Why global sourcing is a golden opportunity for self-distributors

Approximately 30% of the top 200 largest hospital systems in the United States have implemented, or are planning to implement, self-distribution programs, and this percentage is growing. Based on our conversations with many of these CFOs and supply chain executives, they expect it is a cost-neutral proposition at minimum with significant benefits to the hospital supply chain and purchasing systems.

The benefits include standardization not otherwise attainable, improvements in product control, quality and selection, data control, cost visibility, and reduction in time spent by clinicians foraging around the supply room for the tools they need.

Here are the top reasons global sourcing should be an integral component to any large hospital or IDN self-distribution program.

Quality improvement
Because you have taken control of your own hospital products distribution, why not take it a step further and go directly to the actual manufacturers? By working with a healthcare supply chain expert, you are now capable of bringing high quality products from all parts of the globe into the United States directly to your warehouse. Using an inside-out approach to product acquisition, you can customize and enhance many common products to improve quality and better meet the needs and desires of the end users rather than simply accepting the options in a distributor's catalog.

"[Global sourcing] generated a better product at half the price." - VP, Supply Chain Operations, Westchester Medical Center Health Network

"Our [globally sourced] patient amenity kits are a 10X in quality with 30% savings." - Clinical Supply Chain Manager, Northside Hospital

Cost reduction
Now that you have your own warehouse and distribution capabilities including transportation and staff, you don't have to pay the 20-50% markups on many common, commoditized hospital products like thermometers, stethoscopes or patient amenity kits. Global sourcing with factory-direct relationships and the right partner commonly saves hospitals and IDNs 30% or more on the med-surg category.

Since the inception of the global sourcing program in 2013, NewYork-Presbyterian has saved an average of 32% on a select group of products. A significant portion of globally sourced products were designed and improved by clinician input and received quality improvement designations.

"[Global sourcing through our partner] helps us reach our goals of maintaining or enhancing the quality of supplies our patients and staff know and expect from us while dramatically cutting costs at the same time." - Director of Product Development and Global Sourcing, NewYork-Presbyterian.

Remove risk & improve standardization
Self-distributing hospitals and IDNs don't need to trade quality or safety to save on their hospital products. Hospital supply chain complexity and multiple layers of handling within legacy distributor relationships makes it difficult to know the conditions in which products are manufactured, often on the other side of the world. This introduces significant risk where there should be very little. A global sourcing partner that understands the quality requirements of hospitals and clinicians brings smooth, high-value added benefits to any hospital or IDN self-distribution program.

Your global sourcing partner should choose manufacturing facilities according to strict factory audits and quality controls. Inspection criteria should be based on international standards (FDA, ISO, ASTM, EN). A team of experienced QA/QC specialists should perform full inspections on each production lot before final release.

Because you now no longer have to simply accept the distributors price, you can significantly increase standardization of common, quality-assured commoditized products wringing out dozens of SKUs from your item master thereby streamlining your supply chain and self-distribution processes.

Gain full transparency & data control
Hospital CFOs, supply chain and purchasing executives who don't have full visibility into the cost of goods they are acquiring are essentially flying blind; losing clinical quality improvement opportunities and wasting dollars. It's not an optimal way for healthcare providers to operate.

Self-distributing hospitals and IDNs who include global sourcing as a key part of the mix attain visibility into the full cost of acquisition all the way back to the factory. By adding global sourcing to self-distribution initiatives, they can take quality, cost of acquisition data and associated financial control back from the middlemen and set value-based improvements within their supply chains into action, resulting in sustainable competitive advantages.

About the author:

Lorne Tritt is Founder and CEO of ASP Global. With headquarters in Atlanta and operations in the Pacific Rim, ASP is a leader in global sourcing strategies and programs. ASP Global's programs enable IDNs, hospitals and large group practices to take advantage of lower costs and improved quality in hospital medical supplies available through direct sourcing, an efficient supply chain model and the global marketplace.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.​

Copyright © 2022 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars