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Supply chain professionals need to root out overt, covert shipping costs
Freight and shipping inefficiencies can act like a cancer within healthcare financial operations.
Incidents that should inspire questions start out small and seemingly so insignificant that they don't raise red flags in the budget until you're setting up the next year's budget requests.
That's when solid detective work reshapes hindsight. Suddenly, those stat orders in the operating room and off-contract shipping habits become painfully apparent. They may highlight shortcomings in contract compliance, demand forecasting and inventory management practices, but they primarily should sound the alarm for fiscal diligence.
Some healthcare organizations feel freight and shipping practices, which can require considerable digging, should be outsourced to distributors and other third-party logistics and services companies so their own people can concentrate on caring for patients and the facilities that house them. Others may want to control it in-house.
Either way, the first step toward fiscal and operational recovery is admitting you have a problem and then embarking on the discovery phase to root out just how much of a problem you have.
Self, shelf awareness
Supply chain professionals face myriad overt and covert challenges with freight and shipping that easily can multiply into the six-figure range that drain budgets on one side and pad profits on the other. Perhaps the most obvious, and some argue egregious, starts with ceding control to product suppliers.
"The most common [problem] is allowing vendors and manufacturers to control and pay for the transportation process without making an informed decision," said Jim Grieger, president and founder, ISC Expeditions LLC, Asheville, NC. In some cases suppliers can "abuse the privilege," given the manufacturer's scale of business and how tightly integrated the carrier is within the manufacturers' distribution process, he noted. " [But] breaking this process apart may actually increase costs on both sides," he warned.
Grieger also cautioned supply chain professionals about changing the terms of sale to Freight-On-Board (FOB) origin with collect shipments as the healthcare organization actually pays the shipping costs as well as accepts responsibility for the products when those products actually leave the supplier. With the title change taking place at the supplier's location the healthcare organization - the buyer - assumes the liability for freight damage...