Strategic Supplier Campaign – Driving Quick Wins & Fostering Long-Term Supplier Partnerships

Client’s Challenge

Pathstone partnered with a large academic medical center, which included six additional hospitals throughout the system. After a three-year effort dedicated towards driving benefit across large, complex categories, leadership charged supply chain and Pathstone to drive remaining benefit opportunity quickly and ensure no stone was left unturned. “Speed-to-Value” became a frequent talking point in all client conversations and out of these conversations a Strategic Supplier Campaign was strategized, mobilized, and executed.

Pathstone’s Approach

Throughout the first three years of the client engagement, Pathstone had successfully interacted with many suppliers through competitive bid processes and stakeholders through utilization and standardization initiatives. Though significant benefit was achieved through these efforts, it was clear that there were many additional suppliers that had opportunity to achieve price improvements.  

Pathstone reviewed accounts payable data, contract expiration reports, pipeline activities, group purchasing organization (GPO) involvement and benchmark data to identify key suppliers to include in the Strategic Supplier Letter Campaign. Out of this review process, 105 suppliers representing $100M in total spend were selected for the campaign.  

Having created a strategically focused list, Pathstone created a timeline to reach out to all 105 suppliers within one month of go-live. Prior to go live, a workplan with roles and responsibilities was developed with and agreed upon by client stakeholders.  

Pathstone served as the Category / Supplier Lead and assumed the Project Management role. We worked closely with the client’s supply chain team to discuss progress and align on next steps.

The Strategic Supplier Letter Campaign had three primary goals that were communicated with the selected suppliers:

1. Review of Current Supplier Relationships: We provided a data request template within each communication to the suppliers. These templates allowed Pathstone and the client to evaluate the current utilization and spend, including comparing expected rates and spend against actual rates and spend.

2. Reduce Overall Costs: Included in the data request template was a suggested reduction in current rates. Pathstone utilized available internal and client-based benchmarking to determine this request. Suppliers had the opportunity to provide enhanced pricing within the data request template, which allowed for a real-time view of expected spend and benefit delivered to the client.

3. Solidify and Enhance Long-Term Partnership: Knowing that the list of 105 selected suppliers were strategic suppliers, many of which had been key partners of the client for multiple years, Pathstone’s client was offering to extend any active agreement for a select number of years if the supplier could meet the request.

Initiative Impact

As a result of Pathstone’s Strategic Supplier Campaign, the client was able to achieve the following results:

• Achieved $3.5M+ in recurring non-labor expense reduction: The client achieved over $3.5M+ in annual benefit in several key strategic categories including Surgery, Cardiovascular, IV, Neurology, Spine, Respiratory, Patient Supplies, Wound Care, Laboratory, and Dietary.
• Received accepted proposals from over 50% of suppliers within 4 months: Speed-to-value was a prominent theme for this strategy. Pathstone made concerted efforts to keep communication channels open with suppliers and review proposals as promptly as possible. Each week a list of proposals was brought to the client’s supply chain team for acceptance and then moved through the contracting process.
• Identified $51K in overpayments: Pathstone carefully reviewed current contract rates versus rates provided in the data request template and identified over $51K in overpayments. Through conversations with 5 different vendors, the client received refunds for these overpayments.
• Strengthen partnership with 63 suppliers: By the conclusion of the Strategic Supplier Campaign, Pathstone’s client received reduced rates and extended their relationship with 63 key suppliers across the system.
• Confirmed Benefit: Pathstone worked directly with the supply chain, finance, and legal teams to confirm the benefit of each supplier’s proposal. A thorough review of these proposals was necessary to ensure the benefit being proposed fell within the client’s future operational plans. Pathstone actively communicated with impacted stakeholders to confirm the benefit before marking complete.