imagine a healthcare supply chain that works from the patient back
DESCRIPTION
The presentation given by Kevin McPherson, Vice President of Owens & Minor Healthcare Logistics, at the Supply Chain Insights Global Summit in Scottsdale, AZ on September 10, 2014 Imagine a Healthcare Supply Chain That Works from the Patient Back Healthcare is top of mind for both business executives and lawmakers. No one disagrees that it needs a redesign. Join this session to hear the vision of an automated value network for healthcare powered by RFID.TRANSCRIPT
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.1
Imagine a Healthcare Supply Chain That Works from the
Patient Back
Kevin McPhersonOwens & Minor Healthcare Logistics
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.2
AgendaObjectivesOwens & Minor OverviewThe MarketThe ProblemThe SolutionSummary & Q & A
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• Fortune 500 Company – $9B in sales• Founded in 1882 in Richmond VA• 2012 Acquired Movianto – 3PL in Europe• 6,500 Employees
• Core – Med-Surgical Distribution (40% shr)
– >200,000 SKUs– 1,400 suppliers– 4,600 US healthcare provider customers– 825 3PL Contracts
• 2013 – Rebranded as Supply Chain Services Company
3
3
Owens & Minor OverviewOverview
Connecting Manufacturers to the Point of Care
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.4
Owens & Minor Network
44
• 37 Local Distribution Centers• 5 Regional DC’s• 450 Power Units in Private Fleet• Connecting:
• 1,400 Suppliers• 4,400 Manufacturers• Buy-Sell, Activity Based Fees• Agnostics to Title to Inventory
•Custom Models for Mnftgs•Network Models for Large Health Systems•ERP - Ross, Oracle, OMNI•WMS – Cambar (Legacy), Red Prairie,
2 Hour Delivery to 90% of US Hospital Beds
l
ll
l l
Local Dist Center Regional Dist Center
Home Office
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9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.5
8%
29%
4%
15%
5%
39%
U.S. Medical Device Industry by Category, 2011
ConsumablesDiagnostic ImagingDental ProductsOrthopedics & Prosthetic DevicesPatient AidsOther
U.S. Medical Device Market
U.S. Medical Device Industry by Category, 2011
• The $106 billion U.S. medical device market is the largest in the world
• Implantable devices represent the largest dollar volume ($40B)
• Implantable device recalls exceeded 100 million units Q2:2012 for the first time in nearly 2 years
Implantable Medical Device (IMD) Demand
Johnson & Johnson; 10.0% Boston
Scien-tific; 8.7%
Striker; 7.8%
Others; 26.4%
Medtronic; 20.7%
St. Jude Med-ical; 6.6%
Zimmer; 6.2%
Synthes; 5.1%Abbott, 4.4%
Biomet, 4.1%
U.S. Implantable Medical Devices, 2010 ($36B)
52%31%
17%
2015, ($47B)
Source: The Freedonia Group, Inc.
2010, ($33B)
50%34
%
16%
54%29%
18%
2020, ($64B)
6.9%2010 – 2020CAGR
Source: Seeking AlphaSource: MDDI
3%CAGR
Market
Orthopedic
Trauma
Cardiovascular
Cosmetic
Other
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.6
Implant Supply Chain Challenges
• Highly Comp’d – 40% time spend on logistics
• Physician / Rep relationship drives process
• Need technology / visibility tools to exit logistics
• Procedure to cash lag• Procedure to PO = 3 to 30 days • PO to payment 60 days
• 2-4 Inventory turns – Heavy Working Capital
• Antiquated demand planning tools – Disparate & Manual
• 3-5% Inventory loss, outdate, & obsolescense
• High transportation costs – direct air ship 100% - No mins
• All Mnftgs have direct supply models-Redundant
• Combination insourced & boutique distributors
• Lack/limited visibility to Provider & Patient data
6
Logistics
Sales
Financial
The Problem – Implant Manufacturers
DSO 55-85 days
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Distributed Disposables
25%
Direct Purchase Devices, Implants,
Disposables75%
• Surgeon Preference Driving SKU Proliferation
• Sales Reps in Hospital & OR’s
• Supply Chain Issues
• SKU Redundancy – Seek Formulary
• Whse Labor Costs
• Contract Pricing Mngts
• Erratic Supply – Alt Sourcing Difficult
• Disaster Planning
• Seeking Innovative Solutions
Total Hospital Supply Spend (Non-Pharma)
The Problem – Healthcare Providers
Challenges
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.8
Logistics
• Significant inventory reduction
• Reduced freight
• 100% visibility
• Standard processes
• Improved recall management capability
Financial
• PO on Day of Procedure
• 5-20 day reduction in cycle time
• Able to cover more cases with less inventory & fewer reps
Sales Force
• Increased sales rep productivity
• Reps spend 100% of time selling, not on supply chain
• 24 x 7 visibility to set inventory
What the Implant Market needs8
The Solution
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.9
1
PPI Manufacturers
PPI orders placed by the Provider are
delivered to O&M warehouse
3
OM aggregates the various manufacturer goods and delivers them as needed in
convenient totes that are prepped for PAR
locations.
4
OM delivers to Hospitals and Clinics
2
Provider-owned inventory is
segregated in the distribution center by
customer
DistributionCenter
The Solution
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.10
Acute Care Hosp Detroit MI
Sales Rep/DOE to MnftgsWeb Based Order System
Inventory Synch
Ops KPI & A/R Recon Support
Par Driven PO & Weekly Replen / Return ASN
Leverage ExistingDaily Deliver
O&M cycles inventory
ReverseLogistics &Recall Support
Reportable communications, clinical calls, etc
EDI Payment
LENS Visibility Tool
Primary FlowsThe Solution
Demand Capture &
Par Replen
O&M sets PARs
O&M manages metrics
O&M Captures POU Data
EDI Invoice
Text/Email Key Order Status& Alerts – Eliminates CurrentLogistics Tasks
Inventory SynchHosp & DC Level Data
Capture Surgery Demandat point of determination
9/15/2014Supply Chain Insights Global Summit #ImagineSC September 2014, p.11
Providers
• Product to Floor ½ Day Earlier
• Reduce receiving & IC labor
• Eliminate Parcel Receipts
• Pathway to Procedural Kitting
• Scalable in move to Product Formulary
Device Mnftg • 20-day DSO Redux
• Total SC Visibility
• Divest of IC Risk (IC control to O&M)
• Increased working capital (IC & DSO)
• ▲ROI of Reps
• PR – Value add to Providers
O&M• Expands Total
Order Offering
• Leverages Private Fleet
• Leverages current IC Team
• Aggregates for the Industry
• Pathway for reduced cost of care
Value Creation11
The Summary