Balancing business as usual with major COVID effort

HSV has balanced business as usual procurement activities with a significant effort to support the state’s COVID response over the last financial year.

HSV opened the largest Victorian distribution centre for public health goods in Derrimut in December last year and it has already proven valuable as a hub for Victoria’s rapid antigen tests, or RATs, processing around 9,000 pallets of these products alone.

“We sourced, received, warehoused and are distributing 186 million rapid antigen tests (RATs), with our distribution centre moving from nil stock to storing 90 million RATs in a three-month timeframe,” says HSV Director Procurement, Stuart Smith.

“This rapid sourcing helped deliver $400 million in benefits for the state in the process.

“RATs quickly became a part of our ongoing work to secure PPE and essential stock for the State Supply Chain, which we have been doing since shortly after the pandemic began,’ he says.

As well as responding to COVID priorities over the last financial year, HSV continued to manage sourcing activities and exceed expectations, achieving $1.27 billion in value under contract against a targeted $1.20 billion.

“We completed 45 unique procurement activities and 27 equipment buy activities. In total we managed 69 categories under HSV contract, delivering $161 million in total benefits for public hospitals including $24 million in cost reductions,” says Stuart.

“It was satisfying to deliver $11 million more in benefits for our customers than we forecast, especially as much of the year involved considerable effort being focused on the COVID response.

Guiding this activity was the Procurement Activity Plan (PAP), an initiative HSV has embedded in the past 12 months, incorporating regular engagement with health services and supporting our overall strategic goal to deliver $838 million in savings by 2025.

Looking ahead, HSV’s Procurement team is driving improvements in service and value for health service customers by focusing on three areas in financial year 2022-2023.

“We’re rolling out a plan to deliver health service savings faster and pursue new spend opportunities to build greater economies of scale while also driving better accountability for contract performance,” says Stuart.

“We know focusing on these things will help achieve better outcomes for our customers, particularly to help health services realise savings sooner,” he says. 

“We will expand our procurement expertise to new categories and spend groups including investigating possibilities in integrated facilities management. We’re also working with the Logistics team to explore strategic opportunities to leverage our distribution facility so that our customers can enjoy increased benefits of bulk purchasing discounts without compromising on-site storage space.

A new Supplier Relationship Management (SRM) function will help ensure HSV’s partner vendors deliver solutions to health service operational challenges and value over the life of each contract.

“This new team will work with all parties to respond to performance issues and outages and increase transparency and accountability of contract performance and savings,” Stuart says.

HSV is currently recruiting over 24 new roles as part of a procurement recruitment drive, which will help deliver these improvement activities and accelerate solutions for our customers.