THE OMG STORY
Identifying Key Areas of Improvement
As a growing surgery center with multiple operating rooms and specialties, OMG’s busy supply chain team needed an effective procurement and inventory management system. With a new Chief Operating Officer on board, the next step was to add Richard Williams, operations administrator, to the team to help find new ways to manage supply costs and drive efficiencies.
“Our first challenge was to identify what was driving our spend to be so high and our margins so low,” said Williams. “We needed to work strategically on sourcing, clean up our procurement processes, and find cost savings opportunities, even for physician preference items.”
Key Envi Capabilities
One of the key Envi features working well for the materials management team is the flexibility in purchasing. “The EDI capabilities are essential for us,” said Mimi Vega, Materials Manager.
“We explored the idea of using our clinical system for purchase orders, but the system lacked EDI capability, which would have made building and sending POs very complicated. With Envi, I can just email a PO directly to our rep or use EDI to send it electronically.”
The team has built an accurate formulary by ensuring that all items used for procedures are properly cataloged in their item master, supporting effective case costing and inventory management. When they identify items not already in the system while creating purchase orders, they can immediately add them.
“When I use punch-out to add items to a PO, Envi alerts me if something doesn’t have an inventory number assigned,” said Vega. “That’s a red flag that it needs to be added to the system. I can add items directly from the PO itself, which streamlines our process.”
Integration Creates Ongoing Efficiencies
The integration between HST and Envi has been crucial for OMG’s operations, and the team is gaining significant time savings and improvements in their procurement process.
“We have a three-step process of making sure our receipts and invoices match our item master before a PO is sent out or an invoice is paid,” said Williams. “When we add any items, we make sure we’re adding the contract pricing to validate against the contract. If a PO is being created and the price in the system doesn’t match the price on the sales order, that’s an automatic red flag for us to connect with the vendor.”
This attention to pricing accuracy has paid off and led to expansion of their cost savings and contract pricing efforts. “We recently discovered the Envi Spend Optimizer through our GPO representative,” shared Williams. “
As the program came online, we partnered with our Provista representative and identified over $100,000 in savings, specifically in orthopaedic, surgical and medical products that we purchase on a regular basis. Our rep used our Envi spend data to help us get alignment with our main suppliers to address areas of spend where we weren’t connected to the GPO contracts correctly. With this program established, we’ll receive ongoing reports highlighting additional cost savings opportunities.”
Data-Driven Decision Making
While the OMG team is already seeing benefits, they have ambitious plans to further leverage Envi’s capabilities. Their highest priority is cleaning up data to fully utilize the bi-directional interface between Envi and their HST clinical systems.
“Our number one priority right now is getting financial analysis in place. When our HST data is cleansed, we’ll be able to analyze usage through our clinical system to get ongoing analysis of cost per case,” Williams explained.
“From there, we can do true financial analysis on each procedure and identify where we need to make changes, whether with specialty vendors or standardization of our main supplies.”
The team is also working on establishing par levels and implementing barcode scanning. “We’ve identified about 2,000 SKUs in our system that we haven’t ordered in the past year,” said Williams. “We’re evaluating which items to keep and which to remove. Once that’s established, we’ll set-up our supplies with labels and par levels based on our first quarter spend data.”
Envi Best Practice Highlights
- Building a comprehensive and accurate item master
for effective system operation - Using EDI to reduce errors and increase time
efficiencies - Leveraging Envi Spend Optimizer reports to identify
substantial cost savings opportunities - Maintaining accurate contract pricing in the system to
immediately flag discrepancies
Recommendations
“Make sure you take your time and set it up correctly,”
advises Williams. “We’ve done a lot of inventory
maintenance this past year, and it’s been an intensive
process. Taking the time to build an accurate system from
the beginning is crucial.”
The team recommends working closely with vendors and
GPOs to ensure contract pricing is accurate within the
system and collaborating with clinical teams to understand
supply usage patterns. This approach helps optimize
inventory levels and identify cost-saving opportunities.