The economic benefits of positive warehouse culture: 4 questions with Peter Saviola, Medline's VP of operations

A positive workplace culture in the warehouse can lead to significant supply chain efficiencies and cost savings for hospitals, according to Peter Saviola, vice president of corporate sales and operations at Medline Industries.

Mr. Saviola joined Medline as vice president of operations in 2002. He leads the customer logistics team, which provides consultative and logistical support to prime vendor distribution clients. Prior to his time at Medline, Mr. Saviola acted as a general manager for an international healthcare-services company where he oversaw the company's largest distribution center in the New England area, and was responsible for onsite supply chain staff at the University of Maryland Medical Center in Baltimore. He earned a bachelor's degree in management finance from the State University of New York at Buffalo and received his master's degree from University of Virginia’s Darden Graduate School of Business Administration in Charlottesville.

Mr. Saviola spoke with Becker's Hospital Review about the benefits of a positive workplace culture and shared tips on how hospital supply chain leaders can improve the culture of their warehouses.

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

Question: How does culture affect warehouse cost savings?

Peter Saviola: Measuring culture can be tricky. It's a bit of a chicken and an egg type situation. Does the positive culture make a positive workforce, or does the positive workforce maintain a positive culture?

While not measurable in a quantifiable fashion, indicators like employee retention, overtime and turnover can show how positive a company's culture is. For example, we'd expect workers to be less happy at a distribution center with high turnover compared to one with lower turnover rates.

If retention is low and turnover is high, culture can greatly affect cost. Warehouses with poor retention must depend on the workforce to work longer and harder. When new employees are brought in, they are less effective than seasoned employees who must therefore still work harder. Newer people often produce more errors, which is another factor affecting cost.

For as much as we in supply chain keep our eye on cost, labor is a consistent wild card. So as cost savings opportunities become less and less, IDNs and facilities have to look deeper and harder for areas to save money. They have to because employee turnover is expensive. This is the next bucket of cost savings and it’s rising to the surface…and culture is an emerging topic to tackle.

Q: How do you promote a positive culture?

PS: The current healthcare landscape — containing more consolidation and larger integrated delivery networks — is driving more people to think about this question. Many health systems are familiar with the team within their own four walls. Now, hospital leaders are also responsible for people in offsite warehouse settings and they don't know how to empower or work with them.

One of our cornerstones for maintaining a positive workplace culture is the implementation of incentive programs for employees. Incentive programs are crucial to drive culture, a sense of belonging and career paths for workers. We've created many positive employee initiatives and incentives for positive behaviors at our facilities to help change culture and build meaningful purpose for our staff, which in turn enhances performance and drives profitability.

When employees feel more empowered and valued for their work, it leads to greater efficiency, productivity and ultimately helps health systems help patients.

Q: What is the biggest supply chain challenge warehouses or warehouse workers currently face?

PS: To some degree, it would depend upon the specific warehouse or system. But across the spectrum of various IDNs or warehouses, I think the largest challenge lies in finding ways to incentivize workers beyond the hourly wage.

Whether its 2016 or 2020, the pay scale for warehouse workers will largely be the same. Plus, warehouse workers are on an island by themselves — they don't talk to hospital officials or clinicians. So figuring out how to incentivize employees at that consistent scale and engage them in the positive results you want to achieve can be difficult.

We work with a lot of IDNs who want to improve workplace culture, patient outcomes and nursing satisfaction, while limiting the impacts of supply costs and clinical work and rework. These factors are all related in a continuous chain. In our distribution centers, employees understand the needs of our customers. They know what they need to do to provide the right product at the right time, in the right way for customers. The better they do that, the more efficient we are when it comes to servicing our customers.

Q: What sort of self-distribution trends are you currently seeing?

PS: I think 'self-distribution' is a broad term used for a variety of topics, initiatives and solutions, but it's certainly a trend we're seeing today. IDNs are growing larger and getting to a point where they have the capacity for self-distribution. Most of our customers using self-distribution are moving to one singular supply chain channel — how they get there and what pieces they engage in vary greatly.

When considering self-distribution, hospitals have to understand what they're asking themselves to do and have a good grasp of their physical assets — like equipment, trucks and material handling equipment hospitals don't usually get involved in — and more intangible assets, like human capital. We've found a lot of IDNs moving toward self-distribution are piggybacking off medical/surgical distribution — the most refined, efficient supply chain model — and funneling all other non-efficient models into that supply chain.

Because we know that M&A activity in healthcare isn’t going away, expect self-distribution to continue being a hot topic to watch in 2017.  

 

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