To develop an analysis methodology and reporting framework focused on procurement expense for a large hospital so they could better manage a large and growing expense category.
An analytics methodology was developed to decompose increases in expense into volume, price, and product mix changes. A database tool was developed that automated the analysis methodology for the client, including data capture and formatting, so that the analysis could be updated and the results reported on a monthly basis. The tool also reconciled the supplies expense to the client’s general ledger.
The analysis methodology enabled the client to understand the drivers of procurement expense and decompose cost changes into the source components.