Netcare e-procurement cuts CAPEX cycle time by 66%

E-Procurement technology has assisted South Africa’s largest private healthcare network Netcare to cut the time to procure CAPEX items from 3 months to as little as three weeks. The company’s Buynet solution (Powered by local provider is now used by more than 3500 users, 250 suppliers and 43 sites. The company processes as many as 15,000 purchasing transactions a month, valued at more than R60m, via e-Procurement.

Netcare decided towards the end of 2001 to embark on Buynet, a group-wide project aimed at streamlining its MRO e-procurement processes. “We had in place a centralised payments department for our suppliers,” explains Mike Eborall, Change Analyst at Netcare. “Now we wanted a solution that would be a significant improvement on our existing paper-based procurement systems”.
The company partnered with e-Procurement solutions provider to streamline its procurement and stock management systems, to obtain greater control and efficiency within the group’s business processes.
“We have achieved operational efficiencies without significantly changing the way we conduct business. The technology has driven significant actual and time-based savings, allowing us to focus more on our core business” Dr. Richard Friedland, Chief Operations Officer at Netcare
On analysing Netcare’s procurement processes, Philip Katz, Managing Director of, realised that smart buying would have a limited impact on efficiency unless Netcare was able to manage its internal requisitioning and stock control. With this in mind, custom-developed a solution that provided four key modules:

• Buynet Accelerator – a Head Office buying module that maintains the Netcare stock requirements and the listing of approved products and suppliers,
• Buynet Stock– a regionalised stock control module that allows each hospital’s stock room to plan for and manage the procurement and issuing of stock,
• Buynet Procure– a procurement module that resides within each hospital’s wards, and issues internal orders to the stock room,
• Buynet Central – a web-based reporting tool that allows the group to consolidate and report on all procurement data.

Central control provides group purchasing power
Tight control over what is ‘approved stock’ is critical for Netcare. Buynet Accelerator controls at a central level what can and cannot be purchased by a hospital’s individual stores. It provides the ability to link many suppliers to one product, comparing pricing and service levels, and creating individual catalogues of relevant products for each hospital. Products and prices are updated centrally, automatically ensuring instantaneous changes to each hospital catalogue.
“This control offers an immediate benefit by eliminating maverick spend,” explains Katz. “Any MRO item procured has been approved for use within Netcare, and at a cost negotiated with the full purchasing power of the group”. Additionally, all items are mapped to the correct General Ledger expense headers, and all users are linked to their respective cost centre code, enabling the system to generate accurate costing reports. This information, duly reconciled to payment data, can be electronically imported into accounting systems.

Automated internal systems cut time and costs
At a regional level, Buynet Stock feeds off Accelerator to manage each hospital’s central store. At one end, it issues stock based on requisitions from wards, and generating internal delivery notes to ensure better control. At the other, it receives stock into the system, matching quantities and costs to that ordered.
“The system is intelligent,” points out Katz. “It monitors order patterns and provides detailed information about items in stock – such as how old an item is – allowing for more accurate predictions in ordering and maintaining recommended levels.” Since the introduction of Buynet, Netcare’s stock levels and associated holding costs have been reduced by between 40 and 50 percent.

Integrated procurement power
At the heart of the process is the Buynet Procure module, which links directly into Buynet Stock. This allows hospital wards to order (and track orders) electronically from the central store, with the only pieces of paper in the virtual chain being the picking slip and delivery note. Further integration between modules means that as soon as store levels are depleted to a predetermined level, automatic replenishment is prompted, reducing ‘out-of-stock’ scenarios.
The obvious benefit is the reduced amount of faxing, telephoning, and ‘chasing up’ associated with procurement. “An equally important benefit is that the ordering of MRO goods is now controlled by administrative staff, reducing the burden on nursing staff, and freeing up their time to concentrate on providing the best possible patient care,” says Eborall.

Consolidation on the web leads to single cheque for multiple suppliers
“The entire process has been delivered by through Buynet Central, a web-based system. This provides extensive central reporting capabilities at group level, consolidating each hospital’s data to generate reports on items issued, receipts recorded, stock levels and listings of preferred MRO items. Netcare has a clearer, near real-time picture of their operations, allowing for far greater accuracy in its management and planning. Furthermore, its accounting is also streamlined, allowing the company to pay suppliers with a single cheque,” says Katz.

About Netcare
Netcare is South Africa’s largest private healthcare network. Having grown from a single day clinic to become the continent’s largest integrated private hospital and doctor network, Netcare owns 45 hospitals with 61 specialised medical units, as well as 53 Medicross Family Medical and Dental Centres. The group has over 18,000 employees and is supported by approximately 3,000 doctors and specialists.
Netcare’s success is measured in the lives it saves and the overall welfare of the patients in its care. But in a highly competitive market where operational efficiencies are a differentiating factor, Netcare needs to be super efficient in its logistics support – in particular the procurement of Maintenance, Repair and Operational (MRO) supplies.

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