Centric

Background:

In 2006 Centric helped a large hospital with an audit of their Accounts Payable (AP) Processes. As a result of the AP Process Review success, the hospital reached out again to Centric in late 2008 to partner with their Internal Audit group on a 10-week Contract Review. This review was initially intended to focus only on 5-10 high spend contracts to ensure the maximum value is being received from their service providers. Centric proposed a full review of strategic sourcing and contract management processes (including a high-level spend analysis and contract assessment) across various spend areas. Our goal was to offer insight on best practices and make strategic recommendations that would improve the Sourcing Process end-to-end, and provide insight to immediate opportunities based on findings from the contract assessment.

Objectives:

• Identify best practices and deficiencies in the Supply Management Process
• Review of contracts with high spend vendors
• Provide a view into significant spend areas and areas for improvement

Approach:

• Conducted 25 interviews and discovery sessions across 12 areas
• Created Contract Review Templates to support reviews on a sampling of 19 contracts from 13 suppliers in the various departments reviewing terms & conditions, SLA’s, and potential areas of risk for the client leveraging a team of 10 industry SMEs
• Performed High Level Spend Analysis
• Profiled 5 main processes and 20 sub-processes and assessed each on 7 distinct criteria
• Prioritized process opportunities and generated a roadmap outlining immediate actions and strategic imperatives necessary to develop a robust Supply Management Organization

Result:

The Centric team identified between $0.5 - $2.0 Million in potential savings from the contract reviews by utilizing a team of SME with a variety of industry background and expertise. A series of deficiencies were also uncovered leading to a full scale improvement effort being initiated to take corrective action in the sourcing and contract management areas.