Relationship-based procurement

By ahhb
Monday, 01 August, 2016

Building on the strengths of partnership.
At SummitCare, our procurement process is largely relationship-based so rather than thinking of our suppliers as contractors we think of them as specialists in their area or, ‘consultants’.

For example we have been operating for fifty years and we have used the same cleaning company for over twenty. So when we were looking to build a new facility we asked them, “can you have a look at the plans for this new building and tell us whether you think it meets your needs and tell us what you would do differently?”
To clean this building efficiently they identified the need for more cupboards to store the large cleaning machines and more power points. This might seem minor, but was very helpful to us and gave them confidence to start using the reputation they have with us to leverage other business. So rather than thinking of tendering as a process that occurs after the build, if you involve your good contractors and elevate them to consultant level at the design stage you get a win-win and that’s the foundation of relation-based procurement.
Needlessly bumping suppliers in and out of contracts just ends up making lawyers wealthy. We have changed contractors reluctantly when they have not been performing well in traffic light system of reporting but in my experience, if the cleaning is not working at your aged care centre, hitting your contractor over the head with a contract does not really affect the outcome you want. Generally, we want our contractors to be with us long-term and to elevate them to consultants on our new builds. When you put the relationship front and centre, this is where you see the true value.
Relationship-based Reliances
A number of times we’ve had to call on our contract cleaner to do things at the last minute and this is where relationship-based reliances come into play. I’ll give you an example of a recent conversation between myself and our cleaners.
“It’s 5 o’clock on a Friday afternoon – we’ve just had a major emergency, could you come out?”
“Yep, no problem. I’ll stop what I was doing and come right away and fix the problem that’s happening at your facility.”
This kind of relationship-based reliance, in my experience in aged care, is of far greater value than if we had no relationship with this company and had to rely entirely on the formal contract, requiring us to negotiate on every point.
Of course price is important but is often given disproportionate consideration in the tendering process over other things like relationship reliance, reputation, the company’s understanding of aged care and respect for residents. These things are often hard to quantify but we know are really important in longer term contracts to achieve quality for aged-care outcomes.
Of course price is important but switching contractors in and out of agreements is a very expensive exercise. We have done it reluctantly with contractors who have not been performing well in the green, amber and red traffic light system of reporting. Generally, however, we want our contractors to be long-term and to elevate them to status of trusted consultants.
New Equipment
When I am sourcing new equipment for a facility I find that talking with my peers in the industry is a good starting point for new equipment purchases. In aged care there is good communication and honesty between senior management that allows this to happen. So we see relationship-reliance coming to the fore here again as relying on each other’s referrals, shortcuts what would otherwise be a blind procurement process.
There is also a lot to be said for enthusiastic and passionate suppliers who provide information about products that we may not necessarily need at the time but we may have use for in the future.
So relationship-reliance works a number of ways; with your suppliers and with your peers.
In my three and a half years heading up procurement at Summit I have never had to run a formal tender with untested suppliers. For example, we have moved our clinical care systems, as is the case with most aged care providers in Australia, to an electronic platform for resident’s files. We looked to other aged care providers and unlike other industries, we freely exchange ideas about ‘best in breed’ and rely on this third party referral.
Outside the Box
Small works building contractors who really “get” aged care can be hard to identify. At times this has meant sourcing a contractor with no experience in aged care and educating them about the nuances of operating in aged-care centre 24/7.
For example, we moved away from standard pool fencing to a smarter and less institutional-looking glass. To do this we looked outside traditional channels and chose to work with a glass balustrade manufacturer and installer with a good reputation for high rise residential buildings and shopping centres. We educated them about working in an operational aged-care facility with vulnerable residents, some with dementia, and they embraced the opportunity and it was a great experience for both us and them. Finding a supplier who is willing to go on this journey with us is key to our selection criteria.
We look for contractors who can add value to their goods or service above and beyond their competitors. Our landscapers, for example, make three suggestions to us per month and this is built into the KPIs for their staff. Some of these suggestions have been about screening areas, replacing plants etc., and we like working with an innovative company who demonstrates a culture of continuous improvement.
This company was also prepared to send their staff on a dementia-awareness training course. This assured us their grounds staff, working in our centres, would have a clear understanding of dementia. And this has worked very well. They know how to approach people with dementia and rather than be afraid of them, they engage them in gardening projects etc.
There are many different approaches to procurement depending on the industry but I have found the relationship-based model to demonstrate the best value for Summit Care. Valuing our contractors as consultants and specialists, understanding what they do, going on a journey with them and investing the time to educate them in the nuances of aged care has been a very successful model for us.
Relationship-based Procurement
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Elevates suppliers/contractors to specialist consultant status
Puts the relationship front-and-centre
Adds value to your business and your consultant’s business
Builds strong links with industry peers through third party referrals
Promotes invested and innovative consultants who are willing to take the journey with you

So relationship-reliance works a number of ways; with your suppliers and with your peers.

john-headshotJohn Engeler
John Engeler joined SummitCare, a leading provider of Residential Aged Care in Sydney & the Hunter in 2012. He previously worked in disability care, support and advocacy across a number of areas, but primarily accommodation related projects and property development.
One of his direct areas of responsibility at SummitCare is Procurement, so he is very well placed to discuss procurement in the Healthcare sector today, especially as SummitCare begins construction of a new 200 bed facility in North-Western Sydney.

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