Frequently Asked Questions (FAQs)
Question 1: What does my organisation need to do to achieve
supply chain reform?
Trading partners, working together on building blocks to
jointly develop a world-class supply chain, is the definition
of supply chain collaboration. The extent that potential benefits
will be realised from automating and managing an optimal supply
chain will depend upon the quality of people, processes and
technology. It will rely on good decision making, performance
management and measurement, smart process redesign, strategic
partnerships, and achieving critical mass. Central to maximising
potential benefits is an organisation culture of innovation
and collaboration, including a willingness to commit to continuous
improvement and change, to sustain an optimal supply chain.
The focus, at least initially, must be on review and redesign
of core business processes in the supply chain, utilising
technology as an enabler for best practice business processes.
Automating a mess, leads to an automated mess. If an organisation
approaches reform from the perspective of a desire to achieve
a world class supply chain, the business processes are central
to the reform agenda, not the technology. The implementation
of IT solutions to enable interoperability is the logical
extension of improvements to processes.
|
For All Participants in Supply Chain Reform:
- Review existing processes with a view to overall
improvement, viewing electronic connectivity as an
enabler to world class supply chain realisation.
- Examine and address the fundamentals; get internal
data synchronised and cleansed, review internal systems
and processes, determine KPI’s for measurement,
establish project teams.
|
|
For the Hospital:
- Required Activities Include:
- Determine any relevant policy on technology or
processes.
|
For the Large Supplier:
- Required Activities Include:
- Reconcile existing 1:1 or 1:many connectivity solutions.
|
For the SME Supplier:
- Required Activities Include:
- Investigate third party suppliers/interoperability
facilitators.
|
References:
Connecting Trading Partners; Business Framework to Optimise
Hospital Supply Chains, National Health Supply Chain Task
Force, 2003
Question 2: What are the practical benefits from supply
chain reform for my organisation?
The document Business Framework to Optimise Hospital Supply
Chains outlines some of the objectives of supply chain reform.
|
For All Participants in Supply Chain Reform:
- Run streamlined processes and use improved workplace
practices that are more strategic.
- Develop optimal channels and networks to service
the market.
- Improve relationships with customers, channel intermediaries
and suppliers which in turn increases loyalty, volume
and services quality.
- Develop better products and services, faster.
- Collaborate to optimally align end-to-end supply
with end user demands.
- Improve the management of cash flows.
A more detailed list of potential benefits from collaboration
and IT implementations can be found in Appendix 4 of
the Business Framework document.
|
|
For the Hospital:
- Standardise stock and non-stock purchases through
agreed protocols and clinical evaluation procedures.
- Replace fragmented, manual procedures with electronic
order placement, confirmation, receipt and payment.
- Universally access products in standard electronic
catalogues with common nomenclature and identification.
- Identification and elimination of supply chain waste,
(process, transactional and inventory waste) without
compromising safety reserves in the overall supply
chain and freeing up resources for patient care.
- Benchmark performance consistently (in different
States, Territories and hospitals).
|
For the Large Supplier:
- Include all supply chain costs in price negotiation,
especially with government agencies, with public sector
support for joint management of total evaluated cost.
- Work effectively with distributors and hospitals
to optimise supply chain inventory through partnerships,
joint ventures and specialty sales agreements.
- Achieve shared economies of scale through standard
protocols, nomenclature and shared e-business solutions.
|
For the SME Supplier:
- Opportunity to extend market reach beyond geographical
boundaries.
- Opportunity to present a similar image online,
in terms of quality and availability, as that of a
larger competitor for relatively low cost.
- Reduce the marginal costs of establishing customers
and sales.
|
References:
Connecting Trading Partners; Business Framework to Optimise
Hospital Supply Chains, National Health Supply Chain Task
Force, 2003
Question 3: What model of relationship between suppliers
and purchasers is intended in Australia?
Individual participants in the health sector supply chain
will determine their own method of connection within the described
framework. This framework does not require or define any particular
approach and highlights options for participants to transact
electronically through a:
- Marketplace or catalogue.
- Transaction clearing house.
- Direct connection.
- Third-party service provider.
The current focus of the Task Force is on proving the point-to-point
case of electronic interoperability, by applying a standards
based approach. It is likely that future directions may encompass
the implementation of models of interoperability incorporating
marketplaces or real time centralised catalogs. Free market
forces or other industry needs may see the identification
of opportunities in the industry for third parties to provide
these services on a commercial basis, particularly responding
to the business needs of small to medium sized businesses.
|
For All Participants in Supply Chain Reform:
Any model of interoperability is acceptable, as long
as it is consistent with the standards-based approach
defined in the Standards Framework document.
|
|
For the Hospital:
- Hospitals may engage with suppliers either directly
or may engage through e- marketplaces.
|
For the Large Supplier:
- Direct connectivity with groups of hospitals running
similar systems may be an attractive option, with
few variations on technical requirements needed.
|
For the SME Supplier:
- Be aware of and investigate developments of marketplaces
(buyer-side and supplier-side eg. GHX).
|
References:
Standards Framework; Trading Partner Connectivity, National
Health Supply Chain Reform Task Force, 2003
Question 4: Just how fixed are the technical interoperability
standards?
To establish a level of consistency, the framework recommends
a set of related standards that can be applied to any system
to system connection between trading partners:
1. Extensible Markup Language (XML) as the preferred document
content description language.
2. The United Nations Centre for the Facilitation of Electronic
Business (UN/CEFACT) Electronic Business framework (ebXML)
as the foundation eBusiness technology framework standard.
3. Open Buying on the Internet (OBI) – or XML Common
Business Language (xCBL) as the default document and document
control specifications for the short/medium term, and adopting
ebXML’s Universal Business Language (UBL) in the longer-term.
4. Standards Australia’s AS-IT14.10 standard definition
as the minimum document content specification within Australia.
5. United Nations Standard Products and Services Code (UNSPSC)
(http://www.unspsc.com) for the classification of goods and
services purchased by government agencies. The UNSPSC classification
system is based on a four-tiered hierarchy of product groupings.
6. Internet-based network communications.
There are a number of different components for enabling electronic
interoperability between trading partners in the supply chain.
Many of these are relatively mature and ubiquitous technologies
or business standards, such as XML content description and
the ABN for unique business identification. Others are new
and require monitoring to ensure that they evolve into the
international non-proprietary standards required as one of
the principles for adoption. Examples include the ebXML registry
and the Universal Business Language (UBL) document specification
set. The evolution of these components, will be monitored
and supply chain participants will be kept informed of developments.
|
For All Participants in Supply Chain Reform:
Current ways of doing things are not invalidated. It
increases confidence that, when a new solution is implemented
which complies with the chosen Standards, the approach
will be largely compatible with a medium to longer term
convergence of technical standards.
|
|
For the Hospital:
- Incorporate standards into FMIS, and other relevant
systems, requirements when exploring replacements.
- Ensure interoperable standards are incorporated
in the system.
- Ensure integrated real-time applications within
the organisation.
|
For the Large Supplier:
- Existing business partnerships can evolve to meet
the requirements of interoperable standards.
|
For the SME Supplier:
- The needs of SMEs have been incorporated into the
standards and will be for future standards.
- Standards are non-proprietary.
|
References:
Standards Framework; Trading Partner Connectivity, National
Health Supply Chain Reform Task Force, 2003
Government Framework for National Cooperation on Electronic
Procurement, Australian Procurement and
Question 5: What does my organisation need to consider in
terms of measurement and benchmarking?
The performance measurement guideline is designed to add
value at any stage of maturity, by encouraging the organisation
to:
1. Determine Current and Expected Performance
2. Select Critical Success Factors.
3. Identify Key Performance Indicators.
4. Develop a Performance Improvement Framework.
5. Continue the Pursuit of World-Class Performance.
While each organisation has individual characteristics, which
make comparisons between all organisations complicated, the
measurement of performance is essential to determine success.
Trend analysis and benchmarking between similar organisations
is possible.
|
For All Participants in Supply Chain Reform:
- Enables measurement of improvement (or deterioration)
over time within the organisation, and between organizations
through performance management and measurement, and
benchmarking.
- Access to national (and international) trends and
knowledge about success factors.
|
|
For the Hospital:
- Open comparison of performance by other hospitals
will enable referencing, benchmarking and sharing
of knowledge about success factors.
|
For the Large Supplier:
- Measurements such as achieving delivery of products
and services in full, on time and in specification.
|
For the SME Supplier:
- Performance measurement guideline provides model
for application to business regardless of size.
|
References:
Management Guideline; Achieving World Class Performance
in Australian Hospitals, National Health Supply Chain Reform
Task Force, 2003
Question 6: Why should my organisation adopt standardised
contract terms and conditions?
While a comprehensive body of electronic commerce law will
only develop as specific cases are decided in the courts,
electronic transactions Acts mean that the law clarifies the
general principle that a person can enter into a contract
electronically. This legislation assists in the successful
implementation of electronic commerce in Australia. Legal
issues associated with electronic supply chain interoperability
include:
- Contractual terms and conditions (www.health.vic.gov.au/supplychain):The
Task Force has developed standardised contract terms and
conditions, aimed at reducing the barriers for companies
trading with multiple government jurisdictions. While there
are some hurdles to this process, standardisation across
governments is possible. The GITC and National Public Works
contracts are examples of this.
- Privacy considerations (http://www.privacy.gov.au):The
Commonwealth Privacy Act and related laws at both federal
and state and territory level are significant considerations
in the development of electronic interoperability. Related
to this issue are considerations around data security and
authentication.
- Freedom of Information and Audit (http://www.comb.gov.au/publications_information/freedom_information.htm):The
right balance between ensuring commercial confidence and
the satisfaction of fundamental characteristics of dealing
with governments is a continual challenge, which can be
brought into prominence when determining new ways of doing
business.
|
For the Hospital:
- Simplifies negotiations of new tenders and contracts.
|
For the Large Supplier:
- Reduces the cost of trading across State and Territory
borders.
- Ensures maximum compliance with multiple jurisdictions.
|
For the SME Supplier:
- Reduces the cost of dealing with separate agencies.
- Increases the ability to trade across State and
Territory borders.
|
References:
Standard Contract Documents; Trading Agreement and Request
for Tender, National Health Supply Chain Reform Task Force,
2003
Government Framework for National Cooperation on Electronic
Procurement, Australian Procurement and Construction Council,
June 2002
|
