Health insurer likes flexibility of e://volution

By ADAM GIFFORD

Health insurer Southern Cross Healthcare has signed with e://volution E-Business to procure supplies.

Southern Cross projects manager Jackie Pivach said she was looking for a way to increase efficiency and lower printing and stationery costs.

"I selected e://volution for the flexibility it offered to add not just printing but other suppliers like medical products in future," she said.

Southern Cross' printing contract, worth about $1.9 million a year, was moved to e://volution's parent company, Norcross.

For the $600,000 worth of stationery that its 320 staff use each year, Southern Cross looked at several tenders but stuck with its existing supplier, OTC.

Ms Pivach said e://volution was developing as a separate entity to Norcross.

"We know if at any stage we're not happy with Norcross we can move to another print provider but retain e://volution."

She said Southern Cross was looking at taking products from other suppliers in the e://volution system.

Purchases have been done through e://volution since September, but Ms Pivach said it was too early to assess savings because the company was still working through stationery and printing generated under earlier arrangements.

The company would receive consolidated billing from e://volution, with all non-direct spending broken down by cost centre and general ledger code.

"From the reprints we've done so far, we're certainly seeing savings by having Norcross manage the printing," said Ms Pivach.

"We've also seen better pricing from OTC because everyone is now buying off e://volution."

She said trials would start soon allowing staff in the 11 Southern Cross hospitals to buy their stationery and printing through the system.

Southern Cross might join the buying federation being put together by e://volution, she said.

E-business managing director Henry Norcross said the e://volution model allowed buyers to control the marketplace through third-party exchange managers, rather than having suppliers in charge.

The Acumulus buying federation should be in place before the end of the year, he said.

"The market wants to know if electronic procurement will lower prices or if it will just automate the process.

"When we tender for, say, a million reams of photocopy paper, we will find out."

Mr Norcross said companies preferred longterm supply of items, rather than pick up what they needed at the time on spot markets, as some electronic marketplace developers were assuming.

"I see the model, if anything, being about improved supply chains."

Acumulus, which is being developed in partnership by e://volution and KPMG Consulting, aims to link small groups of non-competitive organisations to increase their buying power.

Each group will be closed and its activities will not be visible to other buying federations. This will ensure the total spending and pricing gained within each group is kept confidential.

A memorandum sent to potential members said Acumulus already involved significant New Zealand corporates, "each of which can deliver a procurement spend of $50 million."

As well as lowering maintenance, repairs and running costs through bulk-buying, Acumulus will also sell value-added services to members and in the longer term allow them to sell their own wares.