EmpoweringCPO's Strategic Sourcing Project Helps Large UAE Hospital Group Save 30% on Consumables Procurement

EmpoweringCPO’s Strategic Sourcing Project Helps Large UAE Hospital Group Save 30% on Consumables Procurement

Introduction

EmpoweringCPO, a leading procurement services company, recently partnered with a large hospital and medical care organization in the UAE to address their procurement challenges and drive cost savings. The client, with multiple verticals and business units across different countries in the Gulf Cooperation Council, sought to find comparable alternatives to their current medical consumables supplier base in order to obtain better prices and achieve savings on the procurement front. EmpoweringCPO developed a comprehensive solution involving strategic sourcing and vendor optimization to address the client’s requirements.

Client Overview

The client is a prominent hospital and medical care organization operating in the UAE. With a diverse range of verticals and business units spanning different countries in the Gulf Cooperation Council, the client faces the challenge of managing procurement processes and ensuring cost-efficiency in the acquisition of medical consumables.

Client Problem

The client’s primary challenge was to identify comparable alternatives to their existing medical consumables supplier base in order to obtain better prices and reduce procurement costs. The client recognized the potential for significant savings through strategic sourcing and sought EmpoweringCPO’s expertise to optimize their procurement operations.

EmpoweringCPO Solution

EmpoweringCPO devised a comprehensive solution to address the client’s challenges and drive cost savings. The solution involved a full-fledged strategic sourcing project, including Request for Proposal (RFP) management, supplier research, response analysis, sample management, impact analysis, and negotiations between selected vendors and the client. The key steps undertaken by EmpoweringCPO are as follows:

  1. Spend Consolidation and Data Analysis: EmpoweringCPO conducted an extensive analysis of the client’s procurement data, which involved cleaning and classifying more than 2,500 Stock Keeping Units (SKUs) across 40 categories. By consolidating the spending data, EmpoweringCPO gained visibility into the client’s procurement patterns and identified potential areas for savings.
  2. Supplier Research and Engagement: EmpoweringCPO conducted thorough research and analysis of suppliers in low-cost countries to identify potential alternatives for the client’s medical consumables. They established contact with over 200 suppliers, assessing their capabilities, quality standards, pricing structures, and delivery capabilities. This step laid the foundation for a robust supplier base.
  3. RFP Management and Response Analysis: EmpoweringCPO managed the end-to-end RFP process, from creating and distributing the RFP to collecting and analyzing responses. They liaised with the suppliers, facilitated information sharing, and ensured the RFP requirements were met. Responses were collated, cleaned, and analyzed for apple-to-apple comparison, enabling EmpoweringCPO to identify the most suitable suppliers for further evaluation.
  4. Sample Management and Impact Analysis: To ensure quality assurance, EmpoweringCPO requested samples from shortlisted suppliers and conducted a comprehensive impact analysis. The samples were evaluated against predefined criteria, such as quality, reliability, and adherence to standards. This analysis provided crucial insights for the final selection of vendors.
  5. Vendor Negotiations and Selection: EmpoweringCPO facilitated negotiations between the client and selected vendors, leveraging their expertise to secure favorable pricing, service level agreements (SLAs), and mutually beneficial terms. Through diligent negotiation, EmpoweringCPO aimed to achieve the best possible outcomes for the client.

EmpoweringCPO Impact

The strategic sourcing project conducted by EmpoweringCPO resulted in significant benefits for the client:

  • Substantial Savings Opportunity: By consolidating spend, optimizing vendor selection, and negotiating favorable terms, EmpoweringCPO identified a potential savings opportunity of 30% on the overall consumables spend for the client. These savings would directly impact the client’s procurement costs and contribute to their financial performance.
  • Vendor Consolidation: Prior to the project, the client had a dispersed supplier base, with over 150 vendors across various categories. Through the strategic sourcing initiative, EmpoweringCPO streamlined the vendor base, reducing the number to less than 50, resulting in improved procurement efficiency, better supplier management, and enhanced cost control.
  • Beneficial MOUs and Price Stability: EmpoweringCPO facilitated the establishment of Memorandums of Understanding (MOUs) between the client and selected vendors. These MOUs ensured price stability and fostered a long-term collaborative relationship, further benefiting the client’s procurement operations.

Challenges

The strategic sourcing project faced several challenges, including:

  • Unorganized Client Data: The client’s procurement data was unorganized, requiring substantial effort to clean and classify the data for analysis. EmpoweringCPO overcame this challenge by implementing robust data management practices and leveraging their expertise in data analysis.
  • External Factors: The project faced slower response rates from suppliers due to external factors such as the COVID-19 pandemic affecting multiple regions. EmpoweringCPO adapted their timelines and communication strategies to accommodate these challenges, ensuring a smooth project execution.
  • Stakeholder Alignment: Aligning multiple stakeholders within the client’s organization posed a challenge, as different departments and business units had varying priorities and requirements. EmpoweringCPO navigated this complexity by engaging with key stakeholders, conducting regular meetings, and ensuring transparent communication throughout the project.

Conclusion

EmpoweringCPO’s strategic sourcing project successfully addressed the client’s procurement challenges and delivered tangible results. By conducting a meticulous RFP process, engaging with a wide range of suppliers, and negotiating favorable terms, EmpoweringCPO enabled the client to achieve substantial cost savings, consolidate their vendor base, and establish beneficial partnerships. Despite challenges related to data organization, external factors, and stakeholder alignment, EmpoweringCPO’s expertise and commitment to delivering procurement excellence ensured a successful outcome. The strategic sourcing initiative empowered the client with improved procurement practices, laying a foundation for sustained cost optimization and operational efficiency in the procurement of medical consumables.

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EmpoweringCPO's Strategic Sourcing Project Helps Large UAE Hospital Group Save 30% on Consumables Procurement

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 Tool

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:

  • Very high prices
  • Risk of losing out on volume discounts and rebates

As compared to the current contract that was finalized after the sourcing process, the tool helps in tracking:

  • Vendor Compliance
  • Price Compliance

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.

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