Purchaser / supplier global relations: what do buyers expect? Megan Main Chief Executive Health Purchasing Victoria 4 November 2014

What do buyers expect? The basics: “one way” expectations Honesty and fairness in dealings Fair value / price Adherence to policy, contract terms Compliance with standards GS1 compliance But there’s more! Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector

Price savings alone are NOT sufficient Easier To See Price Process Cost Sourcing Cost Evaluation/ Order Mgmt Returns Mgmt Logistics Mgmt Supplier Mgmt Recall Mgmt Compliance Mgmt Training Payment Mgmt Inspection Utilization Cost Standardization Demand Mgmt Labour Productivity Maintenance Shrinkage Damages Waste Disposal Recall Mgmt Revision Procedures Infection Rates Etc. Total Cost of Ownership We need to address drivers of cost. Harder To See 3 3

We must work together to reduce cost TOTAL COST Hospital Cost Supply Chain Cost (Hospital) Order Processing Inventory PURCHASE PRICE Transport Supplier Cost Supply Chain Cost (Supplier) Profit Sales Selling Cost Product Cost Research, Manufacturing, Packaging, etc   Benefits through automation & economies of scale

Think and act as a system Integrated supply chain processes Goods & Services SUPPLIER NETWORK P A T I E N S SUPPLY CHAIN PROCESSES CLINICAL CARE NETWORK Category Management Contract Management P2P Logistics Management Materials & Inventory Mgt Source Buy Supplier Relationship Management Customer Relationship Management Deliver 5

Buyer - Supplier collaboration Nirvana Supplier Performance Management Value “75% of sourcing savings can be lost within 18 months without SRM” - Geller & Company Survey Lost Value Contract Start Date No Supplier Relationship Management Program Time 6