At a Glance
- A leading academic hospital with an annual turnover of $1.2 billion faced significant challenges within its procurement policies and supply chain processes, lacking performance information and exhibiting a culture of accepting inefficiencies.
- Renoir was engaged to conduct a review and implement a comprehensive Supply Chain Process Rebuild.
- The engagement resulted in savings of $3.8 million and a return on investment of 4:1
Key results
Achieved savings of
$3.8 million
Substantially reduced inventory through the implementation of an Inventory Management System.
Instilled a systematic, project-managed approach to teamwork, analysing opportunity and problem-solving, fostering a 'businesslike mindset
Background
The client is a leading academic hospital system in the United States with an annual turnover of USD 1.2 billion. As one of the nation’s top-rated medical centres, it operates in a highly regulated and complex healthcare environment. Despite its reputation for clinical excellence, the client’s internal processes, particularly within procurement and materials management, lagged behind industry standards, prompting leadership to seek external support for performance improvement.
Analysis
The project was initiated following the Board’s concerns about the lack of visibility and control over procurement operations. The organisation operated without reliable performance metrics, and existing systems could not support strategic decision-making. A deep-rooted cultural norm—known internally as the “way things are done”—created an acceptance of inefficiencies, especially in the supply chain.
The severity of the process breakdown led the Board to seek external expertise for an unbiased assessment of their situation.
Project Approach
Renoir proposed a full rebuilding of the client’s supply chain processes based on first principles. This included:
- Developing a comprehensive performance measurement system.
- Designing a structured, participative change program to break the status quo culture.
- Committing to delivering a minimum savings target of USD 2.4 million over the course of multi-week project.
The approach emphasised deep engagement with internal stakeholders through Management Action Teams (MATS), leveraging Renoir’s proprietary Focus Process™ to drive rapid yet sustainable transformation.
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Implementation
The project engaged Management Action Teams (MAT’s) comprising of the client’s staff, fostering a participative approach to drive rapid culture change towards a ‘businesslike mindset’. Throughout an intensive engagement period, several key activities were undertaken:
Planning: All procurement and supply chain processes were mapped and critically reviewed. Workshops on action planning and problem-solving techniques were conducted.
Management Control System: Elements and benchmarked metrics were established for weekly review. Supply costs were benchmarked and analysed to identify opportunities for standardisation and negotiation.
Implementation: Specific project schedules were developed and implemented for each MAT. Training sessions were conducted on teamwork, problem-solving, effective meetings, benchmarking, and the Marketplace @Novation platform.
Inventory Management: Inventory Management Systems were implemented, resulting in significant inventory reduction. Spend analysis tools were deployed to leverage Group Purchasing Organisation (GPO) utilisation opportunities.
Process Re-engineering: Purchasing and Supply Chain processes were re-engineered, reducing inventory and procurement costs. Benchmarking data empowered contract negotiators to achieve better pricing with vendors.
Contract Management: A new contract management system was introduced, eliminating vendor increases on expired contracts. A monthly contract schedule and action plan were implemented to prioritise vendor contract negotiation opportunities.
Performance Management: A scorecard was implemented, and key performance indicators were measured and reviewed weekly against best practice targets, cultivating an action-oriented culture and a new way of working.
“The Purchasing Department processes were broken and inefficient. Renoir’s ability to work with our people to address these issues has given [the client] the momentum and sustainability to continuously address supply chain opportunity well into the future.”
-Chief Financial Officer
Results
A total savings of USD 3.8 million—well beyond the original project target
Supply cost benchmarking and spend analysis enabled process standardisation and stronger vendor negotiations
An inventory reduction that freed up both physical space and working capital.
The scorecard and weekly reviews of KPIs against best practice targets created an action-oriented culture, moving the company away from the previous 'client way'.
Through structured engagement, capability building, and data-driven decision-making, the client is now equipped to continue identifying and capturing supply chain opportunities well into the future.
*We have intentionally omitted client-specific details to uphold strict confidentiality.
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