Auckland hospitals are looking forward to more efficient ordering of supplies as they embark on an electronic procurement project.
Two district health boards — Counties Manukau and Waitemata — and half-a-dozen medical equipment suppliers are initially involved in the project, which could result in the formation of a much broader business-to-business exchange. The initiative comes from the Medical Industry Association, representing suppliers, which has brought in Australian company Pacific Commerce to run the exchange.
Vaughan Matthews, who is managing the project on behalf of the health boards, describes it as “a very low-cost way to get data from one point to another cheaply and effectively”.
The hope is that it will dramatically cut paperwork from the ordering process.
“Currently with the trial suppliers the number of invoices exceeds purchase orders by between 10% and 50% depending on supplier,” Matthews says. “We would like to cut this down to 5% for all the suppliers in the trial.”
The exchange is expected to handle its first live orders next month. Sydney-based Pacific Commerce managing director Andrew Gunter says the implementation phase, which is being handled by Carter Holt Harvey e-business consultancy Velocit-e, is a matter of synchronising supplier and buyer data.
“It involves identifying data formats and mapping purchase orders to suppliers’ product data,” Gunter says. “If they have the ability to create an electronic file, we can map that to the format of their electronic trading partner.”
Pacific Commerce, which has been operating a similar exchange in Australia for the past two years, carries out the translation function, and provides communications links between suppliers and buyers. It charges an annual subscription fee of “less than $5000” and a fee per transaction of “less than $1”.
Cost savings through aggregating buyer power, as was the hope of buyers who signed up to short-lived medical marketplace Onezone, are not part of the package. Gunter says Onezone, which failed late last year, didn’t take off because it was buyer-centric.
“What that approach fails to recognise is that business relationships are built on a number of criteria. The method of interchange is only one element.”
The Pacific Commerce exchange has been criticised by a former Onezone buyer subscriber as providing a “bland” answer to e-procurement. Vaughan Matthews says that’s fine by Counties Manukau and Waitemata health boards.
“Yes this is a bland technical solution — [which is] what we were looking for. We have already invested in ERP systems that do much the same work as [marketplace software] Ariba or Commerce One so we saw no need to duplicate the functionality we already have.”
Waitemata uses Oracle’s 11i suite, to which Counties Manukau is also moving.
Matthews expects the boards to put about $12 million of orders through the exchange during a year-long trial.
Pacific Commerce, meanwhile, hopes to hook up further health boards to the exchange. Gunter says he is working on a proposal for Auckland District Health Board.