• Written by Sonali Subhadarsini, Product Manager

A typical Monday morning for the procurement team in a healthcare provider often begins with a flurry of activity, as they scramble to respond to queries from clinical staff about the status of orders, supplier contracts, and inventory levels. The category manager may spend hours poring over reports and spreadsheets to answer these questions, only to find that the data is outdated or incomplete. This is where AI for procurement in healthcare providers can make a significant difference, by enabling the procurement team to ask questions of their own data and get answers in real time.

The procurement questions that currently wait on a report

The procurement team in a healthcare provider is often bombarded with questions from clinical staff about the procurement process. The shift supervisor may ask about the status of a specific order, while the theatre manager may inquire about the availability of a particular piece of equipment. These questions often require the procurement team to wait for a report to be generated, which can take hours or even days. With AI for procurement, the procurement team can ask these questions directly of their own data, without having to wait for a report.

For example, the category manager may ask what the current spend is with a particular supplier, or what the price variance is to contract for a specific item. The procurement team can also ask about the supplier concentration for a particular category, or what the spend under management is for a specific department. These questions can be answered in real time, without having to wait for a report, and can help the procurement team to make more informed decisions.

The data behind them: purchase orders, supplier contracts and terms, invoice history, category structure

The data that underlies the procurement process in a healthcare provider is complex and multifaceted. It includes purchase orders, supplier contracts and terms, invoice history, and category structure. This data is often stored in different systems and spreadsheets, making it difficult for the procurement team to access and analyse. With AI for procurement, this data can be integrated and made available for questioning, allowing the procurement team to ask more nuanced and detailed questions.

The procurement team can ask questions about the data, such as what the total spend is for a particular category, or what the average price is for a specific item. They can also ask about the supplier contracts and terms, such as what the payment terms are for a particular supplier, or what the contract renewal dates are. This level of detail and analysis can help the procurement team to identify areas for improvement and make more informed decisions.

Sector constraints: scheduling and utilisation and supply consumption variability

Healthcare providers operate in a unique and complex environment, with strict privacy obligations and a high level of variability in supply consumption. The procurement team must take into account the scheduling and utilisation of clinical staff, as well as the variability in supply consumption, when making procurement decisions. With AI for procurement, the procurement team can ask questions that take into account these sector constraints, such as what the impact of a change in scheduling will be on supply consumption, or what the effect of a change in utilisation will be on procurement costs.

The procurement team can also ask questions about the supply chain, such as what the lead time is for a particular item, or what the stock levels are for a specific supplier. This level of analysis and questioning can help the procurement team to identify areas for improvement and make more informed decisions, while also taking into account the unique constraints of the healthcare sector. For more information on how to optimise operations in this context, see our page on operations.

What improvement looks like: spend under management, price variance to contract, supplier concentration

Improvement in the procurement process in a healthcare provider can take many forms, but some key metrics include spend under management, price variance to contract, and supplier concentration. With AI for procurement, the procurement team can ask questions that help to identify areas for improvement in these metrics, such as what the current spend under management is for a particular department, or what the price variance is to contract for a specific item.

The procurement team can also ask questions about supplier concentration, such as what the supplier concentration is for a particular category, or what the impact of a change in supplier concentration will be on procurement costs. By asking these questions and analysing the data, the procurement team can identify areas for improvement and make more informed decisions, leading to better outcomes for the healthcare provider. If you would like to discuss how AI for procurement can help your organisation, please contact us.

What this does not do, or when it is the wrong choice

While AI for procurement in healthcare providers can be a powerful tool, it is not a solution for every problem. It is not a replacement for human judgement and expertise, and it is not a substitute for careful analysis and decision-making. The procurement team must still use their expertise and judgement to interpret the results of the questions they ask, and to make decisions based on those results.

In some cases, AI for procurement may not be the right choice, such as when the data is incomplete or inaccurate, or when the procurement process is highly complex and nuanced. In these cases, other solutions may be more appropriate, such as manual analysis or specialised software. The procurement team must carefully consider their needs and the capabilities of AI for procurement before deciding whether to use it.