That ’ s the approach Sacramento , Calif . -based Sutter Health took . When it was time to move the direct-buy items back into the distribution channel , the question was , what ’ s the best way ? Fortunately , Sutter Health supply chain leaders could turn to Medline for guidance , collaboration and teamwork .
Challenges For Lee Ayers , Sutter Health senior director of supply chain operations , “ It all comes back to one of the supply chain principles near and dear to my heart : Least handling is best handling .”
Trucks coming in all day lowered efficiency Ayers looked at Sutter Health ’ s distribution model and noticed that a lot of supplies were coming from Medline in the morning . Then throughout the day , a large volume of items would be delivered to their hospital dock from other trucks , whether a vendor truck , FedEx or UPS .
“ When you receive hundreds of parcels a day on your dock , it ’ s hard to determine what PO goes to what parcel ,” says Travis Barkel , Sutter Health director of purchasing and stock control . “ It involves a lot of manual work , which lowers efficiency .”
In addition , when Sutter Health makes a purchase directly from a vendor , it may come as just one item that has to be broken down from a case or a box into one repackaged item .
“ Then we have to unpack all that stuff and put it in our own bins ,” Ayers says .
Freight fees from multiple carriers added up Every time the Sutter Health supply chain team orders a parcel delivery from a carrier such as FedEx or UPS , a freight fee applies . Those costs don ’ t apply when they use a distribution channel . Instead of receiving one product and being charged a freight fee , Sutter Health can have the product added to the delivery that ’ s scheduled to arrive in a large truck the next morning .
Sutter Health ’ s distribution control tower
Sutter Health set up the Stock Control team as a “ distribution control tower ” almost four years ago . “ This team focuses on and is the counterpart to Medline all day long ,” says Lee Ayers , senior director of supply chain operations , Sutter Health .
Here ’ s how the team functions :
Analytics Manager 6 analysts : Focus on forecasting , prime vendor management , looking upstream and projecting next back order
“ The team is deeply rooted in the relationship with Medline ,” Barkel says . “ We ’ re trying to provide more transparency to Medline as to what our demands are going to be , and then manage the supplies coming from Medline across the organization .”
Actions Sutter Health supply chain leaders approached Medline in March 2023 to help tackle their challenges . “ They wanted to put those buy-direct vendors back in the distribution channel ,” says Chad Hoare , Medline IDN executive account director . “ It started with a small idea . They simply wanted to see what items they could shift to us as their distributor .”
Review the master item file The Medline team asked Ayers to send Sutter Health ’ s master item file so they could look at what items could be moved . After analyzing the file , the team was able to move 1,200 items worth $ 40 million total — into Medline ’ s distribution channel .
Until then , Ayers hadn ’ t realized that so many items could be channeled through Medline ’ s distribution center . He says , “ I didn ’ t realize that it was a choice . We proposed the idea to the vendors whose items we wanted to move .”
Travis Barkel Director of Purchasing and Stock Control
Purchasing Manager 12 buyers : Focus on Medline orders and tactical day-to-day movement between Medline trucks and receiving
Logistics Manager 2 inventory control technicians : Focus on keeping 90 days of disaster response SKUs on hand in Sutter ’ s warehouse , plus stockout items
Some vendors chose to continue working directly with Sutter Health to keep the personal relationship with the health system . However , most of the vendors had no preference whether they furnished supplies directly to Sutter Health or had them go into Medline ’ s distribution channel .
Bring in the implementation team Medline coordinated the project with its implementation team to carry out the secondary implementation process . The team made sure Barkel and his Stock Control team — also known as Sutter Health ’ s distribution control tower — understood how the implementation would work .
“ We transmitted all our manufacturer contract pricing to Medline so they could present a contract to the manufacturers ,” Barkel says . “ The contract presents Medline as an intermediary within that relationship so we can keep pricing consistent .”
Barkel found Medline ’ s implementation team invaluable throughout the process , saying , “ They helped us do an analysis of our volume and how much we purchased and decide what that inventory in a Medline distribution center would look like .”
Eoneren / E + via Getty Images
22 SUPPLY CHAIN OPTIMIZATION Issue 9 / 2024