Shining a Light on a New Supply Chain

Shining a Light on a New Supply Chain

Shining a Light on a New Supply Chain in Ontario Toby OHara, HMMS Derek Robertson, TransForm Derek Robertson Vice President TransForm Toby OHara GM HMMS Derek Robertson currently serves as the Vice President, Business Development at TransForm Shared Service Organization (TransForm) a leading Shared Service Organization in South West Ontario. Toby is General Manager of healthcare supply chain provider Healthcare Materials Management Services (HMMS) in London, Ontario. Prior to joining HMMS, Toby held positions at Baxter Corporation and Source Medical (Cardinal Health). Along with being a Board Member at HSCN, Toby is also a Board member at The Logistics Institute and holds a Professional Logistician designation (p.Log). Derek is a strategic leader with strengths in market analysis, consumer engagement, vendor relationship management and government affairs. Derek has demonstrated vision and commitment to excellence in Supply Chain management.

TransForm Overview TransForm SSO is an innovative organization offering a broad range of services in the areas of: Supply Chain Services Information Technology/Information Management Project Management Servicing the Erie St. Clair Hospitals(SWO): Bluewater Health Chatham-Kent Health Alliance Htel-Dieu Grace Healthcare Erie Shores HealthCare Windsor Regional Hospital TransForm Annual KPIs COST SAVINGS - $7.0M Managed Spend - $500M # Invoices Paid 200K # Managed Contracts - 1471 Regional Data Centre Uptime - 99.999% Requisition Efficiency - 99% 4X GHX Canadian Provider of the YEAR HMMS Overview

Based in London Ontario, est. 1997 Full service Supply Chain provider for owners Buffet-style Voluntary Collaboration throughout region Transparent Cost-recovery fee for service Servicing over 20 Hospitals and other Healthcare Service Providers ~240 employees at HMMS and within London hospitals HMMS Notable Annual KPIs Purchasing: >100,000 POs worth >$480 Million Sourcing: >150 RFxs designed for collaboration. Active participant in Ministry VORs and GPO contracts Accounts Payable: >700 invoices paid daily worth $1.6 Billion Contracts: >2,500 active contracts for compliance monitoring Customs: Close to border with research = 100s of imports monthly Analysis: Data rich! Centralized supply chain data for strategic planning Inventory: >5,000 items for stockless

replenishment including Cardiac items for Point of Use at LHSC and Pandemic Systems: AllScripts (McKesson) ERP with interfaces to WMS and Cerner (HIS), other Hospital ERP systems and numerous corporate solutions Warehouse: 3 buildings processing ~1.8 million orders Distribution: Fleet of HMMS trucks driving ~300,000 Km including Renal home patient deliveries Site Logistics: >900 Par Carts replenished by HMMS staff 24/7 Project Specifications Phase 1: Stockless Cart Replenishment Complete by March 31, 2017 Conversion should be invisible to hospitals Same products Same methodology Respect all contractual commitments Harmonization must be mutual Phase 2: Harmonize pricing Align Regional Sourcing Strategy Align GPO participation Phase 3: Relentless pursuit of efficiency

Explore technological integration opportunities Optimize collaborative volumes for maximum value Why?? Distribution Market Pressure served as catalyst to conduct a business as unusual exercise Collaboration opportunities allow HMMS and TransForm to remove significant costs from the HealthCare system Economic arguments leverage mutual advantages of each SSO and therefore formalized a Collaboration and Service agreement between TransForm and HMMS How we did it Jan 1/17 Mar 29/17 Finalize customer requirements Jul 15/16 Mar 16/19 Contract harmonization meetings with suppliers June 1, 2016 Collaborative Agreement authorized by Transform and

HMMS Sep 19/16 Dec 19/16 Technology for order processing Dec 15/16 Go live item list confirmed by TransForm Jan 1/17 Mar 31/19 Price reconciliation with suppliers Jan 1/17 Collaborative Agreement with London Hospital Linen Services Apr 15/17 Mar 31/19 Continuous improvement

Apr 3/17 Windsor Region (Ouellette site) Mar 6/17 Hotel Dieu (Windsor) TransForm contract with 3rd party provider expires June 1, 2016 Jul 16 Aug 16 Jul 6/16 Jan 1/17 Notifications to industry Sep 16 Oct 16

Sep 1/16 Dec 1/16 Warehouse optimization Nov 16 Nov 1/16 Jan 1/17 Technology for financial transactions Dec 16 Dec 1/16 Feb 28/17 Inventory build for Go Live Jan 17 Jan 24/17 Chatham Kent Jan 31/17 Bluewater (Sarnia) Feb

17 Mar 17 Apr 17 Feb 28/17 Erie Shores (Leamington) Mar 20/17 Windsor Regional (Met site) May 17 Apr 15/17 May 31/18 Operation al quality reviews May 26/17 Bell Renal site (Windsor)

May 18 Mar 19 Mar 31, 2019 HMMS/TransFrom Supply Chain Services - Project Metrics Metric # of lines Net Reconciliation amount # of items requiring reconciliation # of items ordered Net amount (positive & negative) available by end of 2nd week of the month** # of unique items on Price Reconciliation file / # of unique items ordered 1 - (# of orders partially filled or killed)/# of orders placed 1-(#of pieces ordered partially filled or killed /# of pieces ordered) 1-(# of late departures/# of total departures to TF) 1- (# of return lines (or errors communicated)/# of lines ordered)

The unresolved amount on HMMS Balance Sheet/the most previous month's reconciliation amount*30 # of times GPO relationships are entered into separately. # of times HMMS commits to Hpro contract that affects TF JIT + # of times TF commits to MMC contract that affects JIT % of the items ordered by TF requiring monthly price reconciliation Order Fill Rate to TransForm Re sul ts How Quantity Fill Rate to TransForm % of deliveries leaving for TransForm on time % of Lines Picked Accurately (Quality) Timeliness of financial compensation for required price reconciliation (days)**info Results 501,138 (1,145,358)

882 1,809 Notes 28% of total HMMS ~4% of total $ volume ave/month ave/month 48.8% Majority are 'TransForm only' items where HMMS acquisition price is not aligned 97.7% Backorders/recalls Nimbleness of systems 98.1% 100% 99.9% 372 Days ~200 Inconsistent tracings process, Supplier engagement

GPOs engaged early MMC Affiliation opportunity Results TransForm has realized savings of >$750,000/yr. HMMS gaining efficiencies Region has benefited from enhanced use of GTINs throughout Logistics process Benefits for all regional partners! Southwestern Ontario continues to embrace voluntary collaboration for best value Price Reconciliation process improving >175 to 18 monthly Focus on 99% only Were not done yet! Continuing open and collaborative dialogue on additional efficiencies Lessons Learned

1. Maximum effort should be spent on harmonizing contracts Price reconciliation work is not value added work for anybody. 2. You can never communicate too much. 3. No one sourcing agency has the best price consistently. 4. Have a clean item master! Price exceptions/discrepant invoices create significant disruptions 5. Interfaces, although effective, are not as good as centralized systems 6. Tracings for Price Reconciliation are different than tracings for GPO rebate calculations which are different than tracings for market analysis. Providers arent always set up to generate accurately. 7. People are key. We are fortunate to have some of the best! 8. Voluntary collaboration in the quest for maximum efficiency is happening in Southwestern Ontario. It can be done! Questions?

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