Next generation freight management includes courier services

It happens more often than you might think: a hospital lab technician overnights a mission-critical package not across the country—or even across town—but across campus. Imagine the expense and inefficiency of overnighting that single package. Then multiply it by hundreds or even thousands of times a year—and the scope of the challenge becomes clear.

With the continued expansion of health systems, the challenge is mounting. As these provider networks grow in both geographic coverage and clinical services offered, the mounting complexity creates the need for greater efficiency in moving supplies, lab samples and other urgent parcels from facility to facility. As the use of shared and centralized services increases to meet the demand, same-day transportation becomes an important link in the supply chain to connect the entire network.

A traditional freight management program isn’t designed to handle the growing need for intra-network delivery. These programs typically focus on inbound and outbound shipping expenses alone. What these programs don’t factor in are transportation expenses outside those two modes, including courier services encompassing scheduled and rush service, as well as private fleets and large freight.

By adding these other expenses and looking holistically at freight spend, hospitals and health systems gain greater visibility into their total cost. And with it, they can make more informed decisions about how to better control costs and improve efficiency—without impacting the quality or timeliness of care.

Let’s take a closer look at how courier expenses in particular can be integrated into an advanced freight management program.

Think local, save more

While the traditional carrier industry is centralized, well established and delivers a high degree of certainty for both full truckload (FTL) and less-than-truckload (LTL) deliveries, the local courier market is so fragmented that it has been referred to as the “wild, wild west,” according to Matt Leahy, Director of Strategic Planning and Execution for Cardinal Health.

The same-day courier market can be divided into two segments:

  1. Scheduled delivery: frequent users include hospital labs, pharmacies and home health. May be handled by internal resources.
  2. On-demand delivery: for deliveries between locations not serviced on scheduled routes. Or, deliveries that need to occur between scheduled pickup and delivery times. An example is an on-demand delivery from a blood bank to an operating room. May be handled by couriers or a private fleet managed either by supply chain or clinical teams.

The challenge with third-party couriers is that there are lot of local and regional players in the market, and there’s no standardized rate structure. The same health system may use many different courier services, which creates a number of issues—starting with the lack of a fully integrated, uniform technology solution.

Each courier typically has its own technology platform. When a health system attempts to manage them all, the result is a lack of system-wide visibility. The absence of comprehensive reporting into key areas such as freight spend—as well as the overall inefficiency of managing disparate courier systems—can drive costs up.

In an effort to reduce courier expenses, some health systems choose to operate their own private fleets. But the result may not lower costs or improve efficiency. And by getting into the transportation business, health systems are diverting valuable resources away from improving the quality of care.

Driving the future

By focusing on transportation spend outside the inbound and outbound modes managed by traditional freight management programs, providers can avoid leaving significant money on the table. Adding courier expenses—and using advanced data analytics to monitor overall transportation spend—can improve visibility, increase efficiency and lower costs.

Taking this next-generation approach to freight management can be a substantial contribution to a health system’s efforts to control costs while supporting quality of care goals.

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