10 Costs You’re Overlooking in Your Procurement Process

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Your hygiene consumables procurement costs you more than the line price. The unit cost could be less than half of the picture.

The real cost of consumables procurement is bigger than dollars and cents, and it affects your whole facility.

What won’t work on this cost: 

  • drilling down into a spreadsheet
  • negotiating with your consumables supplier 
  • purchasing in big order quantities

Traditional purchasing philosophies could be limiting your cost analyses. Here’s one significant cost factor you could be overlooking.

The Cost of Time

The biggest cost to your aged care facility is not the money, it’s the time your procurement is taking up.

You’re busy, your floor staff are busy, your facility managers are hectic – and you know it affects your decision-making and leadership. 

You know your nurses would deliver better direct care with more time to do it.

Why does everyone have no spare time?

Read on to find out.

The Case Study

We interviewed Alex*, the procurement officer at a multi-site nursing home group in Sydney. 

Alex and his colleagues were always ‘time-poor’, and all the processes that management put in place weren’t working. So he decided to do something different.

Alex worked a day of ordering hygiene consumables stock. 

What did he find? Ten touchpoints (creating time costs) in his nursing home’s ordering process.



Ten Touchpoints of Consumable Orders

1. The Stock Take
2. The Purchase Order
3.
The Approval
4. The Order
5. The Order Confirmation
6. The Delivery
7. The Distribution
8. The Restocking
9. The Paperwork
10. The Payment

Let’s dive in from the start.

1. The Stock Take

Alex’s day in the life of a consumables order started with checking stock. 

His facility had five storage locations:

  • the nurses’ glove storage
  • the kitchen consumables cupboard
  • the laundry chemicals system 
  • the washroom supplies cupboard
  • the main consumables storage room. 

As Alex peered into dark cupboards and pulled aside half-empty disinfectant bottles, he ticked off the items – chemicals, paper goods, PPE…

  • Several listed items couldn’t be found, while others had overflowing boxes stockpiled at the back of the storage room.

It took Alex 40 minutes before he was sure he’d checked every item.

Summary

Touchpoint:
Checking Stock

Time taken:
40 minutes

Areas for Improvement:
• Numerous storage areas
• No system for organizing consumables
• No review of overstocked goods 

 

2. The Purchase Order

To enter the purchase order, Alex had to get into the stock system. It took a few minutes to load, then he had to ask around for a spare system license.

There wasn’t a standing order for him to edit. He had to curl over his keyboard entering all the tiny printed codes, and worse, his own scribbled writing! 

Remember how he thought he’d checked all the codes? 

Not quite. 

2 items – in storage at the other end of the building – needed rechecking.

After 20 minutes, Alex could save his purchase order.

Summary

Touchpoint:
Entering the purchase order 

Time taken:
20 minutes

Areas for Improvement:
Slow and limited system
No standing order
Missed items

3. The Approval

Emailed purchase orders usually took 2-3 hours to get approval. If there were no queries, it was a quick formality that took 5 minutes of management time.

Alex sent off the paperwork to his manager. 

After an hour, the order was approved in the system.

Summary

Touchpoint:
Approving the purchase order

Time taken:
10 minutes

Areas for Improvement:
• Inefficient submission & review system – emailFormality

4. The Order

Now the order could be sent. 

Alex was relieved this was a simple 5-minute job:

  • wait for the system to reload
  • access the approved purchase order
  • print it as a PDF
  • email it to the supplier.

Done.

Summary

Touchpoint:
Sending the order to the supplier

Time taken:
5 minutes

Areas for Improvement:
Order printed as a PDF, not directly entered into a suppliers’ portal

5. The Order Confirmation

Alex found that order confirmations were not often received – only 2 out of 5 orders would get a reply from the supplier.

If items were back ordered, the facility wouldn’t know until the order was delivered. 

Alex waited for 5 minutes for a notification, but the rest of his day was calling. 

The order was confirmed over 48 hours later, and Alex noted the ETA and emailed the relevant staff.

Summary

Touchpoint:
Receiving the order confirmation

Time taken:
15 minutes

Areas for Improvement:
Unreliable confirmations and notifications
• Manual ETA alert to staff

6. The Delivery

A previous order was scheduled to come in that day, so Alex headed down to the back. 

A truck pulled into the unloading area, and dropped the boxes near the rear access point. 

Alex went through each carton and ticked the items off against the delivery docket. 

Sorting through the third box, Alex found there was an item missing, so he flagged down the delivery truck. 10 minutes of searching found the missing item tucked away in a corner, labelled incorrectly.

Total time taken – 25 minutes!

Summary

Touchpoint:
Receiving and checking delivery

Time taken:
25 minutes

Areas for Improvement:
Boxes unloaded in an inconvenient location
• Manual delivery check (on paper)

7. The Distribution

Alex stacked the items back into the delivery cartons. Now he had to transport them along the corridors to storage. 

Usually the maintenance manager did this by himself, with or without the facility’s trolleys.

Alex put the boxes in front of the nurse’s glove storage, main storeroom and washroom supply cupboard. 

In the usual procedure, the nurses would ‘put the stuff away when they had time’.

This step took 20 minutes.

Summary

Touchpoint:
Distributing the order to storage

Time taken:
20 minutes

Areas for Improvement:
One person usually handling several boxes

8. The Restocking

Instead of waiting until the nurses’ end of shift, Alex spent 20 minutes putting the consumables away in the three stores himself.

The main storeroom was full of out-of-date chemicals and paper goods, with no sorting system to be seen. This made it difficult to organise the consumables by type.

Three local storage points in the different wings of the home were out of toilet paper and paper towel, so he restocked those supplies.

Summary

Touchpoint:
Restocking the storage & washroom locations

Time taken:
20 minutes

Areas for Improvement:
Inefficient process with several parties involved at different times

9. The Paperwork

Back at the desk, Alex manually reconciled the purchase order with the delivery paperwork.

He found several ordered items missing and spent 10 minutes to confirm the items were back ordered.

(Admin usually spent up to 30 minutes on the phone with the supplier, trying to get an answer about an undelivered item.)

Then Alex receipted the purchase order and sent it to Accounts to confirm the invoice.

All of this took 20 minutes.

Summary

Touchpoint:
Checking the paperwork and updating the system

Time taken:
20 minutes

Areas for Improvement:
Paperwork manually reconciled
• Backorders not noted on supplier paperwork

10. The Payment

Accounts usually allocated the invoice to be paid about a week after it was received. 

Alex called them and found out it took 10 minutes to do this.

Summary

Touchpoint:
Paying the invoice

Time taken:
10 minutes

Adding Up the Time Cost

Alex and his team had spent 3 hours and 15 minutes in consumables procurement. Far more than the half hour he would have expected!

Those 3 and ¼ hours were taken from direct care time, business development and other important responsibilities.

A normal order could take still more time because of:

  • the different people doing it
  • the time taken in communication
  • the mistakes made by busy people.

The industry average for aged care facilities is 1 hour and 15 minutes spent on ordering hygiene consumables.*

Focusing on the time you spend in your procurement processes will give you back more value than a unit cost analysis ever could.

What if your facility is losing hours of direct care time? 

What if your staff are overworked because of an inefficient ordering process?

Do you know your time costs?

*Based on audits conducted in facilities across NSW & QLD.

Do you want to know more?

Reach out one of our Specialists for a time cost analysis.

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