Extend Your ERP – Lessons

from a $8B IDN

Opening Remarks

Jack Colletti
CEO, Prodigo Solutions, LLC
Prodigo Solutions is focused on driving savings in the
healthcare supply chain. Launched by healthcare
supply chain professionals, the company's suite of
solutions and services drive compliance, automation,
data quality and user adoption.
 Typical Environment

Internet

Supplier Connections

Item ~15%
~85% Master of Transactions
of Transactions

5
 Background

Bob Pavlik
Director, Non-Clinical Sourcing
 UPMC Profile

• Leading integrated health care system in Pennsylvania;

one of the largest and most diverse in the nation
• 48,000 employees; second largest employer in
Pennsylvania
• Hospital – 20 tertiary, community, and specialty hospitals
• Physician – more than 4,000 physicians with privileges at
UPMC hospitals including about 2,300 employed
• Community Provider Services – extensive network of
rehabilitation, home care and senior services
• Insurance – products covering commercial, Medicare and
Medicaid segments, EAP, Behavioral Health (1.3 million
covered lives in Health Plan)
How we stack up?
 Supply Chain Profile

•Centralized Operation Key Systems

•$1.8 billion in spend

•Process 4000+ Purchase requisitions per week
•Process 70,000+ invoices per month
•Receive 1.1 million+ packages per year through a
central distribution center
•Manage over 600 point of consumption material
carts
•Manage 30+ value analysis teams
 Non-Clinical Team Spend
Overview

Overall Team Spend Spend

Corporate Admin Services $452,622,000
Information Technology $206,000,000
Facitilities, Construction, & Dietery $362,789,000
$1,021,411,000
 Non-Clinical Sourcing Team
Transformation

• Sourcing organization that is driven by internal customer’s

business goals and objectives
– Commodity Council approach – cross functional teams, executive
sponsorship, etc..
• Utilizes a structured sourcing methodology
• Integrated organization from vendor selection through order
placement
– Stronger sense of ownership when implementing contract
• Better accuracy will reduced match exceptions and returns
– Can be more proactive with career management
• Clear path from Sourcing Specialist to Commodity Manager
– Can be more creative with regards to resource management
• Split time between sourcing and order placement, etc.
• Leverage technology to reduce transactional work
– True North = 100% lights out
– Use efficiency gains to off set workforce reductions
– Move tactical FTEs to sourcing
 18 Month Staff Impact

Sourcing Operations Total

Jan-08 8.5 13.5 22
Jul-09 9 10 19

Increase/Decrease 6% -26% -14%

 Technology Impact

Total eligilble eMarket Lines Lights out lines Current

Vendor Go-live Date Lines # % # % Run Rate
Intercontinental Subscription Service Jan 9 2009 145 145 100% 143 99% 99%
Software House May 9 2008 1,067 255 24% 0 0% 0%
Airgas Mar 7 2008 554 435 79% 0 0% 0%
Worldwide Technologies Feb 26 2008 5,385 2,438 45% 678 13% 32%
Grainger Feb 19 2008 6,537 5,621 86% 5,055 77% 77%
WorkflowOne Oct 17 2007 45,209 44,043 97% 43,624 96% 96%
Jeter Sep 13 2007 4,951 3,859 78% 660 13% 84%
BatteriesPlus Oct 9 2007 382 197 52% 127 33% 53%
Franklin Interiors Oct 10 2007 2,674 435 16% 118 4% 13%
Corporate Express May 30 2007 331,362 326,993 99% 311,076 94% 97%
398,266 384,421 97% 361,481 91%

Next opportunities:
•Dietary (Sysco & GFS)
 Workflow One

Category Recap Overview

Inventory Products 1,323 items Inventory Value = $ 975,363

Print On Demand 3,010 items Coordinate Options in UPMC Print Shop

OMS Program 47 Suppliers 2008 Annual Activity Value = $ 2,723,378

Stationery Program 8,167 Orders 2008 Annual Activity Value = $ 629,495

Promotional Products 428 Orders 2008 Annual Activity Value = $ 498,617

ePro Orders 81% Usage 2008 Annual Requisitions = 13,360

Requisitions via ePro accounted for 81% of activity (96%

lights out)
Reduced work load from 2 FTEs to .5 FTEs
Match Exception Improvement
 Staples / Corporate Express

Month Oct 2008 Nov 2008 Dec 2008 Oct 2009 Nov 2009 Dec 2009
Metrics
Total Purchases $1,155,305.61 $938,648.63 $997,605.77 $833,603.39 $801,576.67 $824,456.72
Total Returns & Credits $48,627.01 $109,941.01 $47,976.72 $17,405.62 $17,248.61 $16,418.60
Total Net Purchases $1,106,678.60 $828,707.62 $949,629.05 $816,197.76 $784,328.05 $808,038.13
Avg Order Size $154.71 $155.76 $160.61 $156.65 $149.45 $149.46
Avg Lines Per Order 3.53 3.58 3.51 3.44 3.42 3.45
% CEB of Net Purch. 38.59% 38.44% 37.09% 18.47% 19.57% 18.82%
% Electronic of Net Purch. 89.34% 91.63% 93.35% 97.41% 97.45% 97.05%
% MWBE of Net Purch. 14.34% 14.17% 14.41% 18.67% 21.33% 20.00%
% CEXP Catalog Fill 93.01% 92.87% 93.80% 86.22% 86.93% 85.78%
% Total Returns/Credits 4.21% 11.71% 4.81% 2.09% 2.15% 1.99%
# of Orders Placed 7,428 5,563 6,153 5,292 5,343 5,491
# of Order Lines 26,220 19,941 21,583 18,191 18,277 18,965

 Requisitions via ePro accounted for 97% of activity (97% lights out).
Reduced work load from 1 FTEs to .25 FTEs
Match Exception Improvement
Better catalog control
Increased MWDBE business (improved business compliance and improved reporting)

15
Executing the Strategy

Jeff Andersen
Manager, Consulting Services
 Supply Chain Profile

Enterprise-wide Stakeholders
• Sourcing – implement contracted savings & improve data quality
• Accounts Payable – minimize Matching Exceptions
• Purchasing – focus on value-added transactions only

• Materials Management – reduce product returns

• CFO’s – ensure spend compliance

• CEO’s – maximize user efficiency/redistribute resources
• Business Unit Leadership – improve ease-of-use
• Department Users – “we want content too!…”
 Supply Chain Profile

Ingredients For Success

•Platform
•Supplier Ramp
•User Experience
•Leverage PeopleSoft ERP Investment
•Low TCO
 A Look Back… 2 Yrs. Ago

Internet

Supplier Connections

Ad-hoc

Special Item ~15%

Master of Transactions
Requests
~85%
of Transactions

19
 Content is King!

UPMC Implemented in mid 2007…

2008/2009 = tremendous supplier ramp

21
 On the Horizon

eMarketplace isn’t solely for external suppliers!

Catering Print Shop

Coming soon:
Medical Media Services
Telecom
 Resources

Maintenance & Growth was/is inexpensive

• Catalog Manager = 1 FTE

• IT Resources (post-integration) = None
• EDI Integration Manager = 0.5 FTE
 Results

Data User
Compliance Automation
Management Experience
Drive more spend Reduce special Streamline item Realize extensive
under management requests and enable master process savings and
with improved touchless (no buyer) management, and increased user
contract compliance purchasing, and improve UNSPSC adoption.
and rapid improve overall quality.
enablement of key connectivity with
suppliers and your supplier base.
punchout suppliers.

Background
UPMC had grown from $2b in revenues to
over $7b in 10 years. Despite having a major
ERP system in place, contract compliance
was below 20%, special requests and maverick
spending was rampant, and the growing user
base and supplier base was compounding the
issue.
Decision Points
In early 2007, UPMC made the decision
(after a thorough technology review) to
implement eMarketplace technology as an
enhancement to the existing PeopleSoft
eProcurement module.
Success Story
Solution
UPMC implemented the eMarketplace solution as a
single connection from PeopleSoft ERP. The supply
chain group then began a systematic onboarding of
punchout suppliers and hosted supplier catalogs.
Further, UPMC integrated the Item Master file
(60k+items; 850 suppliers) into the eMarketplace.
Results
24 months post implementation:
•UPMC is fully deployed at 20 locations (including Corporate)
•Transaction level: 340,000 (past 12 months)
•Compliance: 50% increase in contract compliance
•Automation: 15% increase ; currently 40% of total purchase
transactions are “touchless” (estimate $30 savings per
transaction).
•Process: 33% reduction in time spent on placing orders.
Also, UPMC experienced a 40% reduction in time spent on
item master management.
25
 Metrics Tell the Story: Leveraging Best Practice
in Pursuit of “World Class”
Increase “Lights
Out” (automated
transactions) to
remove tactical
FTE’s Every 5%
Increase Represents
a FTE

Increase
eMarkeplace
transactions from
15% to 68% 
Contract
Compliance Benefit
& FTE Impact
 Results
Results of Deployment
• Eliminated Paper Disbursement Requests
• Eliminated Paper Requisitions
• Eliminated 60% of faxed/phoned PO’s to supply base and working toward 100%
Hard Impact
• eVoucher eliminated 4 FTE’s in the AP Entry Group
• eProcurement/eMarketplace eliminated 6 FTE’s that comprised the SCM Pre-Key Group
• Allowed for the reduction or limited the need to hire 15.31 FTE’s and counting as
eMarketplace and “Lights Out” programs expand………
Soft Impact
• Efficiencies gained with supply base
• Efficiency & effectiveness of remaining Procurement Operations staff
• Increased control through automation & interfaces: PO spend rogue (limit use of P-
Card, Flat File Invoice & Blanket PO) spend
 What’s Next?

UPMC is removing all paper based invoices.

“According to a recent survey, the healthcare industry is at least

15 percent behind other industries when it comes to
automation.” – Healthcare Finance News
“Hospitals are about five years behind non-healthcare industries in
terms of adoption of paperless invoice processing. Of the survey
respondents, more than 70 percent of the hospitals received in excess of
80 percent of their invoices in paper format. As a result, they said
resolving matching errors and exceptions were their most challenging
tasks.” – PayStream Advisors, a Charlotte-based research and consulting
firm
 The Future: Accelerate Benefit Capture
 Continue aggressive push to access supplier hosted (and local)
content through single eMarketplace punchout
 Incorporate services & internal purchases (telecom, print
services) into eMarketplace
 Add more direct connects through eMarketplace for
“configurables” (furniture, clinical equipment, catering)
 Leverage content and supplier enablement to drive back-end
Procure-to-Pay automation (ERS, Assumed Receipt, ASN
Receipt etc.) Lights Out  Perfect Order
 Segment Supply Base and funnel toward appropriate automated
flowpath – using the PeopleSoft SRM suite as the foundation
Q&A Session
 Contact Information

Janette “J.P.” Perretta

Director, Sales & Marketing
703.574.4479 (office)
412.445.8096 (cell)
JP@prodigosolutions.com
www.prodigosolutions.com