Great products & great people: How Cardinal Health is working to transform supply chain logistics

In the healthcare sector, logistics and supply chain teams face constant change. For some time, healthcare has been grappling with the evolution and disruption of the convenience of the purchasing and supply chain experience that's driving consumerism in virtually every industry. Meanwhile, the COVID-19 pandemic has dramatically accelerated the shift of healthcare to home settings over the last year.

Becker’s Hospital Review recently spoke with Josh Dolan, vice president of global logistics at Cardinal Health, about today's healthcare logistics environment and what Cardinal Health is doing to innovate for the future. He shared how Cardinal Health is facing a variety of challenges head on to ensure that it stays on the cutting edge, rather than being a follower in this space.

Cardinal Health's recipe for success: Great products and great capabilities powered by innovative technology

Logistics and supply chain have been competitive advantages for Cardinal Health since its founding. Maintaining this source of differentiation, however, means embracing change. "If this year has taught us anything, it's that the landscape is constantly evolving," Mr. Dolan said. "We're very much focused on recognizing the need for change and embracing that."

Cardinal Health's customers have demonstrated an increased focus on reliability and speed, as well as efficiency. To fulfill its mission to be healthcare's most trusted partner, Cardinal Health has committed to investing in its supply chain to meet the needs of customers wherever they are and as their needs change.

Across the enterprise, the company has made physical infrastructure investments over the last 24 months to expand its distribution capacity in the Medical segment and in its third-party logistics services business, while earning recognition by Gartner Healthcare Supply Chain Top 25 Masters category. In addition, Cardinal Health has expanded refrigerated capacity in its pharmaceutical segment to serve its core pharmaceutical distribution and specialty business.

The company has also made supply chain and logistics changes to accommodate increased demand for medical care in the home. For example, Cardinal Health has continued its vigilance around product safety as it has expanded delivery to patients' homes, and the company has turned its attention to providing better consumer visibility into product locations. Mr. Dolan and his team continue to monitor if direct-to-patient deliveries will continue at the same pace once the COVID-19 pandemic is over. The logistics team understands, however, that flexibility is critically important. As a result, they are building resilient capabilities that will support the business no matter what happens.

"We have a strong history of great products, as well as great global supply chain capabilities powered by cutting-edge technology," Mr. Dolan said. "We're constantly investing in these areas. When you put those things together with the customer at the center, that's really our differentiation. Every day, our team provides the highest levels of service possible. It is what makes us healthcare's most trusted partner.

Next-generation logistics solutions rely on infrastructure and technology investments, as well as partnerships

To continue its legacy as a global supply chain leader, Cardinal Health is exploring a wide range of logistics innovations. The company has been doubling down on enhanced visibility across the entire supply chain and its partnership with the supply chain tracking solution company FourKites is playing a central role in this area.

"One thing that we had been working towards and the COVID-19 pandemic illuminated for us is that consumers expect high levels of transparency and visibility; they can see when their car share ride is coming and the exact location of their online shipment," Mr. Dolan said. "There's no reason that Cardinal Health shouldn't be able to provide the same information for our products that are in transit. We need visibility and transparency on the customer-facing side, whether that's a pharmacy or an at-home customer."

Cardinal Health's collaboration with FourKites has created connectivity with all carriers across the network from large national carriers all the way down to small businesses and diverse businesses that may own just four or five tractors.

The FourKites partnership is also helping Cardinal Health to develop a cognitive network that enables the logistics team to read and react proactively to whatever is happening across the supply chain. With this information, they can make inventory decisions and ensure that service levels remain at the absolute highest levels possible, despite possible supply chain disruptions.

"It all goes back to providing end-to-end solution, data-driven insights and delivering on our commitments no matter what is thrown our way, whether it's a winter storm, COVID-19 or some other event," Mr. Dolan said. "Our partnership with FourKites is a critical building block for making these things happen and the investment is proving to be more powerful than we originally expected."

In addition to the integration of systems to improve supply chain visibility, Cardinal Health has been exploring new capabilities for physical transportation. These include autonomously guided vehicles for ground and air transportation and new storage solutions to increase convenience for customers.

Logistics as a way to do well and do good

Working with small businesses and diverse suppliers has been a big focus for Cardinal Health's supply chain and logistics team, but it's also a companywide mission for every area that sources products or services.

"I'm super proud of the work we've been doing with our sourcing team internally to explore new opportunities to expand our partnerships with small and diverse suppliers around the world," Mr. Dolan said. "We believe this investment of time and effort pays great dividends, since these providers are some of the best in the entire network. It's a great example of doing well, doing good and creating a competitive business advantage."

Historically, Cardinal Health has focused on new transportation equipment to reduce emissions. The company is continually replacing equipment and looking at new solutions to increase its miles per gallon. One example is new trailer technologies that improve the fuel economy of trucks.

"With logistics, we believe we can continue to serve customers and reduce emissions at the same time," Mr. Dolan said. "Some of that progress will be through traditional means like transportation equipment. We are also looking at other strategies to reduce our carbon footprint, such as consolidation of freight, shifting from less-than-truckload to truckload and changing modes to intermodal rail services. Over the last couple of years, we've been leveraging our dedicated fleet and our backhaul capacity to fill up empty miles when coming back to a distribution center after making deliveries and servicing our customers. As being good stewards of our environment, we continue to search for opportunities to do better."

In terms of advanced technologies, Cardinal Health recently completed a pilot of electric vehicles on the West Coast. The company is optimistic that combining the latest transportation technologies with traditional transportation activities will dramatically reduce its carbon footprint.

Transforming the logistics function is a team effort

Cardinal Health believes that its people and their commitment are a big part of what sets the company apart. "We believe in putting the patient at the center of everything we do, and we believe in the power of our teams," Mr. Dolan said. "When I think about last year and what we've worked through, it's hard to forget that our team members in the field nationwide were putting doctors, pharmacists and the patients they serve first every single day."

To deliver on its promise of outstanding customer service, Cardinal Health's logistics team recognizes that it needs to embrace evolution as a norm, rather than a one-time event. The key to success is unlocking the power of the entire team and focusing on customer-centered innovation.

"My focus in leading my team is continuing to coach, develop and put people front and center on this journey, so we can create this transformation," Mr. Dolan said. "I think from an industry perspective, it will be pretty cool for people to see what we deploy over the next 6 to 18 months."


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