The healthcare industry continues to see growing pressure from increasing patient numbers, as well as the drive to improve costs, quality of care, and availability of affordable care. One place to combat this, while meeting the rising demands of customers and healthcare providers, is in the supply chain.
In the healthcare industry, patient care is influenced by logistics in several ways. This includes ensuring medical supplies, devices, and prescriptions are delivered on time, in a period when products are moving quicker to market and in smaller batches with shorter product life cycles.
You must also consider other major hurdles the industry is facing:
- Increasing regulations
- Declining reimbursement
- Growing patient base
- New patient care delivery methods
Coupled with these industry challenges are transportation and logistics trends that are wreaking havoc on the healthcare sector. These include increases in freight costs, service issues, limited access to data and decentralized functions, poor routing, and a lack of visibility - all of these feed inefficiencies and could cause catastrophic disruption to supply chains.
One way to combat these trends, while speeding products to patients and increasing positive medical outcomes, is by having optimal transportation management. This allows companies to collect, analyze, and use the right data; access carriers; and optimize routes through planning, execution, and operational excellence.
However, you must take into account that transportation management is not a "set it and forget it" solution especially considering the dynamics of your business. It's a continuous improvement process. Each month, assessing and analyzing network opportunities leads to more efficient routes and optimal loads driving incremental savings. Utilizing business intelligence on a tactical and strategic basis, you may find more cost savings and streamline your process and network further.
Here are some key elements to consider when analyzing your network:
- Develop effective baselines that can be used for comparison to actual results. It's difficult to quantify progress if you don't know where you started. You should make it a point to understand monthly, quarterly, and annual performance baselines and the accompanying network profile.
- Utilize business intelligence tools to enable swifter analytics of the data. There are many cost-effective tools available in the marketplace that can turn 'Big Data' into actionable information very quickly. This will enable your team to spend more time interpreting the data versus data gathering and reporting.
- Establish a 4-step approach as the basis for managing and controlling network cost and service performance: Performance + Variance to Plan + Root Cause = Action. Utilize Pareto charts to focus on the areas driving the greatest impact to the issue.
- When developing your weekly/monthly performance bundle for management reviews, the information, charts, dashboards, etc. that you put together should answer the question, "So what should be the takeaway from this?" Too many times interpretation of the information is left in the hands of the audience with no direction from the subject matter experts.
- Lastly, get into a rhythm of review. Establish a weekly and monthly cadence for a network check-up. Consistency of review will eliminate network performance issues lingering for several weeks before being addressed.
Few companies currently use transportation management optimization and business analytics. However, when executed correctly, transportation management is an effective way to improve cost efficiency and serve patient needs.
Authored by Chris DiBernardi Chris DiBernardi is a Director of Business and Product Development at Ryder. He has over 14 years of global supply chain experience in the Healthcare & Life Sciences industry.
