PRODUCTS & SERVICES
Romanelli points to ven- dor compliance and “free freight” as two examples where price becomes a factor.
“Hospital Supply Chain
leaders and freight man- agement companies will often focus on the rate
Gerry Romanelli
they are paying with the carrier for inbound and outbound shipping,” he said. “A lower rate may increase savings on an individual shipment but a strong inbound vendor management program will deliver much more saving as a percent of total spend. For example, a 50 percent savings on one $10 package is $5. A 45 percent savings on $10,000 in freight [spending] is $4,500. “Free Freight is also a frequently misunder- stood term,” Romanelli continued. “While it sounds appealing it often has stipulations in the fine print that make it difficult to realize. It depends on the vendor but some provide on certain day and time frames; others require a particular mix of product or spend.”
Three-legged stool
Freight and shipping issues extend beyond receiving goods (inbound) and sending goods (outbound). In fact, the third area can be toxic to budgets, particularly in an inte- grated delivery network or multi-hospital system. It’s moving goods between facilities that can add to total costs.
“VPL has found that health systems are becoming more proficient in tracking the total landed cost of products on the first leg of the delivery into their network,” said Don Carroll, Vice President, Business Develop- ment, Vantage Point Logistics, Inc. “Once it enters their network, they tend to lose visibility to the movement of the product, and therefore have no idea what the true final landed cost might be. With ever- expanding points of care, such as ambulatory sites, physicians’ clinics, home health, etc., made even more complex with the accelerating [merger-and-acquisition] activity across the industry, health systems are having to move an increasing amount of product to various locations within their own networks. In fact, the latest estimates indicate that up to two- thirds of all health system freight costs occur within their systems’ networks. These freight costs include local and regional carriers, local couriers, small parcel carriers, etc.” As a result, VPL is developing a product that will allow its customers to follow and track a product from the original shipper into their network and then track it until it arrives at the final point of patient care, according
Don Carroll
to Carroll. This technology will provide its customers with the ability to calculate the true landed cost of any product, regardless of the number of times it moves from location to location, he added. Jake Crampton, Founder and CEO, MedSpeed LLC, concurs that Supply Chain may skip scrutinizing of the entire journey of a shipment, which affects calculations of the total cost of ownership.
“Beyond the [expense] of freight moving into the healthcare system, the
Jake Crampton
costs of moving items between health sys- tem facilities — known as intra-company logistics — can be overlooked,” he indicated. “Intra-company logistics costs are often buried in line items in many departments throughout the organization, managed by a number of resources and fragmented/ overlapping. Waste within intra-company logistics translates into a higher overall logistics total cost of ownership.” Crampton points out that the freight expense of supplies delivered directly to non-acute facilities can be overlooked. “Often, the freight expense for these items
is bundled into the cost of goods, instead of separated as independent line items,” he noted. “Compounding the confusion, items are typically shipped directly to the facilities via a third-party freight company that provides little visibility into the ship- ping mode, making tracking freight costs and creating strategies to reduce them a challenging task.”
Supply Chain should pay closer atten- tion to courier-direct, local and same-day shipments, too, emphasized Melissa Laber, Senior Vice President and General Man- ager, OptiFreight Logistics, Cardinal Health. “When there’s a lot of
focus and energy placed on inbound and outbound freight management, Sup- ply Chain often overlooks same-day/local courier transportation,” Laber said. “This segment of transportation touches distribution, but it is also mission critical for many other departments and clinical areas across the health system. Ownership and manage- ment of same-day shipments are usually shared or spread across many parts of an or- ganization, and there are typically multiple third-party couriers performing the work, adding to the complexity. What’s important to note is that same-day spend is estimated to be about half of a health system’s total freight spend and is an important compo- nent to manage.”
Melissa Laber 46 August 2018 • HEALTHCARE PURCHASING NEWS •
hpnonline.com
Consequently, Laber calls for a unified view of everything being shipped, includ- ing small parcel, large freight and same-day transportation expenses. “A holistic view of a health system’s transportation spend supports the ability to get closer to a ‘one truck’ concept,” she noted. “Layering all movement within a network can have a compounding impact when managing costs. Working with a singular partner to align, audit, and drive change management through all these elements will reduce cost and streamline operations.”
She further encourages managing freight and inventory together for products shipped direct. “If you know how much inventory you have, where you have it, and when it expires (as appropriate), would it better inform you about the decisions you make about shipping? Absolutely,” she added. Supply Chain simply needs transparency in its freight and shipping/transportation operations, according to Daniel Gagnon, Vice President, Global Healthcare Logistics Strategy, UPS. “Visibility tools track shipments, notify recipi- ents of transit details and often easily integrate into existing purchasing sys- tems,” Gagnon said. “Sta- tus alerts let users know when supplies are in transit. That advance knowledge can help with inventory plan- ning, and may help logistics staff trouble- shoot delivery issues before they have an impact.”
Daniel Gagnon
But Gagnon urges Supply Chain to pursue a more holistic approach, too, that includes the types of product shipped and the con- dition in which they need to be shipped in order to remain safe to use. “Regulatory support is critical as require- ments are growing in complexity,” he said. “Regulations, like the Drug Supply Chain Security Act (DSCSA), are requiring a single system of federal electronic, unit- level traceability of drugs and will require investments across the supply chain. While the FDA has delayed preliminary require- ments for serialization, they plan to begin enforcement in November 2018. Additional FDA process requirements may ramp up from there.
“Temperature control in relation to prod- uct-specific packaging and time-in-transit must be carefully considered to minimize supply chain costs,” Gagnon continued. “Innovative packaging solutions are increas- ingly important. With the aid of packaging experts, industry leaders look to standard- ize product kits and quantities. This can help reduce waste and improve the patient experience.” HPN
Page 48
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64
