Regina Maria reduces acquisition prices by 10-25% with TotalSoft's eProcurement system

Company

Regina Maria, the largest private healthcare network in Romania, outstands on the Romanian market due to its high quality medical services and impressive number of health facilities through which it addresses more than 180,000 subscribers and the general public. Regina Maria meant: 18 proprietary clinics, 5 hospitals, 2 maternity hospitals, 3 medical campuses, 5 imaging centers, a stem cell bank and over 140 partner clinics.

 

The activity of the concern is supported by national clinic laboratories (in Bucharest, Brasov, Constanta and Bacau), which ensure both emergency medical tests and investigations required by hospitals, as well as regular tests coming from other units.

The laboratory network insures a vast range of investigations, varying from the usual set to advanced diagnostics, providing over 1.300 types of medical tests.

Situation

At the end of each year, with compiling the budget for the next fiscal period, the company also negotiates acquisition prices for drugs and medical equipment. Although there is a reduced number of suppliers on the Romanian drugs market (maximum 10 players), the negotiation and selection process for the best offer is slow, time consuming and involves much human effort. Until last year, for several months, the acquisition team consisting of 4 people was sending inquiries to all drugs suppliers, negotiating prices, comparing offers, renegotiating; in the end, after countless analysis, they were able to agree terms and acquisition prices with a supplier.

 

Besides the huge effort which focused the whole team’s attention on the process, there was no guarantee that the result was the maximum which could have been gained by means of a transparent bid to ask all vendors face to face. This was also the conclusion of the international company for management consulting hired in 2012 by Regina Maria in order to improve company’s performance and reduce costs.

The acquisition of a specialized tool (IT system) for conducting negotiations with suppliers, in order to streamline the process and maximize the result, was unanimously accepted. 

 

The next step was to contact TotalSoft, the company which had already supplied IT systems vital for its activity, like Charisma ERP and Charisma Medical Software, through which Regina Maria managed its financial and accounting, as well as medical and laboratory activities.

“We knew TotalSoft had an eProcurement software solution, as we had seen a presentation in summer, so we invited them to a discussion in order to identify whether it was what we needed” stated Mr. Manuel Cancenski, Acquisitions Manager, Technical & Logistics, Regina Maria.

Solution

With the support provided by TotalSoft and the consulting company, it was determined that the optimal solution in order to improve suppliers’ selection process was an on-line auction system which would bring suppliers in a direct and transparent competition. TotalSoft offered Charisma eProcurement, whose SaaS version is hosted and implemented together with its UK partner, Market Dojo. Thereby, a solution which could immediately be used was obtained; acquisition costs were not high, no investments into infrastructure were necessary, no internal resources were involved. Also, the testing period was significantly reduced. 

 

“From the moment we said we wanted, until we were able to run the first auction, two weeks have passed. TotalSoft presented the solution, opened an account to enable us to test the system in order to make sure it met our needs, and in the 5th day we sent the invitations for the first auction.  ” claims Mr. Manuel Cancenski.

 

In order to be able to quickly benefit from the system, it was decided not to integrate it with the financial-accounting solution (Charisma ERP) in the first phase, while the purchase necessary was to be created and centralized outside Charisma, based on templates which could have been uploaded subsequently through a simple import. The next step will be the integration of the two systems, so that the purchase necessary can be directly transferred.

 

It was possible, hereby, to quickly set up a major auction, exceeding 3 million Euros, which aimed to establish acquisition prices for raw materials (especially drugs) for the next 3 years. The participants’ qualification was determined before the auction, outside the system, for the reason of not prolonging the process by entering data into the system. Technical and qualitative criteria, payment and delivery terms, starting bids, the list of articles suppliers could not, for various reasons, bid for – were agreed and determined, so that the actual auction would only take price into consideration.

In order to obtain the best price, reference prices for every item have been entered into the system, so that at the end of the auction one could clearly find out how profitable the action had been. This has revealed that, compared to the prices initially offered by the suppliers, discounts had grown to exceed 20 %.

 

In order to prevent participants, who had not been trained to use the system, from raising technical or operating problems, TotalSoft provided them assistance during the auction.

Results

The tender preparation time was reduced to one week, the actual auction lasted 1 hour and at the end of this period of time, the best market price for each auctioned item was obtained. “With an auction value exceeding 3 million Euros we have achieved a saving of 10-25% on every item, a huge percentage compared to the investment made for this software solution, summed up to a monthly subscription which gives us access to the platform.”

The negotiation process has been reduced from minimum one month (the time the process actually lasted) to one hour, the bidding being performed on-line, under a total transparency for all participants. “Throughout the auction, each participant saw in real-time the place he occupied due to its offer, being able to decide if he wanted to grant another discount which would have placed him in the winning position.”

Entering necessary data for the auction into the system was done within few hours, as the interface is extremely intuitive and based on the question-answer principle. Moreover, for every step of the configuration there is contextual help provided, so that every difficulty the user might have can be quickly solved, without the necessity of calling the software provider.   “Most of the desires one might have concerning the development of an auction are already found in the system, evidence being the fact that in order to conduct such a big auction, with various articles, we needed no additional enlargement”.

The assistance provided by TotalSoft for the participants to the auction reduced the possibility of the occurrence of any operating problems to a minimum. “We had already tested the system and had no concerns regarding its functionality and wanted to make sure the bidders will receive, if needed, specialized technical assistance. Only 3 companies needed guidance through the system in order to be able to bid.”

Savings come from different areas, but first of all from the fact that choosing a Software as a Service solution significantly reduced the initial investment effort.

 

The acquisition of a SaaS solution reduces company’s investment to the level of paying a subscription, without additional maintenance costs or enlargements, the ROI being rapid and significant.

 

Case study revised in 2013.