Best practices for procurement contract management
Carolina Belotti Pedroso and Martin Beaulieu
About the main author
Carolina Belotti Pedroso is an assistant professor in Healthcare Procurement & Purchasing at the University of Twente. She has experience in the following topics: Healthcare Procurement, Public Procurement, Value-based Healthcare, and Healthcare Innovation.
Short abstract
Contract management is a critical component of the procurement process, significantly influencing its overall performance. Achieving enhanced performance in contract management can be facilitated by the implementation of best practices. However, these best practices still need to be fully characterised, particularly within the healthcare sector, which faces unique challenges compared to other industries. This study aims to identify the best practices adopted in the contracting processes of healthcare organisations. Data was collected through case study research involving 15 healthcare organisations from various regions worldwide. The findings present best practices for each step of the contracting process and highlight the crucial role of enablers in supporting the adoption of these practices.
Extended abstract
This study investigates the best practices for procurement contract management of pharmaceuticals, medical supplies and equipment in the healthcare sector. The researchers analysed data collected from several healthcare organisations across Europe, North America, Brazil, and New Zealand to generate a best practices model for procurement contract management. The final model proposed could help organisations in the healthcare sector reduce costs and maximise the efficiency of procurement contract management.
Several best practices that tend to produce the best results were identified. These practices differ from those generally mentioned by the majority of the respondents. The study found that a best practice should demonstrate superior performance. The best practices were then compared to the existing practices of partnering organisations to detect a natural relationship between process conduction and the results obtained.
The article discusses several best practices in healthcare procurement based on the worldwide data gathered from healthcare organisations. Here are some of the best practices in healthcare procurement:
· Conduct Opportunity Assessment: Perform a comprehensive study on the needs and requirements before developing the supply strategy.
· Spend Analysis: Investigate which suppliers are receiving expenditures. Conduct an in-depth analysis of the products used to identify cost-reduction opportunities.
· Conduct Supply Market Analysis: Study the supply market to identify available suppliers and new entrants to enhance supplier competitiveness. Evaluate and rank the best-performing suppliers.
· Develop Purchasing Strategy: Limit the size of committees by involving only clinical leaders. Use these committees to validate the strategy formulated by supply managers.
· Issue a Request for Proposal (RFP) or Request for Quotation (RFQ) and Negotiate: Organise industrial visits for suppliers involved in the tender process before issuing an RFQ.
· Implement and Manage Performance: Ensure the information system is directly integrated with the operating program.
The best practices were derived from successful contracting management in various global healthcare organisations. These practices are not universal; the international scope highlights that effective practices can emerge from different environments. Managers should not simply copy the best practices from other organisations but assess and adapt those that fit their needs.
Additional/further reading
· Link to the article (open access): https://www.inderscienceonline.com/doi/abs/10.1504/IJPM.2024.138361
· LinkedIn: Click this link
· Website: https://www.utwente.nl/en/bms/el-ips/