Strategic Healthcare Partners In pursuit of World-Class Supply Chain Solutions

1. Strategic Healthcare Partners In pursuit of World-Class Supply Chain Solutions Jeff Bruno Cardinal Health Integrated Provider Solutions Supply Solutions Executive

2. World class supply chain First Characteristic “At the heart of every ‘best practice’ supply chain is a powerful, comprehensive information and control infrastructure that spans the entire enterprise, as well as the extended supply chain, from point of sale to vendor planning and product replenishment…”Jonathan L.S. Byrnes, DBA, MIT

3. Product Flow Demand Flow Hospital Dock Point-of-Use Manufacturer Distributor Cost of Ownership Ends Begins Traditional Healthcare supply chain

4. INEFFICIENCIES • Contracting and Pricing • Credits / Returns Billing • Proof of Delivery • Receiving • Stocking • Picking • Transportation • Materials Management • Inventory Cashflow • Carrying Costs • Handling / # of touches • Buildings and Maintenance • Systems, Equipment and Maintenance Hospital Dock Point-of-Use HAVING CRITICAL IMPACT ON • Patient Care • Cost Effective Operations • Optimal Reimbursement • Effective Management Ends Begins Traditional Healthcare supply chain Cost of Ownership

5. World class supply chain Second Characteristic “…Wal-Mart, Dell Computer Corporation, and the Procter & Gamble Company…can have world-class supply chains because of their scale and focus.” – Jonathan L.S. Byrnes, DBA, MIT

6. Cost Of Ownership Reduced Supply Chain Inefficiencies Driven by focus and scale Hospital Dock Point-of-Use Return on Investment Leading Industry Trend within a controlled supply chain environment utilizing comprehensive consumption data

7. Product Flow Hospital Dock Manufacturer Distributor Distributor Purchasing Point-of-Use Demand Flow Dynamic supply chain

8. Integrating the Supply Chain Environment Integrated Point-of-Use Data Capture creates control infrastructure for product and data management and utilization Integrated Resources and Performance Metrics creates scale and focus for effective patient-care service Integrated Distribution Infrastructure establishes distribution infrastructure for efficient patient-care service

9. Infrastructure Scale and Focus • Integrated Procurement Contracts and Processes • Contract Optimization • Item Master – Standardization • Integrated Value Analysis Teams • Integrated Systems • Common Enterprise Systems and Integration • Scalable – Expandable Network • Integrated Supply Chain • Standard Performance Reporting and Measurements • Inventories • Item Unit of Measure Rationalization • Operating Expenses • Buildings – Space Management • Cashflow • Resource Management

10. Reduce number of stock out occurrences • Lower total cost of product distribution • Lower “net patient-use” distributed cost Supply Chain Efficiencies Data Capture & Management Customer Satisfaction • Improve departmental product availability • Reduce clinical handling of supplies Comprehensive information and control infrastructure Cost Containment • Reduced operational expenses • Reduced inventory investment

11. Healthcare World Class Key Benefits • Alignment of objectives & processes • Lean six-sigma approach to reduce or eliminate non value-added activities across the supply network continuum • Reduction of invoices & invoicing errors • Improved pricing methodology • Reduction/elimination of credits/return billing • Streamlined receiving, proof of delivery, and stocking • Reduction in direct manufacture transportation expenses • Fewer touch points in supply network • Standardization of processes across all facilities • Reduction in overall inventory • Real-time or near real-time decision support information • Reduction in total cost of ownership • Fill rates measured at point of use instead of the loading dock • 99+% fill rate • Cash flow timeline improvements between supply expenses & revenue • Ability to focus on patient needs, versus availability & location of supplies, resulting in improved clinician satisfaction and patient care

12. “Best healthcare focused supply chain organization in the world” System-wide processes Leverage technology Implement “total cost of ownership” Retain, recruit, hire, & train the best Better manage decisions Operational Excellence Continuously tune the process through Lean Six Sigma Work across the system Find new ways of doing business Does this Vision align with yours? World Class Supply Network √ √ √ √ √ √ √ √ √ √

13. 99.85% Point of Order Vendor 80-85% 99.85% Point of Use Does this approach match yours? Creating visibility of demand at the point of use to help to stabilize patient-care service without inefficient loss

14. World class supply chain Thank You ! Questions?