Prepared for the California State UniversityEast Bay

Skip SkivingtonInterim Vice President of Supply ChainMarch 8, 2007

Kaiser Permanente Supply Chain

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Today’s Discussion

Kaiser Permanente “At A Glance” Kaiser Permanente Supply Chain Overview Careers in Supply Chain at Kaiser Permanente Supply Chain Leadership Qualities

The Supply Chain “. . . has evolved into a profession that values strategic thinking, analytical skills, and the use of technology -based tools.

Those capabilities are gender and race independent. This field is fertile ground for talented individuals.”

- Nancy Haslip, Past President, Council of Logistics Management

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Kaiser Permanente At A Glance

Large Integrated Healthcare Delivery System

$34B Revenue Would be ~ 60 on Fortune 500 Labor Management Partnership

with 33 Participating Unions 9 States & the District of Columbia 8.6 Million Members 37 Medical Centers

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Kaiser Permanente At A Glance (continued)

26 New or Expanded Hospitals Planned > 430 Medical Offices > 13,000 Physicians > 156,000 Employees > 450,000 Surgeries/Yr > 85,000 Deliveries/Yr > 109 Million Prescriptions/Yr > 34.6 Million Doctor Office Visits

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Kaiser Permanente Supply Chain:Large, Fragmented and Complex

Insight: Kaiser Permanente supply chain closely resembles retail/FMCG

Approximately 184,000 Stock Keeping Units

Multiple Parallel (Competing) Distribution Channels – Pharmacy, IT, Records, Pathology, Linen, Food, Supplies

2 Primary 8 Secondary Warehouses1000’s Store Rooms

210,000+Suppliers Approximately 1,500

Supply Chain Employees

Medical Centers and Medical Offices

1,200 National Contracts

1,000+ Vehicles

54 Systems

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Supply Chain – Scope of Responsibility

Provide assurance of supply and cost savings through the efficient operation of its various departments:

Start-Up Services Product Support Document Services Regional Records Fleet & Vehicles Regional Couriers Central Stores & Transportation

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Current Goals

Effectiveness of our Approach

Prioritization & Expectation Management

Internal Communication

e-Sourcing

Organizational Alignment

Sup

plier D

iversity

Sarb

anes-O

xley

Process &

S

ystem

s

Cost

Reduction

Foundational Goals of our

strategy

Goals for 2007

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Supply Chain – Opportunities

California Supply Cost Savings ~ $30M

Reduce Contract Courier Spend

Contribute to “On-Time” opening of all new construction projects

Maximize Print Savings Opportunities via leveraging

Continued reduction in Work Place Safety injuries

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Supply Chain Operational Results Supply Cost Savings - $32M Product Support – 98.5% contract compliance Document Services – HealthConnect print management Fleet & Vehicles - $4M annual vehicle replacement & fleet

maintenance Regional Couriers – Delivery of pharmacy, lab specimens and

medical records Regional Records – Manage over 40M medical records & X-ray

inventory Start-Up Services – Purchase and delivered $350M Print Shop & Graphics – Produced 75M impressions Central Stores & Transportation – Delivered $65M in medical

supplies

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Northern California (Livermore)

2,600 SKU’s

2M Lines Picked – 99.8% pick accuracy

.5M miles driven

5K Pallets – 99% on-time delivery rate

Average adjusted fill rate of 99.5%

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Product Support Services

Committed to first class serviceVendor relations management.Local and Regional Product Councils.Determines product needs and issues.Conversion plans for all KP Supply and Group Purchase Agreements.

Consult with National Sourcing Teams

Facilitate Local Product

Councils

Implement Product

Conversions

Monitor Compliance

Champion Supply Cost

Savings

The Product Support Team enhances the delivery of high quality, cost effective healthcare by assisting customers to recognize and obtain the benefits of National and Regional Product Standards.

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Mission Critical Support

Workplace Safety

Committed, Aligned & Capable Workforce

Quality Leadershi

p

Service Leadershi

p

Service

Cost

Quality/Regulatory

Assurance of Supply

Operations

Workplace SafetyMedical Records Retention

Sarbanes-Oxley Remediation

Day to day operations

Material Services

Financial Security

SecureAutomationof MedicalRecords

Regulatory and

Contract Compliance

AQSCI Model by QPGROUP

Innovation

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Careers in Supply Chain atKaiser PermanenteSupply Chain Manager

Description: Reviews existing procedures and examines opportunities to streamline procurement, warehousing, distribution and financial planning to meet product distribution needs. Directs activities to limit costs, improve accuracy, customer service, and safety. Makes decisions regarding the movement, storage and processing of inventory.

Key Duties: Develops customized strategies providing high customer service levels and reduced cost Responsible for the physical custody and overall safeguarding of the inventory Responsible for the efficient flow of product from supplier to customers Provides information, analysis, and recommendations on overall operations

Required Skills: Broad knowledge of the supply chain: inventory management, distribution center operations, transportation, and supplier operation; expertise in facility layout, cost control, cost/benefit analysis, productivity improvement, and work simplification; strong leadership and people management skills; systems development knowledge desired; background needed in problem-solving, analysis, logistics strategy, or organizational planning; and presentation skills.

Career Path: Supervisory experience in materials handling and order fulfillment, facility layout, planning or distribution is needed. Success in supply chain management may lead to vice president of operations, director of materials management, or director of supply chain.

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Leadership Qualities

Be passionate!!! Be inquisitive in all areas of work and life Be serious, but don’t take yourself too seriously Maintain a sense of humor Listen to stories, become a good story teller Have healthy diversions Own:

Your career path Your physical health Your mental well being

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Thank You & Continue to Thrive