Owens & Minor Healthcare Supply Chain Insights Summit
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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.
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Owens & Minor Healthcare Supply Chain Insights Summit
- 1. Kevin McPherson Owens & Minor Healthcare Logistics Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.1
- 2. Agenda Objectives Owens & Minor Overview The Market The Problem The Solution Summary & Q & A Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.2
- 3. Overview Owens & Minor Overview 3 3 • 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 Connecting Manufacturers to the Point of Care Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.3
- 4. Owens & Minor Network • 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, Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.4 4 4 2 Hour Delivery to 90% of US Hospital Beds Local Dist Center Regional Dist Center Home Office
- 5. U.S. Medical Device Market U.S. Medical Device Industry by Category, 2011 U.S. Medical Device Industry by Category, 2011 8% 29% 4% 39% 15% 5% 3% CA GR Consumables Diagnostic Imaging Dental Products Orthopedics & Prosthetic Devices Patient Aids Other • 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 U.S. Implantable Medical Devices, 2010 ($36B) Other, 26.4% Johnson & Johnson, 10.0% Others, 26.4% Striker, 7.8% Medtronic, 20.7% Boston Scientific, 8.7% St. Jude Medical, 6.6% Zimmer, 6.2% Synthes, 5.1% Abbott, 4.4% Biomet, 4.1% 2015, ($47B) 52% 17% 31% 2020, ($64B) 18% 28% Orthopedic Implants 2010, 50 16 % 34 % % Source: The Freedonia Group, Inc. 54% 6.9% 2010 – 2020 CAGR Market Source: Seeking Alpha Source: MDDI Orthopedic Trauma Cardiovascular Cosmetic Other Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.5
- 6. The Problem – Implant Manufacturers Implant Supply Chain Challenges • All Mnftgs have direct supply models-Redundant • Combination insourced & boutique distributors • Lack/limited visibility to Provider & Patient data • 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 DSO 55-85 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 6 Logistics Sales Financial Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.6
- 7. The Problem – Healthcare Providers Total Hospital Supply Spend (Non-Pharma) Distributed Disposables 25% Direct Purchase Devices, Implants, Disposables 75% Challenges • 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 Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.7
- 8. What the Implant Market needs Logistics The Solution • 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 8 Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.8
- 9. The Solution 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 Distribution Center Provider-owned inventory is segregated in the distribution center by customer Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.9
- 10. The Solution Acute Care Hosp Detroit MI O&M Captures POU Data O&M manages metrics O&M sets PARs O&M cycles inventory Text/Email Key Order Status & Alerts – Eliminates Current Logistics Tasks Sales Rep/DOE to Mnftgs Web Based Order System Par Driven PO & Weekly Replen / Return ASN Inventory Synch LENS Visibility Tool Hosp & DC Level Data Ops KPI & A/R Recon Support EDI Payment Leverage Existing Daily Deliver Reverse Logistics & Recall Support Reportable communications, clinical calls, etc Par Replen Demand Capture & EDI Invoice Inventory Synch Capture Surgery Demand at point of determination Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.10
- 11. The Summary 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 Value Creation O&M • Expands Total Order Offering • Leverages Private Fleet • Leverages current IC Team • Aggregates for the Industry • Pathway for reduced cost of care Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September 2014, p.11
Hinweis der Redaktion
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- So how does all this work? Of course the Devil is in the details but the big picture is pretty simple… You continue to order products from your manufacturers but you change the “ship to” to be Owens & Minor’s distribution center. For Preferred Access SKUs you will place larger, less frequent orders. (Click) Preferred Access items that you own in our DC are segregated in storage but (Click) We can combine the Preferred Access items with routine StockPoint orders for (Click) More effective delivery – offering you all the benefits of wholesale distribution One daily delivery, combined orders, few POs, few small packages, etc.
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