avoid technology supporting a poor process Implement better processes not just better technologyNew technology on top of a bad process results in bad result FASTERPromote integration of systems, information

End user acceptance

Return on investmentCan’t improve what you can’t measure

Operational Impact

Sample Process

Procure-to-Pay Cycle

Sample Process

Procure-to-Pay Cycle

Operational Impact

Legacy/BaselineProcure-to-Pay Cycle

Process was largelypaper-based relying onmanually-intensive steps

½ to 1 DAY 1 to 2 Days1 to 2 Days

7 Days 3 Days 1 Day

Manually Search Paper

Catalog

Fax, Phone, or In-House Mail Paper

Requisitions

Requisition Input

Fax, Phone, Traditional EDI

Purchase Orders

Supplier Order

Fulfillment

Receive Product

Paper Invoice Mailed to AP

Invoice Matched to

PO

In-House Mail Invoice Holds

to Invoice Approver

Hold Response Sent to AP

Hold Resolved,

Invoice Paid

Printed Check Mailed to Supplier

Technology-driven, reengineered process with high-level of process automation

RequisitionAutosourcedinto Purchase

Order

RequisitionGenerated by

Handheld

PO Routedthrough

ElectronicExchange

Check OrderStatus Online

EvaluatedReceipt

Settlement(Pay on Receipt)

ElectronicFund Transfer

SupplierOrder

Fulfillment

ReceiveProduct(Advanced

Shipment Notice)

Exchange-basedorder routing andorder placement

Web-based orderstatus checks andonline reporting

Electronic order capture viahandheld device

Automated requisitionconversion into standardpurchase order

Accurate product identification and accuratepricing at front-end (requisition) precludesoccurrences of back-end (invoice)discrepancies

Complete automation dramatically reducesduration of procure-to-pay cycle

Real-Time

1 Day

1 Day / Payment Terms

Post-Production Procure-to-Pay Cycle

Sample Process

Patient Supply

Charge Process

Sample Process

Patient Supply

Charge Process

Operational Impact

Process largelypaper-based relying on manually-intensive steps

Legacy/BaselinePatient Charge Process

Distribution Clerk

Completes Request

Office Clerk Collects

Completed Requests

Distribution Clerk Tubes/

Delivers Product to Unit

Office Clerk Sorts Request

Sheets

Office Clerk Identifies

Requesting RC

Unit Staff Submits Product Request

Office Clerk Enters

Expenses/Charges

Data TechTransfers

Changes to BackendSystems

Data TechBacks UpLegacySystem

Product Request

Arrives in Distribution

Distribution Clerk Retrieves

Product

Office Clerk Files Request

Sheets

Technology-driven, reengineered process with high-level of process automation

Future/PlannedPatient Charge Process

Distribution Clerk Tubes/

Delivers Product to Unit

Data TechTransfers

Changes to BackendSystems

Distribution Clerk Retrieves

Product

Product Request

Arrives in Inventory Ctrl

Unit Staff Submits Product

Request via Web

Distribution Clerk Scans-In

Request Transaction ID

ERP/Suite

Infrastructure

Optimization

Projects

Operational

Impact

Financial

Impact

Beaumonte3 Solution

Financial Impact

Business Case

Results

Business Case

Results

Financial Impact | 2001

Financial Impact | 2002

Financial Impact | 2003

Financial Impact | 2004

Financial Impact | 2005

Royal Oak & TroyMichiganBeaumont Hospitals

Questions?Questions?

Paul Peabody

Vice President &Chief Information Officer

David White

Senior BusinessOperations Analyst

Royal Oak & TroyMichiganBeaumont Hospitals