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“Controlling Costs / Improving Delivery” Mark Burchess – Perry Point August 12, 2014

HHS SUPPLY SERVICE CENTER. “Controlling Costs / Improving Delivery” Mark Burchess – Perry Point August 12, 2014. HHS Supply Service Center. Our Goal... The Perfect Order. Has the right amount of the right products Is damage free Arrives on-time Arrives at the correct location

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“Controlling Costs / Improving Delivery” Mark Burchess – Perry Point August 12, 2014

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  1. HHS SUPPLY SERVICE CENTER • “Controlling Costs / Improving Delivery” • Mark Burchess – Perry Point • August 12, 2014

  2. HHS Supply Service Center Our Goal... The Perfect Order • Has the right amount of the right products • Is damage free • Arrives on-time • Arrives at the correct location • Is filled completely on the first call • Is entered correctly • Is communicated via a customer-specified medium • Has no invoicing/collection errors

  3. HHS Supply Service Center Requirements of the Customer • Order from Pre-defined “Regional Formulary” • Develop Comfortable Safety Stock Levels • Routine Orders • Prompt Payment Communication is THE Key

  4. HHS Supply Service Center Regional Formulary Development • Issues of Safety, Effectiveness, and overall Value • HHS SSC has pharmacist on staff for help and TA • FDA approved material • Product Availability • Cost Savings • Supply Chain Speed Problems with Non-Stock Items • Sometimes Difficult to Procure • Dating and Expiration Issues • Require Multiple Small Shipments • - high transportation costs

  5. Regional Formulary Advantages Maximize Product Availability Minimize Price Changes Minimize Pricing - Quantity Discounts - Custom Repackaged Items Optimization of Transportation Costs - Maximization of Ocean Freight - Minimization of Air Freight - Minimize Minimum Charges (Customs Fees, Hazard Fees) Minimize Labor Required to Correct Issues

  6. Regional Formulary Advantages Expected Price Cost to PP Customers Proposed Additional Savings for Formulary Use Proposed Total Savings Cost Savings Example

  7. HHS Supply Service Center Pacific Satellite Warehouse • Gain Shipping Efficiencies - Negotiate favorable tenders - Minimize emergency shipments • Emergency Product Availability • Decrease Response Time • Cost Savings (buy larger quantities) Requirements • Formulary • Minimize Non-Stock Items Requirements • Utilize HHS SSC Information Systems • PIHOA + Chief Pharmacists’ Endorsement is a Critical First Step

  8. HHS Supply Service Center Pacific Satellite Warehouse Can a satellite warehouse support itself? • Most shipments to USAPI now go Air Freight • Ocean freight is an appropriate response • What cost savings can be achieved? • Can these cost savings cover potential 3PL expenses? Variables to Address • Regional Formulary Volumetrics and Velocity • 3PL Storage and Transaction Costs

  9. Next Steps?

  10. HHS Supply Service CenterPoints of Contact • Mark Burchess, Chief, Logistics Operations Branch • Work #: 410-642-0702 • Cell #: 443-693-3197 • E-Mail: Mark.Burchess@psc.hhs.gov • Jamie Cooke, Acting Director • Work #: 410-642-2244 • E-Mail: Jamie.Cooke@psc.hhs.gov • Trisha Futty, Management Analyst • Work #: 410-642-0710 • E-Mail: Trisha.Futty@psc.hhs.gov

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