The industry’s first A.I.-powered procurement solution to save costs by 15% p.a. and help make the right choice of products at the right time and price.
The healthcare industry in the US is among those industries with the most challenging and enormous supply chain activities. There are tens of thousands of items that need to be replenished regularly, ranging from surgical masks to prescription drugs. This solution is developed by LARION for Customer M, the largest healthcare services company in the United States. It relies on a formulary-based procurement solution with automatic functional equivalence identification to bring significant cost savings up to 15% annually.
As the oldest and largest healthcare services company in the United States, Customer M plays an integral role in the healthcare industry and has a unique vision for its future. It serves more than 50% of American hospitals, 20% of physicians and 100% of health plans, and as the largest pharmaceutical distributor in North America, the company delivers one-third of all medications used there every day.
Healthcare institutions normally have huge demands for supplies procurement. At the heart of their supply chain system is the item master, which basically is a list of all items purchased by the institutions. These item master files can range from 18,000 to more than 100,000 items, with thousands of inaccurate or duplicate items.
Because item masters are constantly being updated, 30 percent of systems are inaccurate, according to a recent study by AHRMM (Association for Healthcare Resource & Materials Management).
In addition, the sheer size of item masters and the number of users make housekeeping difficult. Common errors may include:
Furthermore, hospital networks with disparate systems cannot keep up with the ongoing churn of item master information to maintain accuracy. Through Customer M’s market analysis including over US$9 billion in supply spending, the following challenges are discovered:
Statistics currently revealed that the administration cost of supply chain accounts for over 40% of estimated operational expenditure of enterprises. This cost ranked second in the total operational expenditure of most hospitals, only following labor cost. Therefore, there has been a great need for developing a system to manage supply chains with the aim of minimizing unnecessary costs during the process of trading medical equipment for hospitals. Old systems in the world have failed to process data with accuracy and lost around 60% of cost saving opportunities for trading supplies and equipment between hospitals/healthcare institutions and suppliers.
Customer M’s Strategic Supply Sourcing solution helps drive sustainable savings for Med-Surg supplies by enhancing item master content. Through better item master content, the solution empowers users to make the right choice at the start of the procurement process. Real-time insights help monitor compliance to savings goals.
The system is integrated with the Cloud Computing technology and functionalities designed and developed by LARION to launch an automated supply sourcing platform with the highest efficiency in the healthcare sector.
It is a complete and effective solution to the above challenges using Virtual Item Master (VIM), Artificial Intelligence (AI), and formulary procurement control.
Core technologies that are used for this application:
The solution provides unprecedented, industry’s first capabilities in all 3 major areas of supplies procurement: Find, Compare, and Control.
For the ‘Find’ function:
For the ‘Compare’ function:
For the ‘Control’ function:
“… Both organizations take responsibility for each other’s success. This did not happen overnight. It is the result of establishing a deep level of trust and respect for the commitment, integrity, and skills that each party has to offer…”