John Vinarsky MT(ASCP) MBA | Vice President, Executive Resources & Office Solutions | Amerinet -
Today’s economic environment has forced healthcare organizations to dive even deeper to reduce costs. Equipment acquisitions and other large dollar expenditures warrant maximum attention. However, those that are willing to expand their cost reduction strategies are reaping big rewards.
One of the less obvious opportunities lies with freight management. Freight management is a collection of system-based services that are combined to provide greater transportation efficiencies. These services can include freight optimization, mode selection, carrier selection, freight consolidation, claims processing, freight payment and audit, shipment tracking, and carrier service evaluation for in-bound and out-bound freight. Many facilities can have thousands of suppliers shipping to them and charging for freight. It is surprising for some to discover that these costs can account for as much as 4 percent of their total supply spend.
Once an organization has committed to pursuing a more effective freight management process, the first step is to determine if they are going to perform these services themselves or pursue an outsourcing model.
If the decision is made to bring this process in house there are software programs that can be acquired and implemented that provide the platform. These freight management solutions can provide immediate shipping and receiving data as well as assist with quality control.
Due to the number of systems involved the cost of acquiring and operating your own system can be quite high. In addition, materials management departments are no different than most where they are being asked to do more with less resources making time a critical factor in the decision making process.
For these and other reasons an increasing number of facilities have decided to contract with a freight management company that can manage both shipping and receiving processes. This approach can provide both short and long term savings and permit the materials manager to focus on their key responsibilities.
As with many cost reduction opportunities compliance is the key to maximizing success. Freight management companies have the experience and processes in place it takes to work effectively with the vendors and suppliers to consolidate shipping and to leverage their relationships with the major shipping companies. The quickest savings are realized by aggregating volumes through a single shipping channel. However, the long term and sometimes most significant savings are realized through channel optimization while following a process that provides efficiencies, quality check and balances with the ability to monitor total freight expenses.
Freight management companies provide access to key shipping and receiving data through web access where they can review shipment details, summarize freight charges, obtain shipment quotes, create customized reports, monitor savings, and identify trends that could potentially lead to greater costs. Another advantage of working with a freight management company is that based on their experiences they can train the hospital’s staff to choose the most appropriate shipping option for each event. Not only will this reduce costs but it will also provide for greater customer satisfaction.
Whether a facility chooses to manage their own process or work with a freight management company they may be best served by acquiring a delivery tracking system. System components include a handheld or clipboard device and software that enable the end user to track and record shipments. In-turn these devices can be connected to the materials management system and provide immediate inventory updates.
It is apparent that healthcare facilities need to reduce costs wherever possible. Group Purchasing Organizations (GPOs) can provide important access and counseling for either direction; the comprehensive management or the do-it-yourself option. If neither is in the budget, a GPO can help a facility to at least find out how to start to investigate and understand their true freight costs.