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Supply Chain Continuum Presented by Mike Morrelli

Supply Chain Continuum Presented by Mike Morrelli. Owens & Minor. Agenda. Market dynamics and the d eveloping t rends . What is the Supply Chain continuum? How to baseline & the benefits of moving towards best practice. Supply Chain as an Evolving Model. Market Dynamics - Questions.

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Supply Chain Continuum Presented by Mike Morrelli

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  1. Supply Chain ContinuumPresented by Mike Morrelli Owens & Minor

  2. Agenda • Market dynamics and the developing trends. • What is the Supply Chain continuum? • How to baseline & the benefits of moving towards best practice. • Supply Chain as an Evolving Model.

  3. Market Dynamics - Questions • Health reform impact on Supply Chain? • Future of Supply Chain? • External ways to increase efficiencies in our organizations? • How to improve quality and reduce costs? • Optimize the different distribution channels? Model of the Future ? Proactive Supply Chains Aggregation

  4. Developing Trends & Topics Market forces are accelerating industry-wide change: • Future driven by Payors and payment structure • Margin pressures increasing significantly across all trading partners • Competitive lines are blurring

  5. Supply Chain Continuum Aggregation Opportunities Med/Surg Devices MRO/Jan-San Common Needs Office Linen Pharm

  6. Supply Chain Continuum Supply Savings Supply Savings • Transportation • Physician Clinics/ Non-Acute Supply Savings Labor Activity Savings • Bill-Only (Implant) Management Labor Activity Savings Labor Activity Savings

  7. Supply Chain Continuum Integrated Service Center ISC

  8. How to Baseline Example

  9. How to Baseline Executive Scorecard - Summary Example

  10. Supply Chain as an Evolving Model

  11. Example: Perioperative Locations Goal Transform from a reactive supply chain to a proactive demand chain • Why • Reduced supply spend • Optimized labor • Elimination of inventory • Improved profitability per procedure Assemble Patient Supply Chain Demand Chain Use Schedule Preference Card Adjust

  12. Traditional Market was Clearly Defined… • Distributor Model • High volume • <$800/unit • Low complexity • Nearly 100% - GPO contracting • Uncomplicated use • Private label • Minimal direct sales • Manufacturer Direct • Low to moderate volume • >$800/unit • High to very high complexity • Direct sales force • High prevalence of local contracting • Complicated use • Mostly sold direct 35% 65% By volume: 75% Distribution / 25% Direct AHA, Gartner Research, 2011 2012 O&M research, estimates

  13. But the Delivery Dynamics are Changing Rapidly… • Distributor Model + Fee for Service • Manufacturers increased reliance on more effective supply chains to service providers • Increase Flexibility • Lower Cost • Improve Visibility • Manufacturer Direct • Downward pressure on revenues /margins forces re-evaluation of SG&A inventory & DSO elements • Address changing customer needs 40% 60% AHA, Gartner Research, 2011 2012 O&M research, estimates

  14. Questions & Answers • Health reform impact on distribution? • Future of distribution? • External ways to increase efficiencies in our organizations? • How to improve quality and reduce costs? • Optimize the different distribution channels? Identify logistics service partners; separate out manufacturers/wholesalers Invest in technology & interfaces to connect schedule, care & replenishment Eliminate ownership as a condition of management; consider novel investments

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