Supply Chain Effectiveness

1. Supply Chain Effectiveness Warren Hastings VP Global Trade Cardinal Health

2. Who is Cardinal Health? • Fortune 19 healthcare services company that improves the cost-effectiveness of healthcare. • As one of the largest healthcare companies in the world, Cardinal Health is an essential link in the healthcare supply chain, providing pharmaceuticals and medical products to more than 60,000 locations each day. • The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products.

3. Cardinal Health Trade Profile • Trusted trader program participation: • US C-TPAT Tier 3 & ISA member • Canadian PIP & CSA • Mexico EmpresaCertificada & NEEC Program (in-process) • China – AA Customs Rating • Prototype Participant in EU AEO (business now spun off) • Self-file customs entries for over 90% of Cardinal’s U.S., Mexico and Canadian Entries. • 100’s of suppliers, 100,000’s of products into multiple countries

4. Data and “the Border” • Two primary types of data in focus • Product • Shipments • Key point - Data misalignment = • How can Traders and Government agencies partner to improve? “Moving the border from the border” X Supply Chain Disruption

5. “Moving the Border from the Border”Shipment Data Example • Shipping quantity accuracy • The challenge exists in all jurisdictions… • The impact on supply chain can significantly vary based on agency approach:

6. Moving the Border from the Border”Shipment Data Example One end of the spectrum: A particular country in Asia Day 13 Day 1 Day 2 Day 3

7. Moving the Border from the Border”Shipment Data Example Other end of the spectrum -Canadian border under CSA Day 2 Day 1 Day 5

8. Same Issue – VERY Different Impact RANGE OF EFFECTIVE COLLABORATION X+20 Quantity Reported X+20 +1 Supply Chain Days +13

9. “Moving the Border from the Border”Product Data Example • Cardinal Health “Kitting” business • Implementation of FDA PREDICT System • Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting • US FDA change in requirement • 510K, Device Listing, Facility Registration & FDA Pro Code • Kit level versus each component • Is each data attribute correct, but also correct together • Some of the data (Device Listing) proprietary

10. “Moving the Border from the Border”Product Data Example • Each import shipment • Average 20+ kits • 100’s of components • 1,000+ lines of FDA data • 120 shipments each week • Any line FDA data X Supply Chain Disruption

11. Kit Mfg Release for Distribution Entry to CBP PREDICT Border Crossing Error Error Resolution (Multi-Day) Suppliers

12. “Moving the Border from the Border”Product Data Example • Resulted in high % of shipments kicked out with errors • Resource impact on agency personnel (FDA and Customs) • Resource impact on Cardinal Health personnel • Extensive supply chain interruption and unpredictability • Paradigm shift needed - Collaborative effort with the Agency to move data checking upstream – or “move the border from the border”

13. Error Resolution No Product Data Process Data Verification Release for Distribution Pass Yes PREDICT Entry to CBP Border Crossing Kit Mfg Suppliers

14. “Moving the Border from the Border” • Many aspects of agency responsibilities are much more effectively administered away from the point of import. • These approaches can help agencies make better use of scarce budgetary resources and reduce processing costs. • More effective compliance results • Smoother, more robust supply chains. • Reliance on Robust Trusted Trader Paradigms • Significance of quantifiable impact • Initial EU AEO perspective • US C-TPAT data

15. Thank you!