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Beyond Leveraged Purchasing: Using Strengthened Buyer/Supplier Relationships to Accomplish Sustainable Strategic Sourcing and Smarter Single Source Acquisitions Open Access

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Strategic sourcing has long been utilized by organizations to maximize budget and supply chain efficiency, usually through leveraged buying, but also through the formation of strategic partnerships with suppliers. When considering leveraged buys, the strategic sourcing process begins with a spend analysis, and the data obtained during the analysis is used by stakeholders to begin defining requirements. Traditional spend analysis restricts the data used in the spend analysis process to basic transactional information, and does not considered corporate social responsibility objectives as part of the strategic sourcing process. This research modifies an existing spend analysis process framework, and applies the framework in a case study that uses additional data points to identify opportunities to allow an organization to simultaneously achieve both strategic purchasing and social responsibility objectives. The study also examines strategic healthcare purchasing in a single source environment, and combines best practices developed using decentralized purchasing strategies by healthcare facilities and successful buyer-supplier relationships from multiple industries to create a process map for hospital systems transitioning to strategic centralized purchasing models. Systems engineering frameworks, process modeling, regression analysis, and cross functional process maps are used in this study’s analysis. Healthcare purchasing data from eight Department of Veterans Affairs medical centers is used in the study. The goal of the model generated using regression analysis in the case study is to determine the buy characteristics that are most likely to generate mandated savings within the medical centers, in conjunction with achieving sustainability goals. The extensions of the regression model were examined to determine how collaborative buyer/supplier relationships can achieve organizational strategic objectives. The purchasing process of high-tech medical equipment for a single hospital was modified to create a cross functional process map to identify purchasing requirements for a large medical system, emphasizing reliable care and patient safety, while also ensuring maximum affordability and minimizing risk. The framework required collaboration and cooperation by multiple hospital departments, relationship building, and collaboration with the supplier. Together, the two processes proposed in this study create a comprehensive cost evaluation model for public hospital systems that also reduces buyer and supplier purchasing risk by controlling for schedule and cost.

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