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Insights from the Digital Procurement Transformation Journey of a Leading Group Purchasing Organization (GPO)
In the complex world of healthcare, procurement processes can often become mired in inefficiencies, leading to issues with contract management, decision-making, and data analysis. This in-depth case study dives into a transformative project carried out by EmpoweringCPO, a renowned data analytics firm, for a top-tier Group Purchasing Organization (GPO) in the healthcare sector. The project’s primary goal was to leverage technology and data to tackle challenges related to unstructured data, inefficient contract management, and delayed decision-making. The methodology and strategies implemented by EmpoweringCPO not only overcame these challenges but also significantly improved the GPO’s procurement processes.Â
Our client, a prominent Group Purchasing Organization operating in the healthcare sector, serves a vast, interconnected web of healthcare providers and organizations. However, the magnitude of its procurement activities, coupled with the lack of structured data analysis, began causing serious difficulties in managing contracts and decision-making. Consequently, the GPO approached EmpoweringCPO, looking for a digital transformation that could enhance efficiency and performance.Â
EmpoweringCPO, upon understanding the issues at hand, formulated a strategy with the following objectives:Â
To overcome the GPO’s challenges, EmpoweringCPO devised a comprehensive, multi-pronged approach:Â
The digital transformation of the GPO’s procurement processes resulted in significant improvements:Â
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.