Hospital Procurement Process Model Assignment

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Reference no: EM132851507

Assignment "Hospital Procurement Process Model"

You are given an actual hospital procurement process (see Table 1 and related Figure 1). This is to be modelled as the ‘As Is' Process using Draw.io or similar product.

Export your process, or use screen shots to depict your process diagram in your report.

Provide a report on your As Is Model analysis. This is to include:
Comments
Problems
Costs
Times

As a bonus exercise (to potentially earn full marks for this assignment), calculate the Weighted Average Cost (WAC) for this process. Use an Excel spreadsheet. Identify each case (path through the process) and add the total cost for each case. Then, consider the probability for each path, with the total probability adding to 100%. Apply the probability percentages to the total costs, and sum to obtain the WAC.

Based on the objectives of e-procurement, an automated, improved ‘To Be' process is to be proposed. Use your imagination! The ‘To Be' process is to be presented as a new Draw.io or similar Process.

Hint: Do not copy the As Is Process and make a few incremental changes. Start afresh and submit a simplified redesigned process.

Provide your analysis. In particular, how have addressed the following problems:

Backorder problem. The supplier has no stock and the hospital does not find out for a week until the start of the next ordering cycle.

Three-way match problem. The Purchase Order, GRN (Goods Received Note) and Invoice from Supplier need to be matched by Accounts Payable to pay the supplier. These 3 documents often do not match resulting in a short or delayed payment to the supplier.

Again, as a bonus you can consider the WAC of the To Be Process. You can make the following assumptions:

IT capital investment of $50,000 for the ROI calculation
‘As Is' and ‘To Be' processes are each daily processes, 365 days p.a.
Costs in the ‘To Be' process are only a preliminary feasibility and do not have to be highly accurate.

HINT: Calculate the WAC for As Is and To Be. Determine the annual cost savings (As Is - To Be)*365. If the To Be cost is not cheaper than the As Is then redesign it! Next, deduct depreciation of capital = $50,000/5, assuming a 5 year system life. ROI = average annual net cost saving/capital cost.

Table 1

As Is Hospital Stores Procurement Process

Activities and Gateways	Document	Process Times *		Role	Total Cost
	Type	Elapsed	Working		($1,000s
		(min)	(min)		p.a.)**
Minimum/Maximum Levels Set
(Outside of Process)
Report run on current stock levels	Paper Report	30	15	Stores Manager	80
Manually calculate reorder quantify based	New Order Form	240	60	Stores Manager	80
on current stock below minimum level
Key New Order into ERP system	New Order Entry in IS	240	30	Stores Clerk	50
Decision- Item has no backorders - 80%
Email Purchase Order to Supplier	Email Order	60	20	Stores Clerk	50
(Backorders are unfulfilled prior orders.)
- Item has backorders - 20%
Decision - Alternate Supplier Available - 60%
Adjust ERP supplier for all orders of item	Supplier Entry in IS	30	10	Stores Clerk	50
Send all orders for item to new supplier	Email Order	30	15	Stores Clerk	50
Cancel old order on old supplier	Email Cancel Order	30	20	Stores Clerk	50
- Alternate Supplier Not Available -40%
Email Purchase Order to Supplier	Email Order	60	20	Stores Clerk	50
Receive Goods into Store	*GRN Paper Form	1440	30	Stores Clerk	50
Reconcile GRN with Supplier Delivery Docket	Paper Form	120	20	Stores Clerk	50
Decision - Are there errors?- Yes - 20%
Resolve with Supplier	Phone Call	120	20	Stores Clerk	50
- No errors - 80%
Enter received stock against PO in ERP System	Stock Entry in IS	120	10	Stores Clerk	50
Items put on shelves		120	20	Stores Clerk	50
Email receipt of invoices (Outside Process)		1440
Invoices received and booked into ERP System	Invoice Entry in IS	60	20	Payables Clerk	45
Decision - Invoice matches GRN and PO - 70%
Pay Supplier	Payment	240	10	Payables Clerk	45
- Invoice has errors - 30%
Submit credit request to supplier	Email Credit Request	240	15	Payables Clerk	45
Decision -Supplier accepts credit request - 75%
Pay Supplier Process (Detail not required.)	Payment	240	10	Payables Clerk	45
- Supplier rejects credit request - 25%
Compile Report for Supervisor	Report	240	20	Payables Clerk	45
Supervisor contacts supplier	Verbal conference	120	40	Accounts Supervisor	70
Pay Supplier	Payment	240	10	Payables Clerk	45

* Wait Time = Elapsed Time - Working Time

GRN is a Goods Received Note used to record incoming goods into the store

** This is the total salary cost per annum for the role, in thousands of dollars. You can use this to calculate the Activity Cost. Assume 46 weeks p.a. and 30 hours per week of productive work. (This is an extension exercise.)

Attachment:- Hospital Procurement Process Model.rar

Reference no: EM132851507

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