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EmpoweringCPO, a leading Procurement service company, specializes in delivering cost-saving solutions to healthcare organizations. In a recent engagement with a prominent healthcare group (hospitals, Clinics & Pharmacy) in the UAE, EmpoweringCPO executed a strategic sourcing project for the pharmaceutical drugs category, resulting in significant projected savings. However, the challenge lay in ensuring that these projected savings were realized, a critical task that required meticulous tracking and compliance monitoring. The key was to ensure the shortlisted formularies were prescribed by all the doctors and medical experts.
To optimize pharmaceutical drugs procurement, on behalf of the client EmpoweringCPO initiated a Request for Proposal (RFP) across vendors in the GCC region and low-cost countries. The RFP was centered on Pareto’s Principle, focusing on the top 20% of formularies that constituted 80% of their spending. Proposals from vendors were evaluated based on criteria such as rebates, FOC terms, discounts, and availability. The selected vendors were tiered according to different criteria, including high-margin brands, low-cost brands, innovator brands, in-house brands, and insurance-approved brands. Distinct measures were considered for out-patient and in-patient categories, aligning with the group’s objectives. For inpatient, the objective was to reduce cost and for out-patient, the objective was to increase revenue.
Over the past two years, the compliance tracking initiative has yielded remarkable results:
This success story showcases how EmpoweringCPO’s Savings Compliance Tracking services have played a pivotal role in ensuring that projected savings in pharmaceutical drug sourcing are effectively realized, making a substantial impact on the client’s financial bottom line. EmpoweringCPO continues to empower healthcare organizations with data-driven strategies for procurement excellence.
EmpoweringCPO is a team of experienced sourcing and procurement professionals with hands on experience of having worked with many fortune 500 companies. The company was founded in 2011 and since then has executed multiple strategic sourcing projects and have achieved average savings of 10-12% so far. In addition to Strategic Sourcing their other offerings are Spend Analysis, Procurement Intelligence, Procurement Analytics, Best Cost Country Sourcing, Procurement Outsourcing, Built Operate Transfer, Supplier Diversity, Sustainable Procurement, Tail Spend Management, Item Master Optimization, Collective Buying, Compliance Tracking and Managed Procurement Services.
Compliance management is very critical as otherwise the procurement organization may run into a scenario where there is a huge gap between realized savings and reported savings. Many procurement functions estimate large savings numbers when contracts are signed. They also invest significant time and effort in negotiating contracts for necessary goods and services, only to have a third or more of their purchasing dollars flow outside those deals. Some of the obvious fall-outs of non-compliance and maverick purchases are:
As compared to the current contract that was finalized after the sourcing process, the tool helps in tracking:
The objective of this tool is to ensure that the orders are placed only with the vendors that were shortlisted after the sourcing process and at the same price that was agreed upon and negotiated during and after the strategic sourcing process.