Mercy’s Supply Chain Earns Top 10 Global Ranking

Start by implementing a single tecsys dashboard to gain whole visibility across manufacturing, procurement, and distribution, answering the call for faster, data-backed decision processes. The head of Mercy’s supply chain should own this project and allocate an additional budget to ensure ongoing success; additionally, this structure drives quicker escalation of issues and clearer accountability.

Using provided data from suppliers, Mercy tracks 28,000 skus annually, with 24 suppliers covering markets in three continents. This granular view reveals ostry bottlenecks in inbound receipts and supports faster decisions at the head of planning.

Mercy launched an additional project to optimize global replenishment, aligning replenishment cycles with market demand and seasonal peaks, which yielded a significant reduction in stockouts and a smoother flow of supplies. The approach, built around weekly reviews and a steady cadence, means more proactive capacity planning and better control over cost-to-serve.

The forecasting model translates forecast into executable orders, turning data into decision-ready actions. This meant the process into daily operations, providing resilience to disruptions and a reliable supply into peak seasons. The team meant to deliver results that customers can feel in on-time deliveries and product availability annually. These improvements help partners reduce expediting costs and improve service levels.

Mercy’s Supply Chain Transformation: Global Ranking, Contracts, and Bedside Delivery

Consolidate seven strategic contracts with core suppliers to lock in value, reduce fulfillment costs, and ensure bedside delivery timelines remain uninterrupted. This internally aligned effort establishes a common standard for service levels across areas and signals a commitment to clinicians that supply support aligns with patient care goals.

The global ranking places Mercy in the top 10 among peers, reflecting growing capabilities in procurement and bedside care workflows. Mercy is leveraging electronic procurement and real-time fulfillment data to form a coordinated response across seven market areas, aligning input from clinicians, operations, IT, and supply partners. This approach reduces cycle times and cites improved service levels, with the same commitment across regions.

At the bedside, Mercy implemented electronic order capture and real-time fulfillment dashboards that clinicians can access within the workflow. This formed a closed loop from requisition to delivery, reducing wait times and preventing stockouts. By building a partner ecosystem that includes internal teams and external suppliers, Mercy achieved faster response times, fewer emergencies, and more predictable inventory in key areas.

Moving forward, Mercy will deepen market contracts by leveraging data from the fulfillment platform. Beginning with a governance review, the team will align seven area leaders and clinicians on roadmap priorities, ensuring the same standards apply across sites. Internally formed cross-functional teams will partner with suppliers, with input from the market and a clear commitment to patient-first delivery. Cited improvements in service and cost metrics will guide renewals and negotiations.

Our Approach: How Mercy Health Consolidated Its Supply Chain

Consolidate procurement into a single, centralized team, standardize skus across all facilities, and lock in long-term negotiations with a lean vendor base. The president said this alignment helps stabilize costs, reduce complexity, and improve reliability across Mercy’s network. In year one, Mercy cut the supplier base from 120 to 78, cutting skus from 5,400 to 2,900, and lifted on-time deliveries from 92% to 97%.

We built a project governance model that links clinical demand with sourcing decisions, ensuring every skus maps to a defined clinical need. This approach, paired with optimized transport planning, reduced tractor-trailers by 22% and cut fuel spend by 9% and also addressed challenges such as stockouts and supplier fragmentation.

Key steps include:

• Centralized procurement hub that manages contracts, supplier performance, and payments; this held the most critical vendor negotiations under one roof and tightened SLA compliance to 98%.
• SKU rationalization to minimize redundancy; skus are tracked monthly, with a 12-month trend showing a steady decline.
• Optimized logistics with a hub-and-spoke network; deliveries now arrive earlier in the delivery window and fleet activity declines by 22%, cutting miles and emissions.
• Vendor alliances and banking support to extend working capital for timely deliveries; banking partners offered flexible terms that support outreach to rural facilities.
• Data-driven decisions supported by dashboards and cross-functional reviews; the team learned to forecast demand more precisely and adjust orders weekly.
• Outreach to clinical and operations teams to map usage patterns, reduce stockouts, and improve satisfaction metrics; core agreements tie product availability to patient care workflows.

Results: annual procurement spend fell by 14%, stockouts dropped by 40%, on-time deliveries climbed to 97%, and satisfaction metrics improved in patient-facing workflows. The company continues to monitor skus and uses the learnings from this project to guide future expansions, including supplier negotiations and fleet optimization across the network.

Contract Modernization: Addressing Current Agreements with Clear Milestones

To start, adopt a milestone-driven contract framework that links price, delivery, and service levels to clearly defined checkpoints, and assign ownership to the procurement team with direct access to data dashboards. This creates a distinction between legacy agreements and modern practice, enabling faster alignment across teams.

Establish milestones such as: 60-day price renegotiation guided by market data and supplier cost inputs; 95–98% on-time delivery; 0.5% defect rate; and a 12-month renewal decision tied to performance gates for products across categories.

Bring stakeholders into the cadence with quarterly reviews by product groups, including pharmaceutical lines and american suppliers, with mccurry as a named contact for escalation. This setup helps stakeholders think about the contribution each party makes and the things that drive value.

Integrate automed as the data feed for contract-management systems, so market data, cost trends, and performance metrics flow automatically, reducing busy manual updates. This goes beyond simple updates and accelerates response times across the supply network.

Track outcomes with a simple dashboard that highlights timely payments, supply availability, price volatility, and earlier issues from the past. This approach resulted in clearer signals about market costs and customer value, and it gets the market moving toward more predictable results among all partners.

Lab-Supply Savings: The $24 Million Reduction and Lessons for Replication

Adopt standardized catalogs and centralized procurement now to move quickly and leverage volume discounts. A dedicated head of procurement coordinates staff across all centers, aligns pricing, and enforces a simple, step-by-step process. This approach reinforces good governance while reducing variation in every order.

Staff across centers delivered a clear contribution to savings; the highlighted processes allowed moving from ad-hoc purchases to a consolidated pool. That move delivered predictable pricing and thorough control, setting the stage for scalable savings and reliable supply for healthcare teams.

The network achieved a $24 million reduction in annual lab-supply spend through disciplined execution of centralized sourcing, standardized supplier bases, and focused contract negotiations. The healthcare organization delivered steady service levels while maintaining quality, with the company coordinating procurement, lab heads, and center leaders to optimize volume alignment and SKU rationalization.

Lessons for replication emphasize a shared agenda between the company’s procurement function, head of centers, and banking partners managing working capital. Coming steps include mapping volume by center, standardizing contracts, and building a single, standardized catalog set. The approach supports quick wins, while ensuring thorough governance and ongoing measurement to sustain gains in a multi-site healthcare environment.

In practice, the move between local buying and centralized sourcing should deliver a repeatable framework: stepwise adoption across centers, rigorous vendor consolidation, and a transparent dashboard to monitor contribution and savings progress. This enables the company to scale the model while preserving service levels and safeguarding supply continuity for clinicians and patients alike.

Implement Now: A Practical Roadmap to Begin Cost Savings in Your Supply Chain

Launch a 90-day cost-savings sprint focused on inventory and supplier terms to realize early wins and set a foundation for sustained savings. Mercy’s leadership named a president of the program, who will own operating decisions and coordinate efforts across finance, procurement, and operations. This plan relies on accurate input from teams and wired data connections to ERP, sourcing platforms, and supplier portals. The data review indicated that purchasing volume and the number of items determine the potential savings; the market signals were reviewed to adjust terms with suppliers. This effort resulted in an initial 6% reduction in carrying costs and a 4-point gain in service levels for high-volume items, and it signaled a path to significantly improve performance.

• Target high-impact items – Reviewed data show a number of purchased items drive most cost and volume. Prioritize these for renegotiation and bundled orders to capture discounts.
• Negotiate with top suppliers – With support from the president and their teams, seek price reductions, favorable payment terms, and volume discounts. This effort should require little disruption to operations.
• Optimize inventory – Set lean safety stock and clear reorder points; acute demand signals justify adjustments; aim to improve inventory turnover and free working capital.
• Improve visibility with a simple solution – Create a lightweight dashboard that tracks volume, number of orders, and purchased items; highlight gaps and opportunities so Mercy can act quickly.
• Governance and cadence – Regularly held reviews; then adjust the plan based on observed results; concluded that the approach yields measurable savings and can scale across categories.

As Mercy’s market data matured, the initiative highlighted gains and demonstrated the value of a disciplined, input-driven approach. Eventually the program will extend to additional categories, but the current 90-day sprint proves a practical path to cost savings when leadership is aligned, data is wired, and efforts are supported by a clear solution.

Inventory Standardization and Bedside Care: How Standardization Improves Patient Outcomes

Establish a single, consolidated catalog across all bedside areas to reduce variation and expedite care. This commitment creates a clear structure for selecting, storing, and replenishing supplies, aligning with hospitals’ guiding priorities and commercial terms that sustain steady price, which resulted in more predictable budgets.

Automated replenishment, powered by intelligence from usage patterns, covers acute and other areas, reducing labor and price variance while increasing inventory turnover. Moreover, the consolidated data guiding decisions has increased interest from clinical teams, which value faster restocking.

Lead with partner and mccurry to map product families, set a standardized product structure, and define replenishment cycles by area and acuity. This approach clarifies which items appear in every bedside cart, establishes consolidated quantities, and links the amount of inventory to patient need.

Each individual patient benefits when the right product is available at the bedside, improving medication safety and acute care delivery. The approach also reduces the amount of cognitive load on nurses and supports a consistent care routine, which is believed to have resulted in lower waste and fewer stockouts.