By Keith Biondo
Inbound Logistics published its first healthcare logistics article back in 1994. That article revealed several important reasons for companies to move to demand-driven logistics, even those not in the healthcare value chain.
Hillarycare was introduced the year before that article ran. My opinion then was, “Fine, look at Hillarycare, but first cut costs and boost patient care by better matching supply to the demands of patients and practitioners.” The article profiled St. Luke’s Roosevelt Hospital as a case study and detailed how, with the help of a 3PL, the hospital took control over the flow of inbound products, slashing waste, saving time and money, and, most importantly, providing better patient care. That was more than 20 years ago, and would be considered a simple logistics program by today’s standards.
Now, with the crush of new pressures on the American healthcare system, where are more stakeholders turning for solace? To supply chain excellence and inbound logistics (see Filling a New Prescription for Supply Chain Improvement). They’re moving away from the idea of “pushing” and toward developing closer relationships with vendors; using IT to share information, gain visibility, and match demand to supply; and partnering with 3PLs who have the skills, knowledge base, and culture to accomplish that.
I recently visited a UPS Supply Chain facility designed to serve healthcare customers. I saw and heard their demands for fulfillment speed, accuracy, and efficiency. “It’s not a package, it’s a patient,” is the UPS mantra at that DC.
The practice of letting the demand point drive the process is not only accelerating in the healthcare sector. As research in this issue indicates (see 3PL Perspectives), enterprises across the United States and around the globe are realizing that demand-driven logistics practices play a crucial role in business success in an increasingly complex world. Of the thousands of shippers providing data for this year’s Perspectives market study, 55 percent report cutting transport costs as a major challenge. Their second greatest logistics challenge (32 percent) is business process improvement. Using logistics to improve overall business process? Yep. Coming in a strong third in shipper concerns is improving service to customers. Only one logistics approach can help with all three challenges. Throw in reducing inventory and supporting infrastructure, advancing the order-to-cash cycle, being lean enough to guard against market dips, and fully profiting from market spikes by staying flexible and scalable.
Sure, pushing product at customers works. But finding a way to let your customers pull product through you just works better.
Although many of you know that a demand-driven logistics approach would work in your company, some are still acquiescent and continue to push product at customers, hoping for the best. Yes, it is easier to push rather than pull. Yes, many of you are tasked with a specific function and don’t have the juice to morph company policy to better align supply with demand. Still others are prospering and see little need to upset the company applecart if all is going smoothly. And perhaps others think your business is not a fit for inbound logistics. That may be true. But a hospital is not the first place that comes to mind when thinking about improving logistics, is it?
If you have read this far, you may think that I have a point. Maybe, just maybe, using the best logistics IT available, and partnering with world-class carriers and 3PLs with the skills, knowledge, and reach, can help you find a better way. If that is true, then perhaps the supply chain success sagas found in this issue, and elsewhere, will push you to take the first step.