5 Year Strategic Plan for Purchasing

PURCHASING & LOGISTICS

5 YEAR STRATEGIC PLAN

Reviewed: 3 August 2006

DOCUMENT HISTORY AND CHANGE CONTROL

Version Number

Section Reason Author Date

Draft All Draft document for comment Bill Stewart October 2002Final 1 All Incorporate feedback from

discussion of draft documentBill Stewart October 2002

Final 2 All Updated following review and input from SCMAG

Bill Stewart November 2003

Final 3 All Updated following review and input from SCMAG & PALPAS

Bill Stewart February 2005

Draft 4 All Updated to reflect new QH structure

Bill Stewart February 2006

Draft 5 All General review and changes to reflect PALBIT involvement and revised structure

Peter Laing March 2006

Draft 6 All Changes to map initiatives to Strategy Map

Holly Clarke March 2006

Draft 7 All Changes to P&L strategy map and revised organisational structures, new workforce initiatives

Holly Clarke May 2006

Draft 8 5, 6, 8 Incorporate feedback on new QH strategic directions and revise in consideration of QHSS strategic objectives

Holly Clarke June 2006

Draft 9 5, 6, 7, 8 Strengthen reference to SCMIS principles and rationalise strategic initiatives

Holly Clarke 3 August 2006

DOCUMENT APPROVAL SEQUENCE

Status Approval Progress

Name Signature Date

Draft Principal Project Officer

Sign Off Senior Director, HSPL

Bill Stewart

Final Sign Off

Executive Director, Corporate Services

Michael Kalimnios

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1. SUMMARY

This strategic plan is the building block that blueprints purchasing and logistics direction for the next five years. The plan identifies key initiatives and strategies to advance supply chain1 value for money2 to support health service delivery and achieve recognised excellence in health supply chain management.

It is based on the Purchasing & Logistics strategy map (see over) which aligns with the Queensland Health’s strategic intention.

It is updated annually to ensure it is consistent with developments in the business and reflects the changing directions of the organisation. All new strategies are subject to appropriate business case development and approval.

Priorities will be recommended by the Purchasing and Logistics Policy and Strategy (PALPAS) committee and approved by the Business Services Board or its nominated subsidiary.

2. THE PURCHASING AND LOGISTICS NETWORK

The Purchasing and Logistics Network (PALN) is a critical concept embodied in this plan. While it is not a fixed organisational element, this network is the partnership of Health Services Purchasing and Logistics (HSPL) and Queensland Health Shared Services (QHSS) working together to achieve the role and vision for purchasing and logistics.

2.1.ROLE OF QUEENSLAND HEALTH SHARED SERVICES (QHSS)

The role of QHSS is:

to provide supply services in accordance with established and agreed client service standards and performance levels;

to comply with Queensland Health’s Strategic Framework; and to implement Queensland Health’s Corporate Purchasing Plan, in line with

Agency Purchasing Procedures.

1 Supply Chain Management encompasses the planning and management of all activities involved in procurement and logistics management. Importantly, it also includes coordination and collaboration with suppliers, third party service providers and customers.2 Value for money concept includes price integrated with consideration of:

contribution to the advancement of Government priorities; non-cost factors such as fitness for purpose, quality, service and support; and broader cost related factors including whole-of-life costs and transaction costs associated with acquisition,

use, holding, maintenance and disposal.


http://qheps.health.qld.gov.au/pl/policies/agency/index.htm

http://qheps.health.qld.gov.au/pl/policies/corporate/index.htm#corporate%20plan

http://qheps.health.qld.gov.au/Qld_Health_Strategic_Framework.htm

2.2.PURCHASING AND LOGISTICS BUSINESS IMPROVEMENT UNIT (PLBIU)

The Purchasing and Logistics Business Improvement Unit has been established within HSPL to assist in the achievement of this 5 Year Strategic Plan. The specific objectives of PALBIU are:

Coordinate the continuous review and improvement of purchasing and logistics business processes across Queensland Health;

Engage in continuous learning and research into leading edge supply chain processes and technologies, and the legal and government framework in which they operate;

Maintain the Queensland Health Agency Purchasing Procedures (APP) in accordance with the Queensland Government State Purchasing Policy (SPP) and Queensland Health policies and procedures;

Ensure the effective delivery of training and development opportunities for Queensland Health staff involved in the hospital supply chain;

Coordinate the development of available systems, technologies and data to maximise the efficiency of purchasing and logistics business processes;

Coordinate the ongoing performance measurement and benchmarking of Queensland Health’s purchasing and logistics business processes; and

Coordinate improved communication, consultation and liaison, amongst the Purchasing & Logistics Network within Queensland Health, and externally with suppliers and supply chain management professionals from the public and private sectors.

3. GOVERNANCE

Management of the plan and the associated strategies review will be undertaken through the Purchasing and Logistics Policy and Strategy (PALPAS) Committee chaired by the Senior Director, Health Services Purchasing & Logistics who will report progress to the Executive Director, Corporate Services.

4. REVIEW

This plan will be reviewed annually during the planning process for Purchasing & Logistics, as part of the ongoing development and planning that takes into account key considerations such as long term budget and funding allocations and Queensland Health’s business framework, policies and procedures.

The annual review will be conducted in consultation with key representatives and stakeholders from the following areas:

PALPAS Committee, including:o Health Services Purchasing and Logistics Branch;o Queensland Health Shared Services, including Procurement Functional

Managers;o Health and Community Care Program;o Statewide Health and Community Services;o Pharmaceutical Advisory Services;o Area Health Services, including Directors of Corporate Services; and


o Queensland Purchasing. CorpTech

Queensland Health Pathology & Scientific Services Chief Information Officer Division

This plan and details from the annual review will be published on the Queensland Health Electronic Publishing Service (QHEPS).

5. STRATEGY MAP – QH PURCHASING AND LOGISTICS NETWORK

The strategy map provides a visual representation of our strategic objectives and how they align with Queensland Health’s eight strategic directions (draft):

Promoting a problem solving approach to reform of Qld Health; Building the next generation of health workers, ideas and health services; Working together; Responding justly and fairly to need; Working with communities to improve health; Creating a patient focused health system; Making Queensland Health a good place to work; and Better manage performance of people, systems, assets and information.

The objectives are spread across the four balanced scorecard perspectives, as customised by Queensland Health:

Consumer Paying for health Internal processes Shaping our workforce.

The Queensland Health Purchasing and Logistics Network Strategy Map appears on the following page.


DEFINITIONS OF STRATEGIC OBJECTIVES

Consumer Perspective

C1. Supply the right product/service to the client (Right product)

Our clients want us to supply the products/services that meet their specifications.

C2. Supply the client’s requirements in a timely manner (Right time)

Our clients want access to requested products/services at the stated or implied time they are required. Delivery of products/services either too early or too late may result in adverse clinical outcomes, not to mention client inconvenience and increased process costs.

C3. Supply the client’s requirements at the location of service delivery ( Right place)


Our clients expect that the products they need to support the provision of services will be right there at the ward, theatre, ex-hospital or administrative setting at the time they are needed. Clients wish to minimise the time they spend in performing supply activities.

C4. Maximise the client’s value for money

Our clients expect us to help them deliver required services within their allocated budgets, by minimising the unit price and cost of supply, without compromising product/service quality or continuity of supply. They expect true value for money, which may not necessarily be the lowest-priced product.

C5. Supply products/services that meet the client’s business need

Our clients expect us to value-add to their business by assisting them to source products/services that meet their business needs. We must maintain a good understanding of the nature of their business, including changes driven by innovations in health service delivery and corporate and support services. Products/services supplied should support clinical, corporate and support services quality improvement initiatives.

Paying for Health Perspective

P1. Achieve a balanced budget

We must deliver and manage our services within our allocated budgets.

P2. Maximise the return on total project cost and recurrent expenditure

We must use our allocated funding in the most effective way, in the delivery of those initiatives that realise maximum benefits for our clients. We must ensure that the benefits promised in return for project funding are realised.

P3. Develop flexible pricing arrangements for supply services

Under the Shared Service Initiative, we will develop and implement a new approach to costing and pricing that will see supply services delivered on a fee-for-service basis.

Internal Processes Perspective

IP1. Improve supplier management

We must promote a process of two-way communication with suppliers in order to continuously improve products, services and processes to derive maximum advantage (lowest unit price and transaction cost, highest product quality and service levels) for Queensland Health.

IP 2. Advance sector-wide supply chain management improvement with Qld Govt stakeholders


We must ensure that we take an active role in planning and implementing supply chain management improvement initiatives, commensurate with Qld Health’s position as the largest purchaser in the Qld Govt. We should act as catalysts for change, particularly in areas where Qld Health has demonstrated comparative strength and/or good practice. Areas of potential improvement across the Qld public sector include supply chain management practices, processes and systems.

IP3. Develop and maintain relationships with supply professionals in other jurisdictions and private sector

We recognise that by developing relationships with supply professionals in both the public and private sectors, we will keep abreast of supply chain management trends and identify opportunities for learning from others. Such relationships may also facilitate opportunities for joint projects of mutual benefit.

IP4. Promote partnerships between staff involved in the QH supply chain

Staff involved in the QH supply chain include clinicians, corporate and support services staff and Supply Services staff. By promoting increased communication and consultation between QH staff, we will help staff to:

Understand each other’s business needs and resource limitations; Identify and implement opportunities for improvement; Advocate and standardise good practices; and Develop support networks to cope with a changing organisational environment.

IP5. Align purchasing and logistics activities with Qld Govt key priorities and community outcomes

We need to ensure that Queensland Health’s purchasing and logistics activities support the Qld Govt’s key priorities of:

Growing a diverse economy and creating jobs; Realising the Smart State through education, skills and innovation; Managing urban growth and building Queensland’s regions; Improving health care and strengthening services to the community; Protecting our children and enhancing community safety; and Protecting the environment for a sustainable future.

Progress against these priorities will contribute towards the key Queensland community outcomes of:

Building Queensland’s economy; Strengthening Queensland’s communities; and Protecting Queensland’s environment.

IP6. Align purchasing and logistics activities with relevant Commonwealth Govt priority outcomes

We need to ensure that Queensland Health’s purchasing and logistics activities support relevant Commonwealth Govt priority outcomes such as those being led by the National E-Health Transition Authority and the National Health Supply Chain Reform Taskforce.

IP7. Efficient and effective processes for purchasing strategic commodities


We seek to improve the efficiency and effectiveness of purchasing processes to drive lower process costs, lower prices, high client service levels, and high quality and safe health outcomes. We recognise that focusing our efforts on our strategic commodities will derive the most benefits for QH.

IP8. Efficient and effective processes for supply chain management across QH

We seek to improve overall supply chain effectiveness through a streamlined network of distribution centres, strategies to lower freight costs and standardise freight processes (both inbound to QH warehouses and outbound to QH facilities), and the consolidation of purchasing processes.

IP9. Improve information management and performance measurement of supply chain processes

To determine our success in achieving our outcomes and to drive improvements, we need efficient and continuous processes for managing information and measuring performance.

IP10. Reduce the environmental impact of QH purchasing processes

We acknowledge our responsibility as an organisation to minimise our impact on the environment. To this end, we will work together within Queensland Health and with our suppliers to implement environmentally-friendly policy and processes, and source environmentally-friendly products.

Shaping our Workforce Perspective

WF1. Develop an appropriately skilled and qualified workforce

We will work with our staff to develop appropriate skills and expertise, and improve access to professional development opportunities, to meet client, individual, service and organisational needs.

WF2. Provide a supportive work environment that recognises and rewards achievements

We want to enable our staff to perform at their best by using employment frameworks that allow innovation in supply chain management, and encouraging and rewarding process innovation and achievement of our goals.

WF3. Implement effective and supportive change management strategies

We will openly and honestly communicate and consult with our staff to develop and implement changes to supply chain service delivery and provide them with skills to manage the change process.

WF4. Develop a values-based organisation, focusing on highest service and ethical standards


We will encourage staff commitment to the organisational values of professionalism, performance accountability, teamwork, and quality and recognition. We will focus on delivering the best possible service to our clients to support the delivery of health services. We will be honest and impartial in the conduct of official business, use public funds responsibly to achieve best value for money, and ensure that the interest of patients remain paramount at all times.


6. STRATEGIC INITIATIVES

No. Initiative Details Responsibility Timeframe1. woG Standard

Offering (new FAMMIS)

Facilitate the implementation of the woG Standard Offering (new FAMMIS) and development of other tools/functionality to enable:

o Workflow;o Evaluated Receipt Settlement;o Wireless technology;o Web-based front end for user requisitioning;o Electronic document exchange;o Hosted catalogues;o Forecasting;o Barcoding;o Reporting;o Sales and Distribution.

HSPLQH Finance Solution

Implementation Project

CorpTech

2006-2008

2. Business Process Review

o Review of current business processes;o Standardisation of processes across QHSS, including the use of the Qld Govt

Corporate Purchasing Card;o Establish a continuous improvement program that researches, trials and

implements innovative business processes.

PALNPALN

PALN

20062006-2007

2006-Ongoing

3. Supply Chain Management Integration Strategy

Key elements:o Rationalisation of warehousing through the establishment of 3 Logistics

Support Centres (Distribution Centres) in SEQ, Townsville and Cairns;o Improved inbound and outbound freight processes, including reduction in

costs, through the Freight Management Initiative;o Centralisation of purchasing operations.

SCMIS Project Team 2006-2008

4. Product Standardisation

o Extend current processes and product advisory committee networks across Districts and Area Health Services to review product usage and to encourage, endorse and adopt standardised products.

o Establish a product evaluation database and provide general access to clinicians / product advisory committees.

Area Health Services and PALN

Functional Procurement Manager - Area 2 Catalogue & Contract Project

2006-Ongoing

2006-2007

5. Contract Management Improvement Project

Extend contract management processes to:o Provide greater focus on performance assessmento Extend the use of existing contracts/SOAs, including the use of contracted

and catalogued materials

HSPLFunctional Procurement ManagersHSPL

2006–2007


No. Initiative Details Responsibility Timeframeo Expand the number of contracts/SOAso Increase the reliability and availability of usage data to maximise the return

on investment through rebate schemes based on contract utilisation

HSPL

6. Policy Reform Review the Agency Purchasing Procedures to:o achieve an improved balance of flexible and responsive purchasing while

maintaining appropriate corporate governance and risk managemento better reflect the intent of the State Purchasing Policy, especially regarding

purchase planning and sourcingo incorporate and drive the strategic purchasing and logistics initiativeso revise purchasing and contract signing delegations to drive the policy

reform, encourage a consistent adoption of practice and integrate with shared services

o strengthen purchasing and supply performance managementEstablish processes for ongoing review and monitoring of the Corporate Purchasing Plan to:

o ensure it is aligned to revised policyo ensure information-based analysis is a major determinant of corporate

purchasing strategies

HSPL 2006-Ongoing

7. Data Cleansing Project

Review and cleanse purchasing and logistics master data, including materials and vendor related data, to support woG Standard Offering implementation and ongoing quality processes and reporting.

HSPL & CorpTech 2006-2007

8. Performance Measurement and Reporting Project

o Develop, implement and refine a balanced scorecard approach to management of purchasing and logistics services and strategies;

o Initiate external and extend internal benchmarking of purchasing and logistics processes;

o Develop specific improvement plans and performance targets using benchmarks;

o Develop a framework and system to regularly report and review performance against targets;

o Continue development of MM-DSS to underpin analysis for contract management, corporate catalogue, benchmarking and performance measurement.

PALN

PALN

PALN

PALN

HSPL & CorpTech

2006-2007

2006-2007

2007-2008

2006-2007

2006-2007

9. PALN Communications Strategy

Develop and implement a comprehensive communications strategy to achieve:o understanding of client needs;o awareness of purchasing and logistics strategy, services and initiatives;

ando support for purchasing and logistics initiatives;

PALN 2006-Ongoing


No. Initiative Details Responsibility Timeframeacross the broad range of staff and clients including;

o purchasing and logistics clients;o Shared Services staff;o product advisory committees and clinical networks; ando Area Health Service and Health Service District management.

10. Supplier Collaboration Strategy

o Establish partnerships with key suppliers to identify and implement improved processes, incorporating (but not limited to) the following reforms and initiatives:o Volume discounts/rebates;o Electronic invoicing;o Evaluated receipt settlement;o E-procurement;o Synchronisation of catalogue and transactional data to support operational

efficiencies, collaborative planning, forecasting and replenishment.o Develop and implement strategies to encourage and support SMEs and to

emphasise local industry development.

HSPL and CorpTech

HSPL (with Qld Purchasing)

2006-2009

2006-Ongoing

11. NEHTA Reform Process

Contribute to the development and then adoption of National Health supply chain reform strategies.

HSPL 2006-2008

12. Staff Development and Training Plan

Develop and implement a Staff Development and Training Plan for staff involved in the Qld Health supply chain, including:

o Core Skills Register;o Skills Sharing Processes;o Succession Planning;o Staff Exchange Programs;o “Excellence in Purchasing” Awards Framework;o “Ethics in Purchasing” Training Package;o Appropriate Training Delivery Methods, including the use of CBT and virtual

classroom technologies;o Change Management frameworks – research, analysis and promotion.

PALN 2006-Ongoing

13. Energy Performance Contracting

o Develop, implement and manage energy performance contracts for a reduction in energy and water use and costs at Qld Health facilities.

o Introduction of Energy Conservation Measures for energy and water use, and carbon dioxide emissions.

HSPL 2006-2009


7. STRATEGIC INITIATIVES MAPPED TO STRATEGY MAP OBJECTIVES

Perspective Objectives Strategic Initiatives

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Consumer Supply the right product/service to the clientSupply the client’s requirements in a timely mannerSupply the client’s requirements at the location of health service deliveryMaximise the client’s value for moneySupply the products/services that meet the client’s business need

Paying for health

Achieve a balanced budgetMaximise the return on total project cost and recurrent expenditureDevelop flexible pricing arrangements for supply services

Internal processes

Improve supplier managementAdvance sector-wide SCM improvement with Qld Govt stakeholdersDevelop and maintain relationships with supply professionals in other jurisdictions and private sectorPromote partnerships between staff involved in the QH supply chainAlign purchasing and logistics activities with Qld Govt key priorities and community outcomesAlign purchasing and logistics activities with relevant Commonwealth Govt priority outcomesEfficient and effective processes for purchasing strategic commoditiesEfficient and effective processes for supply chain management across QHImprove info mgt and performance measurement of supply chain processesReduce the environmental impact of QH purchasing processes

Shaping our workforce

Develop an appropriately skilled and qualified workforce


Perspective Objectives Strategic Initiatives

WoG

Sta

ndar

d O

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Bus

ines

s P

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ss

Rev

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Sup

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Pro

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Provide a supportive work environment that recognises and rewards achievementsImplement effective and supportive change management strategiesDevelop a values-based organisation, focusing on highest service and ethical standards


Documents

5 Year Strategic Plan for Purchasing