A Hospital Story: Going Amazon Pt. 1

By Matthew Palcich
Manager, Materials Management at Summit Pacific Medical Center

A few months ago, largely due to the regular, and relentless march of Amazon boxes though our receiving dock we decided to identify how we could fully embrace this trend, and wrangle it into our Materials Management (MM) system.

Amazon items thus far fall predominately into the category of purchase we like to call in the Hospital world “special”. These are the wide variety, and ever changing types of items that inevitably get purchased through LEAN projects, executive assistant support, marketing events, employee recognition etc. etc. They have no name in our MM system, and are typically painfully reconciled through an arduous credit card process with Accounts Payable. Adapting these items to Amazon replenishment was a logical first step in understanding what value could be achieved.

Our intent was to funnel all of these purchases through our current MM process to integrate these purchases within our system, and allow end users the ability to shop for themselves! (there is a considerable time waste when procurement ends up trying to find the type of item described in either an email or ticket system).

Turns out, Amazon Business largely had all the settings/setups we needed to enable the same, easy to use interface for our end users, allow oversight, and integration with our existing ERP system. A few internal process tweaks later, and we came up with an extremely efficient system.

Step 1 – Setup Amazon Business Account, and Onboard Net 30 Purchasing.

Step 2 – Create Groups for all GL departments, with ship-to and users assigned through Amazon business. We used the Address 2 field to call out specific deliver-to departments within the hospital all under the same physical address.

Step 3 – Setup approvals to move from end user, to department approver, to purchasing department.

Step 4 – Based on approvals workflow – Purchasing back-builds Amazon carts with MM Purchase Orders, adds ASIN number code to line (Amazon’s version of an item number), and approves + receives item. Amazon has the capability to use Punch-out as does our ERP system to automate this bit, but so far it’s not cost prohibitive to run the manual version of this process.

Step 5 – Package arrives with label indicating what department to deliver to. We then use an app called Package Zen + Ipod touch to deliver to department and record signature and tracking information

This setup is turning out to be pretty nice. Amazon packages now indicate who they are for on the exterior label, and drop ship to our offsite locations. Our MM system is able to track what was purchased through the Amazon item number and charge to departments, end users are able to get exactly what they wanted rather than a lost in translation type of purchase, and we are able to begin building a formulary type set of items based on their purchases to one day have a standard approved Amazon catalog of items.

Controls are in place, in that our purchasing group is able to review (with pictures) what is being requested and identify if there are cheaper alternatives. End users can access tracking info and review history with ease. AP and PO processing is efficient, and we have seen a reduction in shipping costs as a result of the expansion. All disputes on fulfillment (very rare) have been resolved in the kind of service we have all come to expect from Amazon Customer Service. Did I mention end user training is non-existent? It seems everyone is proficient with Amazon ordering these days.

Through discussing with Amazon how we can integrate further, it turns out this is only the start to what we can do. We are able to direct source from our MM system to Amazon utilizing their ASIN numbers, and setup tolerances to allow for shopping variation whithin the marketplace. We can load pricing, and upon vendor acceptance execute a negotiated price transaction, and we can utilize their hardware in various locations to enable ordering (AWS button, Wand, Alexa..)

Stay tuned for part 2 of a Hospital Story: The Clinics get Alexa