SA Health: Transforming Supply Chain and Procurement
With Andrea Andrews, Executive Director Procurement and Supply Chain Management, at the helm, SA Health has kicked off its supply chain and procurement transformation journey.
“We've spent a lot of time over the last couple of years trying to improve our processes and recognised that we needed technology for that. So we are looking to implement a contract management system this year. We’re also looking to implement a new Catalogue management system for the thousands of products that we distribute across hospitals and SA Ambulance. We're really in the middle of our technological transformation whilst also trying to implement spend analytics as well.”
“We use an ERP system here at SA health, and you don't want to throw out the baby with the bathwater, so to say. So we had to assess what we had and identify where the gaps were, and then develop that vision of where we wanted to be. It's taken us time. I would say at least three years to get us to the point where we are now looking to implement these changes. It's a big exercise. We have to implement it all across SA Health, in all our hospitals and across our network as well. When it comes to implementation and change management, it’s important to hit the right note. That’s a massive piece of the work, and so we spent a lot of time in the planning stage to ensure we get it right.”
“Prior to COVID, our hope was to have our spend analytics implemented last year. So some of our projects have been paused because we had to divert our resources to other priorities. So we are still on our digital transformation journey. We never got to that finish line. But I don't believe there is a finish line. I think that technology will keep evolving and improving, and we will have to evolve with it.”
It seems, however, that the global pandemic caused a cultural shift and brought its own set of lessons to be learned.
The Covid Lesson: A Cultural Shift
Andrea was on vacation when COVID hit. And as all good supply chain and procurement professionals do, regardless of where in the world they may be, or if they are on or off “the clock, began to immediately think of the repercussions. By the time she got back to work, usage had started to spike.
Andrea shares the story. “On the 2nd of February, we saw all our hospitals draw down about six months of PPE stock in about five days. Fortunately for us, we were watching it and saw it happening. We quickly realised we had to put some controls in place. But then we had to come to longer-term solutions.”
“The first half of 2020, we focused on PPE and identifying our supply chain vulnerabilities. People thought it was great to see oil prices for Petro going down, but for us, it signified possible supply chain issues as a raw material, e.g. polypropylene used in PPE and hospital supplies. You have to start connecting the dots fast. The team did a great job of that.”
“I put the team into functional streams early on so we could focus on those areas, and we got some support from government agencies. One of the key things we did early on was to centralise PPE for all government agencies, and that really helped us. I remember sitting with all the heads of procurement, all the people in roles similar to mine, across all the government agencies, police, education and the department of infrastructure and transport. And in that meeting, we talked about centralising supply through health. We were competing for scarce resources, and we could prioritise from a health perspective how we supplied.”
“I think controlling the demand as well as the supply helped us tremendously, and I thank my colleagues for working with us and trusting us to assume control of that for them. The fact that the public sector could pull together like that was a real benefit. We learned that the public sector could be fast, effective and efficient. We realised we had the skills and tools that we needed. We just had to believe that it could be done.”
“I think the common practice we had across corporates, across the health system, as well as the government agencies, all coming together towards a common goal helped speed things up. We set up PPE manufacturing companies within weeks when normally it would take years. We were lucky to have suppliers who are willing to come to the party and trusted us. I think it's been heartening to see how the community pulled together and how the private sector was able to work with us.”
Healthy Supplier Relationships for a Healthy Supply Chain
Upon stepping into the role, Andrea was keen to improve supplier relationship management, something her team embraced. “It’s important to realise you must talk to suppliers and build up those important relationships. Otherwise, you can’t look at things like innovation. You must have those relationships in place, and it’s important to be clear about what the guidelines are. We should have good working practices that allow us to have those conversations.”
“We run an annual supplier conference. When we had our first one, people questioned why we would run a supplier conference in the public sector. But it’s important to pull everyone in, which allows everyone to hear the same information at the same time. We can share with them our vision and our business planning and strategy and where we're heading, which then makes it easier for all of us when we’re looking for support for goods or services, or whatever it may be.”
“The supplier conference has been growing year-over-year. Last year, we moved it to a virtual conference, and that still worked well. We incorporated one-on-one meetings as well, either with myself, Directors of Procurement, our the Head of SRM or other members of my team. We make sure that suppliers have as much access to us as we can. Everyone is really busy, but we deliberately set that time. And the suppliers know that we do those round tables throughout the year, so that is certainly improving how we work together and the innovation that comes from that.”
“It’s important to remember that it’s those relationships with suppliers that we relied on when Covid hit. Maintaining those relationships meant we could pick up the phone and see if they could help us. We aren’t the biggest state in Australia, and for a lot of international companies, we are on the other side of the world. So if we want to be a key customer, then we need to think differently because it's not necessarily going to be about scope and scale. I think the fact that we really built those relationships up really helped us throughout, and I hope to maintain those moving forward.”
Automating for Better Contract and Relationship Management
Andrea highlights how tighter contract management allows for better relationship management.
“Facts and data enable you to have these relationships because you want to be able to be clear and quantitative. We want to have contract management meetings, agendas and minutes and action logs and all that good stuff because that's the foundation. And if you can get those things right, then it allows you to be able to do some of the more innovative work.”
“Is that an area we could improve in? Absolutely, and the technology piece for me is really key. I want us to automate as much as we can because I want contract management to be not just about talking to suppliers and having contract management meetings but going to talk to our customers. Actually getting out into the hospitals and talking to the nurses and doctors, the end-users. To be able to do that, I need to make time, which means I need to automate what I can so I can get out there.”
In terms of long term plans, Andrea wants to continue to leverage technology for easier ways of working. “I want to come in in the morning, click a button and see a supplier dashboard with colour coding and early warning signals where we can see any challenges, where we may have to go and have a conversation. But also where we can see that suppliers are going above and beyond, and there may be opportunities. I want those early indicators. The benefit is for our contract managers to be actually out with our customers and talking to suppliers and preparing the whole life cycle management of contracts, looking for better ways of working, preplanning for the next tender or whatever is next.
“We’re not there yet, but we're stepping towards it, and that certainly is our end objective. Much of the transactional work can be automated, so we can really get into those other analytical pieces and opportunities, hence the technological transformation that we need to go through to get there.”
“Oracle is our ERP system, and there are additional Oracle modules we're looking to implement. Certainly, I think that having everything on one platform will help us. We are bringing in service partners to come in and help complete implementation for us. We’re supply chain management experts. You can ask us how many SKUs we have in distribution, or you can ask us about negotiation strategies, but we’re not ICT experts, so we do need help from our Digital Health department and from service providers to do that.”
The Distribution Centre
“We are constructing a new distribution centre, and I went out to see it last week, it’s looking brilliant. It’s about 11,000 square meters with office areas on top of that. And we're looking to automate as much as we can. We’ll be putting in a new procurement system and warehouse management system. Our new goods to person picking system alone will hold about 10,400 high volume fast-moving SKUs,” says Andrea.
“We’re working to move the unit picking work to the distribution centre. We’re actually looking at what they need at ward level and then building it back. So at the distribution centre, we pack it in a way that when it arrives at the imprest, ward level, the first thing they need to unpack is at the top. So that's been a massive project for us. We will be working carefully with our customers. I don't think our stakeholders fully understand what the supply chain will look like yet, but certainly, it will be far more effective and efficient while improving quality, speed and volume as well.”
“It’s impressive to see it go from drawing to reality. I hope that the team enjoys it and understands that we tried to make it as positive for our team as possible. We did some surveys early on to decide on things like do we want bike racks in, or outdoor eating area, touchpoints like that. I want it to be a good place to work. The ribbon should be cut sometime at the beginning of September, and we should be operating from there from then on.”
As Andrea and her team look to get back on track with their digital transformation, Andrea hopes they hold onto the lessons they’ve learned along the way. “I would really like to see us imbed a real culture of continuous improvement throughout our network. I think we were very brave and bold through COVID, and I would like us to maintain that kind of boldness that things can be done differently. We don't need to keep doing things the same way we did them before.”