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