guzman

Information about guzman

Published on April 18, 2008

Author: Altoro

Source: authorstream.com

Content

Slide1:  Delivering the Difference Owens & Minor Turning Lead Into Gold: Achieving IT Excellence while Outsourcing David R. Guzman Senior Vice President & Chief Information Officer December 9, 2003 Agenda:  Agenda Owens & Minor’s Business Business Strategy Award Winning Technology Outsourcing Best Practices and Lessons Learned Questions & Answers Slide3:  122 Years of Healthcare Service Slide4:  Healthcare Distribution Leader Fortune 500 Company Founded in Richmond $4+ billion national distributor of medical products 45 distribution centers serve 6,000 customers 200,000 product lines 2,100 manufacturing partners Recognized for Trust, Integrity, Customer Service and Award Winning Technology Solutions Slide5:  The Company at a Glance Our Customers Are Top-Tier Johns Hopkins Baylor Health Care System Sutter Health UCLA Medical Center Massachusetts General U. of Michigan Medical Ctr. Brigham & Women’s Stanford University U. of Pennsylvania (HUP) Memorial Hermann, TX U. of Maryland Yale New Haven Jefferson Health System, PA INOVA, Fairfax VA Fourteen of the nation’s top twenty hospitals in the annual “Best Hospitals Honor Roll,” published by US News & World Report, are Owens & Minor customers. Slide6:  The Company at a Glance Our Manufacturers Are Best in Class Johnson & Johnson Cardinal Becton Dickinson Abbott Labs 3M C R Bard Kimberly Clark Tyco Our Technology Is at the Core of Our Business Model:  Our Technology Is at the Core of Our Business Model Wisdom - Internet Based Data Mining OM Direct – Customer Service Portal CostTrack - Activity Based Management SurgiTrack - Integrated Procedure Management PANDAC - Asset Management State of the Art Forecasting & Replenishment Systems State of the Art Distribution Systems, Velocity Slotting, etc. Wireless Point Of Use Systems Clinically focused supply chain solutions The Company at a Glance Our Award-Winning Technology:  Our Award-Winning Technology The Data Warehouse Institute Data Best Practice Award Winner Leadership Award in Data Warehousing Informatica “Insight” Award Business Objects: Excellence Award Winner Award Winner InformationWeek #1 of top 500 technology innovators in 2001 & 2003; #11 in 2002; #15 in 2000; #61 1999; #146 in 1998; #1 in Healthcare last 5 years ComputerWorld Don Stoller, David Guzman named Top 100 Premier IT Leaders David Guzman named top ten “Best in Class” among Top 100 Premier IT Leaders Goldman Sachs #1 in Customer Service three years in a row Harvard Business School, etc. 2 Harvard Business school case studies, annual class on O&M White paper by every major consulting firm Ph.D. by Wharton “Blueprint for an efficient healthcare supply chain” Business Week WebSmart 50 in 2003 Focus on the customer:  Focus on the customer Wisdom:  Wisdom Owens & Minor’s award-winning Web-based decision support tool helps customers track and analyze timely information about their supply chain purchases. View reports by organization or system-wide for smart business decisions: Product Standardization; Contract Compliance; Consolidated Information. Wisdom II, Wisdom III and “pocket wisdom” Migration to Teradata More than one third of Owens and Minor’s business flows through Wisdom today…and rapidly growing – Wisdom II, III, Mobile Wisdom and beyond… CostTrack:  CostTrack Owens & Minor’s industry-leading activity-based management process. CostTrack separates your product & process costs to reveal the COST-DRIVERS behind supply chain activities. The information allows you to STREAMLINE operations and REDUCE PROCESS COSTS. Existing Redundancies Flow highlights opportunities. CostTrack recognized in 2 Harvard Business School Case Studies and other independent sources as “The Blueprint for an Efficient Healthcare Supply Chain”; currently 32% of our business on CostTrack OM Direct:  OM Direct e-commerce tool that provides customers a reliable way to place orders, track orders and find product information via the Internet. Customized product formularies support your standardization and contract compliance initiatives. Select from 200,000 med/surg supplies at contract pricing versus catalog pricing. OM Direct accounts for 92% of Owens & Minor’s sales of $4B. We are converting EDI to XML on Both Customer & Supplier Side at a rapid rate. PANDAC® Asset Management:  PANDAC® Asset Management Owens & Minor’s wound closure asset management program for suture and endomechanical products. We evaluate your current inventory investment at no cost to you. Together we implement PANDAC® for immediate savings (guaranteed 5%). You receive ongoing reports to help you gain even greater benefit from PANDAC® PANDAC® has accounted for millions of dollars in guaranteed savings to our customers – expanding to other assets SurgiTrack:  SurgiTrack Owens & Minor’s integrated procedural delivery program that delivers all of your procedural components, customized by surgeon preference, to the point-of-use. All you do is place a single order. Better inventory control. Reduced labor costs. Owens & Minor is working on direct interfaces to clinical systems to revolutionize integration to hospitals Slide15:  Nursing Lab, Rad Other Surgery Patient Supply Record Point of Care Point of Admin Point of Dispense Bill of Materials Patient Schedules & Forecasts Requisition Purchases/ Receipts/ Invoices Clinically Driven Supply Forecasts Clinical Utilization & Outcomes Product Info, Guidelines & Content Demand & Availability Integrated Supply Chain Benefits: Reduced inventory across chain Utilization linked to outcomes Demand & utilization visibility across chain Right price w/o discrepancies Efficient labor & logistics across chain Better patient outcomes & quality Right Patient & Outcome Right Product & Quantity Right Place & Time Right Source & Price Suppliers ERP Linking Clinical Data to Wisdom:  Linking Clinical Data to Wisdom Cerner’s Clinical Supply Data Repository Supply Outcomes TM decision support database Links supply usage to patient/clinical data Improved information Identify cost of care – at episode level Link supply usage with outcomes data (revisions, length of stay, infection rates, etc) Identify variation by clinician and procedure Client’s Value Proposition Support product standardization Improve utilization Improve patient safety and outcomes Reduce costs Surgery Forecasting:  Surgery Forecasting Link Cerner’s SurgiNet TM Surgery Information System to O&M SurgiTrack Synchronize Preference Card Information Provide future demand determined by a client’s scheduling process Provide actual consumption activity Feed into O&M Manugistics to use in forecasting algorithms Link to ERP system for purchasing/receiving Client’s Value Proposition Reduced on-hand inventory levels Lower cost logistics and case preparation Improved fill rates and service levels Slide18:  Offsite Warehouse Transportation Receiving Storeroom Purchasing/ Procurement Accounts Payable CFO’s Office Specialty Areas (Cath Lab; Radiology) Par Areas (Nursing Floors) Operating Room Touchpoints in the Hospital – Owens & Minor Today Slide19:  OM SolutionsSM Core Business 3PL Services Slide20:  $12B Supplies from Distributors $24B Supplies Incl. Direct Sales $85B All Medical Products $170B Total Delivered Materials Cost Expanding Opportunity Source: Company estimates What Exactly is Outsourcing?:  What Exactly is Outsourcing? Transfer ownership of a business process to a supplier The buyer exchanges the ability to dictate how the process will be performed for the ability to define the desired results and hold the supplier accountable for them The concept of process ownership is the single most misunderstood concept in outsourcing. It is a mistake for the buyer to outsource a process and still attempt to dictate the process Although micro-management is not advisable, a totally free hand is not the answer either. A member of the senior management team has to be responsible for the success of the outsourcing relationship. Leverage – The crucial component:  Leverage – The crucial component Without leverage, outsourcing makes no sense Leverage provides the fulcrum for value in all outsourcing relationships. The key to success is to understand the source of leverage in the relationship Economy of scale is a powerful source of value Expertise is a powerful source of value Access is a powerful source of value (quality people, e.g.) Buyers must have a clear idea of how the supplier will generate leverage – avoid the “Cheshire Cat” syndrome A good “pre-nuptial” agreement needs to be constructed at the outset, while the parties still love each other Pre-nuptial agreement:  Pre-nuptial agreement Clearly define the scope of the agreement Agree on an appropriate price – driven by market Market Competitive Clause Relatively short term contract/long term relationship Align motivation and objectives Provide a suitable means for measuring performance Do not handcuff supplier – turn over process control Retain control over architecture/business alignment Provide for flexibility as requirements change Change Management Process/Strategic Planning Process Make sure business issues are addressed Make sure business behavior is addressed – do not abdicate Ensure cultural fit Initial Process Investments:  Initial Process Investments Infrastructure, Processes, People Quality, Testing, Redundancy, Disaster Recovery, Security, Flexibility, Scalability, Performance, Availability, etc. – improvements should be expected but may require initial investment – Potentially, a huge source of contention 1st year should be cost neutral, subsequent years should realize cost savings along with quality improvement Metrics: IT cost as a percent of revenue Productivity: revenue per teammate Productivity: % of resources devoted to operations vs. strategic Performance, Availability, Scalability, etc. Make sure metrics align with available market data Align Motivations & Objectives:  Align Motivations & Objectives High labor margins motivate labor intensive solutions, cost efficient margins motivate cost efficient solutions No organization can be allowed to operate without ongoing guidance and performance review…trust has nothing to do with it If it is difficult to measure, it will be difficult to manage, applications development and maintenance is a key example. Different metrics are needed for different processes. You will get what you measure. Pitfalls to avoid:  Pitfalls to avoid Price is not a function of cost, price is a function of competition. The market sets the price. Open-book, “cost-plus” pricing vs. fixed pricing vs. hybrid pricing Risk vs. Cost vs. Margin Bundling of unrelated costs A bundled pricing structure always favors the supplier Benchmarking critical Insist on Flexibility/Benchmarking:  Insist on Flexibility/Benchmarking O&M has the right to in-source or use third parties within agreed upon limits O&M may engage an independent third party to conduct a market comparison of price and service levels Benchmarking language needed to specify remedies that result from market comparisons Off-Shore Alternatives:  Off-Shore Alternatives Quality is superior, cost is clearly orders of magnitude better, speed is clearly superior – makes sense to include an off-shore component – irresponsible, not to consider However, Mix important – targeted talent must be under a single process umbrella – single accountability Critical to have a part of the off-shore team shoulder-to-shoulder with in-shore team I would consider keeping every stage of systems development life cycle except for the actual construction and maintenance phases I would keep business requirements, data modeling, architecture and strategic planning in-house… Background:  Background 2 providers of IT Outsourcing: IBM & Perot 1998 Perot contract designed for O&M situation 5 years ago – IT basics are no longer an issue – and we have achieved some award winning IT solutions in the process However, our business is evolving and IT must evolve to meet our business needs Systems are inflexible and difficult to change, most of our IT budget spent on Maintenance and Operations Existing Contract requires structural change and pricing needs to align with market The key goal is to fund fundamental changes in IT architecture and systems, while dramatically reducing costs of running IT Process:  Process Year plus effort – Competitive Process IBM & Perot – multiple scenarios – Our goals could be achieved with 2 partners or with a single partner Meta & Gartner provided Competitive Market Data Process driven by internal financial model O&M Senior Management Team visits to IBM & Perot Recommendation: One partner (Perot) Professional Negotiation By Best in Class Law Firm – Mayer Brown Rowe and Maw World Class Deal Total Team Effort – Finance, Legal, IT NEGOTIATION :  NEGOTIATION Draft Agreement: From Owens & Minor To Perot Face-To-Face Negotiations Began In May, 2002 Overarching Principles and Major Aspects of Desired Architecture Discussed by Both Sides At Outset of Negotiations Lawyers & Business People present for both sides, at all times Negotiations At All Times Friendly and Professional, With Both Sides Discussing Desires and Concerns and Reaching Compromises, As Appropriate Goals & Objectives:  Provide O&M with the maximum leverage of people and technology, by developing a standard technology infrastructure to reduce our operating costs and free up resources to improve our business and modernize our systems. Develop and execute an innovative strategic plan for IT to upgrade the technology, and provide the capacity, speed and reliability to support business growth and expansion. Align pricing with market, Make IT more efficient, fund fundamental change, while significantly reducing costs Goals & Objectives How did we reduce costs and add value?:  Converts from “cost-plus” to “fixed-price” for all base services and a “fixed-rate” model for discretionary services. With greater O&M Flexibility. Perot has significantly reduced margin - Reduces O&M’s overall IT costs – short and long term. Owens & Minor commits to best practices Two vendor environment had costs associated with duplications Perot takes over purchasing and includes 3 year refresh cycle in contract Perot takes on additional accountability for managing and controlling O&M’s IT costs. “Skin in the game” Financial incentives for reducing costs and shifting resources from maintenance/operations to new development, a key goal for Owens & Minor How did we reduce costs and add value? Discretionary Services:  Discretionary Services Provided for a fixed rate Discretionary pool increases each year without an increase in the fixed price O&M may add or remove discretionary FTEs over the baseline with appropriate notice to Perot O&M pays a fixed rate for each additional resource. Other Key Factors:  Other Key Factors Performance—Increases speed and capacity to support business growth. Example: disk capacity increases to 70TB – currently 9TB – new mainframe with 25% more power. Much faster Unix servers. Perot takes on the ownership of technology assets for new hardware and software, as well as the replacement of existing assets as they reach the end of their useful life (or otherwise need to be replaced). With a negotiated refresh cycle of 3 yrs. Reduces O&M’s capital outlays for technology infrastructure assets. Technology asset costs are included in Perot System’s fixed fee. Leverages Perot Systems’ purchasing power and substantial vendor discounts to O&M’s benefit. Service Levels:  Service Levels Each month, vendor fees are put “at risk” for failure to meet service levels. There are two types of Service Levels – Minimum and Expected If Perot fails to meet a minimum service level, O&M receives a credit Expected Service levels are “stretch” goals. The first two misses are of a particular service level are not counter, all others are. If an expected service level is missed, Perot has the chance to earnback the credit by: Maintaining a 12-month average greater than the service level or Not missing the service level for the following six months Other Protections:  Other Protections Annual satisfaction surveys will be used to solicit teammate input and make changes Non-Compete: No Perot employee working for O&M can be moved to a competitor after they leave O&M Key Perot Personnel are committed for a period of time Perot cannot share any O&M proprietary information without O&M consent Guaranteed liability coverage Our Partners Make us Better:  Our Partners Make us Better Perot Systems – Cultural Fit, Community Service, Flexibility, Service Orientation, Superior Performance Owens & Minor retained services CIO Chief Architect Data Modeling Business Process Leaders Customer Service Change Management Strategic Planning Results: Awards, IT costs = 1% of Revenue, Mgt/Field customer satisfaction, quality beyond our means Slide39:  “In the past, the more information you controlled, the more power you had. In the Net Future, the more information and power you share, the more you have.” — Chuck Martin, “Net Future”, McGraw Hill, 1999 A Final Thought

Related presentations


Other presentations created by Altoro

Robot Different Types
07. 01. 2008
0 views

Robot Different Types

PublicFinancevsPubli cChoice
13. 04. 2008
0 views

PublicFinancevsPubli cChoice

2779JacobFrenkel
10. 04. 2008
0 views

2779JacobFrenkel

Chapter 02 Warming the Earth
07. 04. 2008
0 views

Chapter 02 Warming the Earth

ElectronicRetailersA ssociation9
27. 03. 2008
0 views

ElectronicRetailersA ssociation9

mining
26. 03. 2008
0 views

mining

Austria
21. 03. 2008
0 views

Austria

poc presentationv ny
28. 09. 2007
0 views

poc presentationv ny

PPT Jon Sigurdson
12. 10. 2007
0 views

PPT Jon Sigurdson

Workshop Wintersport
12. 10. 2007
0 views

Workshop Wintersport

2006 2007 Calender
06. 09. 2007
0 views

2006 2007 Calender

Protein for Athletes
06. 09. 2007
0 views

Protein for Athletes

a23
12. 09. 2007
0 views

a23

lecture 18 bread fermentation
04. 10. 2007
0 views

lecture 18 bread fermentation

ustman
09. 11. 2007
0 views

ustman

Slavery
11. 12. 2007
0 views

Slavery

The Model Hockey Program
06. 09. 2007
0 views

The Model Hockey Program

WAWF Deployment Review
07. 11. 2007
0 views

WAWF Deployment Review

soybeans2007
07. 11. 2007
0 views

soybeans2007

Association HEP Training
06. 09. 2007
0 views

Association HEP Training

Portion Distortion
12. 09. 2007
0 views

Portion Distortion

compositae2006r
07. 12. 2007
0 views

compositae2006r

The Cold War and Domino Theory
19. 12. 2007
0 views

The Cold War and Domino Theory

nelson NATO
25. 12. 2007
0 views

nelson NATO

Fri 04 Killar
29. 12. 2007
0 views

Fri 04 Killar

Oslo 1
02. 01. 2008
0 views

Oslo 1

fruit diseases05
04. 01. 2008
0 views

fruit diseases05

HARRY S TRUMAN
28. 12. 2007
0 views

HARRY S TRUMAN

hayek45
12. 09. 2007
0 views

hayek45

ETC 2004 10 25
06. 09. 2007
0 views

ETC 2004 10 25

CT303 NetworkingDevices
28. 12. 2007
0 views

CT303 NetworkingDevices

IDIS
10. 12. 2007
0 views

IDIS

lect04Slides
14. 12. 2007
0 views

lect04Slides

missions
24. 02. 2008
0 views

missions

360
12. 09. 2007
0 views

360

3 4apr07 SDD Chief
29. 11. 2007
0 views

3 4apr07 SDD Chief

Talk EX8 6
12. 03. 2008
0 views

Talk EX8 6

LoD
24. 12. 2007
0 views

LoD

Roch Stuart
24. 02. 2008
0 views

Roch Stuart

sp10002 3
19. 02. 2008
0 views

sp10002 3

FY2006TourismMediaPl an
10. 10. 2007
0 views

FY2006TourismMediaPl an

Thompson
12. 09. 2007
0 views

Thompson

SMI Innov
17. 06. 2007
0 views

SMI Innov

Salvo Presentation
17. 06. 2007
0 views

Salvo Presentation

SALTO Inclusion 2005
17. 06. 2007
0 views

SALTO Inclusion 2005

athletics
17. 06. 2007
0 views

athletics

JohnBare 11sept07
04. 12. 2007
0 views

JohnBare 11sept07

pizza talk 2006
12. 09. 2007
0 views

pizza talk 2006

Selectividad2007
17. 06. 2007
0 views

Selectividad2007

Phil Borgeaud final
06. 09. 2007
0 views

Phil Borgeaud final

Chelsie and Samantha
02. 11. 2007
0 views

Chelsie and Samantha

PLVol1
26. 11. 2007
0 views

PLVol1

ACHA Rules of Emphasis 8 12 06
06. 09. 2007
0 views

ACHA Rules of Emphasis 8 12 06

Renuka Ramnath
12. 09. 2007
0 views

Renuka Ramnath

Overview of Japan Steel Industry
09. 10. 2007
0 views

Overview of Japan Steel Industry

the10mostbeautifulsu rahs
02. 10. 2007
0 views

the10mostbeautifulsu rahs

prez2
21. 11. 2007
0 views

prez2

PlanningMinorityComm unities
26. 02. 2008
0 views

PlanningMinorityComm unities

PPT for recruits 03 2
06. 09. 2007
0 views

PPT for recruits 03 2

siklejog2
17. 06. 2007
0 views

siklejog2

Amuse Promotional materials
12. 10. 2007
0 views

Amuse Promotional materials

GDSv15Training
03. 01. 2008
0 views

GDSv15Training