EZmedicom is Korea’s largest hospital management service organization (MSO). It serves 25 public and private university hospitals and 29,000 suppliers, which hold 30% of hospital beds in all general hospitals in Korea. The company provides e-procurement, e-logistics, and consulting services to help hospitals and medical institutions carry out commercial transactions and procedures, such as ordering, shipping, and paying for medical equipment and supplies. It also provides various purchasing strategies for auctioning, bidding, and co-purchasing to help hospitals and other clients in the healthcare industry purchase high-quality medical goods at the lowest available price.
In February 2011, EZmedicom implemented Oracle’s JD Edwards EnterpriseOne Financials, JD Edwards EnterpriseOne Inventory Management, JD Edwards EnterpriseOne Sales Order Management, JD Edwards EnterpriseOne Procurement and Subcontract Management, JD Edwards EnterpriseOne Advanced Stock Valuation, JD Edwards EnterpriseOne Advanced Pricing, JD Edwards EnterpriseOne Warehouse Management, JD Edwards World User Productivity Kit for Address Book, and Oracle Database 11g.
The integrated ERP system reduced operating costs by consolidating disparate hospital data and standardizing system interfaces, generated real-time profit and loss data by integrating distribution and accounting tasks, closed month-end accounts 80% faster, and enhanced purchasing process efficiency by 60%. The company plans to use the standardized integrated data from the new ERP system to implement agile management practices that will improve service quality, maximize customer satisfaction, and promote business growth.
EZmedicom has a number of business divisions, including a business-to-business (B2B) division, which helps large university and public hospitals procure medical equipment and supplies, and a midsize business division, which provides online shopping facilities targeted at smaller local hospitals and pharmacists. The company also operates Baekse Dong-an, a hospital equipment rental business that supports the well-being of the elderly and disabled.
Previously, master information about the company’s procurement and supply services wasn’t standardized and the midsize business and Baekse Dong-an divisions used different codes for the same products. EZmedicom needed to standardize master data to prevent variations in product prices and descriptions across different divisions, and to enable sales and accounting staff to complete their sales and financial tasks based on accurate data. The B2B division also managed procurement and supply data from each general hospital separately, using disparate interfaces, which made aggregating and sharing this data time consuming and costly.
The lack of compatibility between distribution and accounting data made it difficult to manage collections and payment. EZmedicom needed a system that synchronized enterprise data in real time.
In addition, the performance of EZmedicom’s legacy accounting system couldn’t support the company’s growing business divisions, and querying and finalizing accounts also became very time consuming. Cost, sales, and purchasing statements had to be filled in manually, which made its staff less efficient. Likewise, they had to manually enter, manage, and provide financial data to executives to formulate and manage business plans. This made it difficult for managers to make timely decisions.
Finally, EZmedicom had to revolutionize its management practices to meet changes in the Korean healthcare industry, including the Korean Government Policy for Reducing Financing Disparity Among Health Insurance Funds and Hospital Ratings, which requires assessments of medical institutions and a more open healthcare market.
“We wanted to reform the company into a reliable business partner that contributes to the long-term development of our clients, rather than only offering temporary benefits, such as reduced prices,” said EZmedicom Chief Executive Officer, Hyun Jae-hwan.
EZmedicom integrated hospital procurement and supply data that was previously managed separately in the B2B division into a single database management system using Oracle Database 11g. The new system introduced standardized, work-oriented processes, such as contract management and inventory management and established storage resource management, product catalogs, electronic bidding, contracts, and partner evaluations.
It also improved the reliability of procurement and supply processes by enabling staff to manage medical supply purchase histories as they work, such as checking a specific hospital’s transaction history when making new purchases.
“The company needed an integrated management system that improved cost efficiency and reduced inventory management time,” said Hyun. “Aggregating and sharing B2B transaction data in real time and carrying out inventory tasks based on standardized processes has significantly reduced the time and money spent managing hospital data. We have increased the efficiency of purchasing processes by up to 59% and cut purchasing costs by 4.5%. We have also improved purchasing staff productivity by up to 41%.”
The Database Management System has also enabled EZmedicom to combine separate product coding systems that are managed by each business division into a single coding system. The company has linked its warehouse management system and enterprise resource planning (ERP) system interfaces, and established an integrated and effective inventory management system.
“We unified medical product information by reorganizing, cleaning, and mapping 120,000 master data product codes,” said Hyun. “This resolved the data compatibility issues caused by different divisions generating their own codes and pricing. Using the standardized product data for sales activities, such as bidding or renting equipment, also enhanced the transparency of sales data.”
EZmedicom has also linked the integrated, standardized ERP information with production information about the medical equipment and products customers use. The company can now assess production requirements and manage B2B customers’ needs in real time, which has improved customer satisfaction.
The systems for sales, purchasing, inventory, and financial management are linked through JD Edwards EnterpriseOne Financials. This allows sales and purchasing processes—from making and receiving orders for medical equipment and supplies to making and collecting payments—to be fully integrated with the accounting system as well as to be managed using consistent, unified standards.
“We have dramatically reduced the number of ERP tasks completed manually, increasing efficiency and cutting the time needed to finalize month-end accounts from 15 days to just 3 days,” said Hyun.
Executives can also now easily extract appropriate accounting data, such as the inventory turnover rate, from the new ERP system. The ability to assess financial data in real time has increased business agility and enabled managers to carry out management activities, based on reliable data. For example, by reviewing the inventory turnover rate, managers can determine the quantity and types of medical equipment and supplies they need to purchase and the best time to purchase the goods to accommodate fluctuating demands from hospitals. This helps reduce inventory holding costs.
The integrated system and improved profitability also helps EZmedicom meet the needs of the changing Korean healthcare industry.
JD Edwards EnterpriseOne Sales Order Management, JD Edwards EnterpriseOne Inventory Management, JD Edwards EnterpriseOne Procurement Management, JD Edwards EnterpriseOne Advanced Pricing, and JD Edwards EnterpriseOne Warehouse Management have improved distribution processes by integrating distribution and accounting data. This has reduced the time spent on order management by 40% and increased on-time shipment rates to 95%.
The system has also raised the suppliers’ delivery deadline compliance rate from 92% to 96%, improving customer satisfaction. In addition, it has enhanced the time and cost efficiency of distribution tasks, for example, by enabling hospital staff to check their procurement history directly.
EZmedicom has also established a cost and profitability data generation system, which generates previously unavailable cost and profit data for each product and division. Staff can now compare and analyze cost and profitability results in less than five days. This reduces the company’s total cost of ownership by ensuring EZmedicom can make strategic purchasing decisions, based on reliable ERP data. It also enables the company to provide more efficient customer service.
Baekse Dong-an helps a variety of hospitals and care homes to rent vital equipment, such as wheelchairs. Managing the rental history of each location is of the utmost importance. Previously, a supervisor entered the details of each rental service and item manually into separate spreadsheets.
EZmedicom now manages past and current rental equipment records—including when the item was rented, when it is paid for, and when it is collected to be rented again—using the integrated JD Edwards ERP system. As a result, the company can access the rental history for every hospital or care home immediately. It has cut the time to finalize rental data from two months to one month and improved the visibility of rental operations and rental management efficiency.
The ERP system’s intuitive and easy-to-use interface has improved work satisfaction. Due to the uniform, autonomous working environment, the staff for each division no longer needs to worry about problems caused by working with other business divisions’ legacy systems.
“Our Staff was given intense, one-on-one training to understand and start using the JD Edwards system as quickly as possible,” said Hyun. “The continued effort to train users and raise awareness has improved job satisfaction, and helped employees to use the system effectively.”
EZmedicom reviewed a number of Korean and solutions from other countries for its ERP implementation project. The company decided on Oracle’s JD Edwards EnterpriseOne because it provided the most convenience for users, reduced the total cost of ownership, and applied standardized processes.
“Most of all, Oracle’s JD Edwards EnterpriseOne features superb flexibility,” said Hyun. “We also had an enthusiastic supporting partner that played a major role in us choosing Oracle’s JD Edwards solution.”
Before implementing JD Edwards EnterpriseOne, EZmedicom consulted the best global ERP implementation practices. In November 2010, the company undertook a project innovation to assess and redefine the company’s existing work environment and standardized its master data.
EZmedicom began implementing the new ERP system in February 2011. The system went live in September 2011 and has not experienced any issues.
Advice from EZmedicom
Oracle Partner SE Partners project-managed the implementation, overseeing change management for executives and supervisors, and coordinating tasks between EZmedicom’s core sales, rental, inventory, and banking systems. The team analyzed and consulted the best global implementation practices to apply to EZmedicom’s work environment, reducing project risk during the implementation and helping establish a proven system infrastructure.
“SE Partners used its close ties with leading global vendors to provide EZmedicom with an optimal consulting service,” said Jo Dae-won, team leader, service support centre, EZmedicom.
“During the project innovation phase, SE Partners benchmarked best practices to help us introduce processes that have been proven across the globe. The team was with us throughout the stabilization phase after the system went live and supported us most enthusiastically.
“We have forged a strong relationship with SE Partners and we’ll continue to work with the team to build a more comprehensive and in-depth ERP system in the future,” he said.