I have spent over forty years of my life developing freight management solutions. As an independent logistics and freight management consultant I’ve conducted over 150 Airborne, DHL, FedEx and UPS contracts on behalf of my clients (Abbott, Bio Rad Labs, Pfizer, Nellcor Puritan Bennett and Sorin Bio Medical to name a few) in the healthcare industry as well as some of the most prestigious high technology companies in the US…like Apple, Cisco Systems and HP.

We created this market niche back in 1998 when I put in place what was then known as the first NATIONAL inbound freight program for Catholic Health West, which I managed for them as their CONSULTANT.  But I realized early on that with 5000 hospitals and only one of me, the real opportunity was to develop a 3PL provider service that would minimize the time that would be required by Materials Management, AP and IT and the costs associated with that kind of an endeavor.  In a little over 5 years, FDSI has become one of the most respected, innovative and dynamic forces in the industry, creating change in how healthcare providers, suppliers and GPOs manage freight today.

So, with that background, let’s look at what I believe is a viable approach for a successful freight management program:

What you really need from the 3PL or Carrier

Below, you will find four thought provoking reasons why FDSI believes every provider should take a serious look at managing their freight cost (inbound and outbound).  Based upon my personal experience, excluding cost, as a 3PL or carrier (I mention carrier because presumably all providers are utilizing FedEx and UPS), the key factors to achieve the optimum savings opportunity are as follows:

1.  Painstakingly benchmark supplier costs BEFORE they are implemented into the in-house or outsourced program.  We find this is not been done to the extent that it should be when we perform our preliminary analysis as a new FDSI customer. We discover multiple freight charge designation locations, size, air or ground errors  Arguably, this situation continues today, and I can tell you there are additional suppliers that no longer charge for freight dependent upon the size of an order and if they are shipping air or ground.  So, the question is, who are they?

2.  Drive supplier compliance so no suppliers are left on the sidelines. There are suppliers that require notes on every PO or they won’t ship. Many suppliers are billing back for freight, most likely for this reason.  Same question as above applies.

3.  There are suppliers that charge additional fees on their product invoices while the carrier or the 3PL is also billing you for freight on their invoice.  What you want to know here is which ones and where the combination of the two charges is more than what they would assess on their product invoice.

4.  Benchmarking, as indicated above, is the key to accurately measuring future savings.  So, it follows that freight management reporting is the cornerstone of gaining visibility on how shipments are moving via the different levels of service and where there are opportunities for a shift to more economical methods with the conversion of air to ground and without sacrifice in service, the ultimate goal.

We strongly recommend all providers implement a true 3PL program to reduce their freight expenditures which affect the economic bottom line of a hospital. Since 1998 we have been successful when implementing a true 3PL solution of reducing costs for our customers 100 percent of the time. As our customers would tell you “it is the easiest money we have ever saved”.

For more information:  Contact FDSI