Spearheading a first-of-its-kind logistics center: 5 questions with Dennis Mullins, VP of supply chain for IU Health

In August, Indiana University Health broke ground on a $9 million* integrated service center in Plainfield, Ind., to improve medical supply distribution to the Indianapolis-based health system's hospitals and medical facilities across the state.

The 300,000-square foot facility, slated for completion in mid-2017, will rely on a Swisslog automated picking system to manage inventory. IU Health will be the first health system in the country to operate the robotically controlled system, which health systems typically rely on distributors to operate, according to Dennis Mullins, MBA, CMRP, vice president of supply chain, operations and construction for IU Health.
Dennis Mullins

Mr. Mullins holds more than three decades of supply chain experience. Prior to joining IU Health in 2015, he served as corporate director of supply chain integration for Baylor Scott and White Health in Dallas. Mr. Mullins earned an MBA from Garland, Texas-based Amberton University and is now working on his doctorate in business administration from Grand Canyon University in Phoenix. He also served as a medical materials specialist in the United States Air Force for 10 years.

Mr. Mullins spoke with Becker's Hospital Review about the new integrated service center and shared his visions for IU Health's revamped supply chain.

Note: Responses have been lightly edited for length and clarity.

Question: Why did IU Health decide to build a new integrated service center?

Dennis Mullins: As a large organization, our supply chain processes need to be truly centralized. Right now, we're looking at purchasing from an individual hospital standpoint, not the whole system. If we do look at it as a whole system, it will be more cost effective. The integrated service center will help us move toward a standardized approach and limit variability in the type of products we stock.

We also wanted to move toward a self-distribution business model to deal directly with manufacturers and limit interactions with distributors since they charge a handling fee and get a kickback from the manufacturer.

Q: What changes, if any, have you made to improve efficiency and reduce waste in IU Health's supply chain?

DM: The integrated service center will be responsible for managing all medical and surgical products for the health system. We're in the process of consolidating logistics and hope to provide fewer delivery runs to each hospital. The integrated service center has about 120,000 to 150,000 square feet of space shelled out for other service lines like pharmacy or home health. Starting as soon as 2018, these service lines will be consolidated into the integrated service center. So whether supplies are going to pharmacy or IT, they will all be moving from one location, which is a first for our supply chain.

Q: What is the biggest supply chain challenge you're currently facing?

DM: Standardization. We have 14 hospitals across the state and getting everyone to utilize the same products and business practices is difficult. It's like the Wal-Mart model. It doesn't matter which store you walk into — they're all laid out the same. Basically, we're trying to achieve the same concept at each of our hospitals through the supply chain.

Q: How does supply chain affect patient care?

DM: Supply chain is a very significant expense for any organization. When you look at healthcare spending across the country, it's roughly 20-30 percent of total costs. Nothing gets done without the supply chain. Even though we're not in the hospital, we provide healthcare from here. As far as patient care goes, it's crucial to get quality products on the shelves in a timely fashion, while also getting the best prices.

Q: Are there any regulatory changes regarding supply chain practices you hope to see?

DM: While the healthcare supply chain is responsible for measuring every unit of inventory, we don't always have the systems to do so. For example, if you go into a grocery store, you can see barcodes on every item. They have that single unit of measure and can easily replenish an item when it's low. When you buy a pack of gum, the cashier scans the barcode, you buy it and it's done. However, in the supply chain, [if I were to] issue a pack of gum, I need to track each individual stick of gum and they don't have a barcode, which makes it difficult.

I'd like to get to the point where manufacturing marks packaging all the way down to the single unit of measure so we have the technology to indicate what's being used, who's using it and when. The sooner I know it's used, the sooner I can work to replenish it.

*This figure represents the cost of equipment and related expenses for IU Health. The health system is in a long-term lease with Browning Investments, the developer building the facility, according to a news release.

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