James "Jim" Booker
Senior Manager, Master Data Management, Supply Chain, Stanford Medicine
Stanford Medicine integrates research, medical education and health care at its three institutions – Stanford School of Medicine, Stanford Health Care, and Stanford Children’s Health. Through innovative discovery and the translation of new knowledge, they strive to improve human health locally and globally. Stanford Medicine continues to seek new ways to serve its community by providing outstanding and compassionate care while inspiring and preparing the future leaders of science and medicine.
Supply Chain endeavors to be a leading-edge Supply Chain organization, delivering premium value to healing hands with the right item or service, at the right time, and at the right place, transforming tomorrow’s Health Care Supply Chain.
As one of the nation’s top academic medical centers, Stanford Medicine (SM) balances providing outstanding patient care with running a highly efficient business. In 2017, SM worked with GHX to conduct a formal assessment of its supply chain and discovered its data foundation was not strong enough to drive informed decisions about its Procure-to-Pay (P2P) operations. This creates a myriad inefficiencies and risks including credit holds which can limiting access to supplies used to treat patients and causing unnecessary late fees for SM.
Like many healthcare organizations, SM’s invoicing and payment process was highly manual, leaving critical product and payment information trapped in silos. Automating processes to align payment, remittance and reconciliation information required cleansing and integrating multiple sources of data (including Vizient, GHX, ERP/MMIS, EPIC, ARCHELIOS) and working with two ERPs across the organization. SM needed greater visibility into cash flow to create faster and more predictable payment schedules and maximize discounts by reducing the days sales outstanding (DSO) on orders. Meanwhile, SM was acquiring organizations, further adding to information silos.
SM set out to eliminate delays and inefficiencies in order processing, meet payment terms, deliver financial reporting in the P2P cycle and ensure people and processes were in sync. Midway the pandemic hit, accelerating the urgency for data quality and governance.
Build a stronger, more reliable data foundation to make data actionable. This required:
Accurate, consistent data to evolve from decentralized sourcing and procurement to centralized sourcing, master data management (MDM), vendor onboarding, relationship management and controlled, efficient payment systems
Automating P2P operations to support the 690 daily POs in vs. an increase to 910 in 2022 across 6 facilities
Standard processes and staff training on MDM
The solution was built on:
People: Formed a P2P and business intelligence team to build reporting dashboards; established cross-functional data governance committee to ensure vendor and item data quality; aligned cross-functional teams for collaboration and operational efficiencies.
Processes: Prioritized data governance and built standard processes
Technology: MDM and Lawson/PeopleSoft integrations provide greater visibility and less time manually fixing errors.
Stronger data governance was a force multiplier during the pandemic: from improving inventory data accuracy to aiding supply reliability efforts. System-wide improvements also include:
- Improved supplier-vendor relationships from improved payment processes
- Created standard reports for single source of truth, bridging Sourcing and AP
- Identified gaps that led to open receipts and identified automation opportunities
- Improved master data integrity across vendors, payments and products
- Standardized the vendor onboarding process and AP/Purchasing workflow
- Tied payment terms to vendor relationship strategy
- Accelerated vendor returns processing and credit tracking
- Created invoice templates to streamline matching process and extend net payment terms
Results were measured by:
- Operational efficiency
- Average dollars spent per bed in the hospital system
- % of PO lines with a Unit of Measure exception
- % of PO lines with a Price Exception
- % of PO lines with a Part Number Exception
Accuracy quality of purchase orders (POs):
- % POs sent using the most efficient method (EDI)
- % POs requiring manual correction
- Total dollar spend with contracted vendors of total spend (compliance)
- Total number of missing receipts for invoices submitted against POs not been received
- Total invoices paid within terms
- Number of invoices processed using EDI
- Number of invoices processing via automated method
Operational efficiency: Stanford moved from #13 in 2017 to #4 in 2021 on GHX’s annual list of the Best 50 supply chains, which recognizes the highest performing healthcare providers in North America. Ranking is based on low exception rates across price, SKU and unit of measure.
- POs sent using EDI and Invoice Automation increased: from 83% to 89% and from 58%-95% respectively
- POs requiring manual correction decreased from 28% to 8%
- Total dollar spend with contracted vendors improved 85%
- Decreased number of missing receipts submitted against POs that haven’t been received dramatically
- Data accuracy: from 54% to 95.7%
- AP Exception Aging reduced to <30 days = 80% KPI
- Item master/vendor master accuracy went from 40% to more than 90%
- Invoices paid within terms: 54% improvement
- Number of invoices processing via automated method: from 58% to 96.4%
- Compliance rate improved 321% in one year
- GHX ePay, Order Trust, Exchange, contracting solution
- Infor Lawson IPA (process automation) and robotic process automation (RPA) and Infor Birst business intelligence dashboards
- MDM ServiceNow
- Alteryx and Tableau to develop system agnostic reports with drill-down capabilities
SM built a proven blueprint for healthcare providers to use data for strategic decision making to support patients and the healthcare ecosystem. It includes:
- Item file data hygiene that resulted in a 50% improvement in managing product spend data.
- Promoting industry data standards (UNSPC, UDI, GTIN) to ensure data consistency, resulting in recognition by GHX for its adoption of UDI.
- Enterprise-wide savings
- Ability to quickly pivot during a crisis
- Ability to monetize cash flow, heading off potential shortages before they impact patient care
- Ability to easily integrate additional data sources
Before COVID, data accuracy was important but not urgent. It became an imperative overnight, requiring SM to make real-time supply chain decisions using accurate data. By prioritizing data governance, aligning teams and quickly scaling efforts, SM saw significant and long-lasting improvements.
The project was nearly complete when the pandemic hit, forcing SM to reset priorities. Given the need for accurate, real-time inventory data, governance became critical to supply reliability efforts. Data accuracy has bolstered SM’s inventory management and improved supply chain agility, putting SM in a better position to handle future supply chain disruptions. SM’s Supply Chain team can also use data to resolve conflicts and provide visibility and insight to stakeholders across the organization to drive better decisions.
Implant orders are difficult to manage. They come in many shapes and sizes, are referred to by several terms, and are often brought to the hospital on the day of a procedure by the manufacturer’s sales rep, therefore the process for ordering them isn’t always in the system. Managing implants is a time-consuming, error-prone 15 step process. SM has simplified implant orders because it now has confidence its data is accurate and current, resulting in a more resilient supply chain.
About Stanford Medicine
Stanford Medicine integrates research, medical education and health care at Stanford School of Medicine, Stanford Health Care and Stanford Children’s Health. Through innovative discovery and the translation of new knowledge, Stanford Medicine strives to improve human health through outstanding and compassionate care and preparing future scientific and medical leaders.