Put the value back in your supply chain 135 Kb - Cardinal Health

Put the value back
in your supply chain.
ValueLink® Supply Management Services

ValueLink ®
Put the value back
in your supply chain.
We want to help you do more with less. By optimizing our industry-leading ValueLink® program, we’ll help
you contain costs, streamline supply flow processes and reduce inventory by providing product in the most
logical unit of measure (LUM). This means you only process, handle, store and pay for the amount of inventory
needed, when it is needed. On average, our ValueLink® Services customers see significant operating margin
improvements and reduction in inventory investments exceeding 20 percent. Because we custom configure
your deliveries in totes based on point of use demand, your supplies are available at the right time and place.
This significantly reduces the time your clinicians need to be involved with supply chain matters and leads to
higher levels of clinician satisfaction.
Comparison between traditional and dynamic hospital supply chain
Features
Product availability
Inventory costs
Traditional supply chain
• Daily, weekly stockouts and
product unavailability
• 96% fill rate
• Extra touchpoints in the
process and inventory costs
• Use space to hold obsolete/
expired product
Dynamic supply chain
enabled by ValueLink® Services
and ValueLink® Par Optimization
• Significant reduction in stockouts and
call-downs
• Often exceeds 98% fill rate
• Elimination of extra touchpoints and
inventory costs
• Reduce storage and on hand inventory
levels and associated holding costs
• Increased availability of storage and/or
revenue-generating space
Supply chain flow
Use of clinician time
FTE allocation
and utilization
• Inefficient ordering and timing
• Unorganized space for
necessary product
• Traditional supply chain
vendors usually deliver only
to the dock
• Excess clinician time spent
managing inventory
• Low clinician satisfaction
• Hospital labor required to
make deliveries
• Efficient electronic ordering
• Space savings
• Inventory reduction
• Waste elimination
• Product rationalization and standardization
• Ability to deliver beyond dock to point of use
• Vendor consolidation and streamlining
• Less clinician time spent managing inventory
and more time spent taking care of patients
• Improved clinician satisfaction and utilization
• Labor reallocation to high priorities
For more information, e-mail ValueLink@cardinalhealth.com
or contact your Cardinal Health sales representative.

The hospital supply chain
Traditionally, supplies flow from the distributor to the hospital loading dock. There are many disadvantages to ending
the supply chain here because it doesn’t ensure that product gets delivered directly where and when it is needed, creating
additional unnecessary steps for your staff. However, when product is delivered beyond the dock to the point of use, the
result is less waiting time for product availability, less handling of the product, less labor costs and more consistent product
delivery. In turn, enabling you to deliver your product promise on to your clinicians.
Traditional supply chain
Customer order
Product delivery
Central Store
Departments
Clinician use
Customers order
products electronically
Products are delivered to
customer dock/receiving
Customers place
product in Central Store
Products are distributed
to individual departments
Inventory count
Dynamic supply chain
Enabled by ValueLink® Services and ValueLink® Par Optimization
“Cardinal Health has been doing low-unit-of-measure from
the beginning. They know what they’re doing. They’re more
than a trusted advisor; they’re an extension of our staff.”
Johnny Gilliland
Director of Materials Management at DCH Health System
Customer order
Customers order
products electronically
Departments
Products are distributed
to individual departments
Optimized par inventory levels
through Par Optimization
Inventory count
Clinician use
ValueLink® benefits
••
Eliminates excessive touchpoints in the supply chain
••
98 percent fill rate guarantee
••
Reduces on-hand inventory levels and associated
holding costs
••
Drives clinician satisfaction by increasing
product availability
••
Significantly reduces stockouts and call-downs
••
Reallocates labor and resources
••
Optimizes department storage space and capacity
• Streamlines product recall process

Activity-driven distribution model with
ValueLink® Supply Management Services
With an activity-driven distribution model, you’ll gain visibility for ways to
increase your operational efficiency, reduce your internal operating costs and,
in turn, reduce your distribution fees. It all starts with the ability to distinguish
the cost of goods from the cost of having them distributed. This allows
for strategic management of those controllable cost drivers.
Understanding the primary controllable cost drivers gives you the ability to add
or alter supply chain services and activities that impact your total cost. Our flexible
model will adjust to the level of activity your growing hospital or IDN requires.
An open-book approach
to pricing
Our activity-driven model points to areas where we can work together to continuously
improve total supply chain efficiency, reduce your inventory costs and provide you with
distribution savings.
Above all, clinician needs come first — new efficiencies and savings matter only when
nurses continue to have the products they need, when and where they need them.
With this transparent
approach, you know
what you’re paying for
with both product and
process costs—facts
and figures you need
to make supply chain
decisions that benefit
your bottom line.
Number of
deliveries
per week
Number of
internal ship
to locations
Primary controllable cost drivers
Product
value
per line
Cost for
ValueLink®
Services

The ValueLink® Services advantage
We offer a collaborative effort that extracts the most value
from our services and adds it back to your supply chain.
As part of the ValueLink® program, we work with you to deliver
the most efficient, streamlined and cost-effective operations.
Supply chain efficiencies
ValueLink® Par Optimization is a service
quality improvement program that utilizes
a Lean Six Sigma driven approach to
optimize the supply chain management
process and achieve greater than 99.5%
product availability at the point of use. Par
Optimization virtually eliminates stockouts
and helps to improve clinical satisfaction
due to product availability.
Benefits
• Analysis of historical clinical data enables
proactive management of cycle counts,
expired product removal and stock rotations
• Uses mathematical calculations and
clinical advisory to establish both logical
and rational par levels
• Aligns on-hand inventory and service
schedule with true demand
Did you know?
50%
of departmental inventory is inactive*
10%
of inventory expense is obsolete*
“Cardinal Health has excellent solutions, including Par Optimization and other modules that you
can integrate to increase performance.”
Dan Williams Senior Director of Finance, Truman Medical Centers
Cost containment
ValueLink® Services helps eliminate
the large cost of storing, maintaining and
distributing supplies. This service shifts
the central distribution function from the
hospital to Cardinal Health. Since supplies
are delivered in pre-organized totes directly
to departments, the cost to sort, transfer and
unpack products dramatically decreases.
Benefits
• Reduces storage and on-hand inventory
levels, and associated holding costs
• Storage space turns into clinical,
revenue-generating space
• Reallocation of labor and capital for other
high-priority activities
“There has been a precipitous decline in the cost of getting the product where it needs to be.”
Michael Reeves System Executive, Supply Chain Services, Baptist Health
25%
of clinical staff time is spent on supply
chain activities*
74%
Stockouts … redundancy, variation
and unnecessary steps … contribute
to the 74% of time nurses spend
outside the patient’s room meeting
administrative responsibilities **
25%
Inventory represents as much as
25% of the typical hospital’s
operating budget **
Clinician satisfaction
From a patient care standpoint, ValueLink®
Services is one more valuable tool to reduce
the amount of clinical staff time spent on
supply chain activities. ValueLink® Services
not only saves costs, but also helps improve
quality of care by taking the nurse out of the
supply chain process—so the focus can be
more on where it belongs: the patients, not
searching for products.
Benefits
• Less clinical staff time devoted to ordering
and handling products
• Increases clinician satisfaction by ensuring
products are always available
• Minimizes stockouts at the point of use
* Source: Cardinal Health benchmarking
model 2003 InventoryLink® database
** Source: Squire, Robert W., Putting
Information to Work: A Strategy for
Boosting Supply Chain Performance
“If you’re taking care of them, nurses don’t even know Par Optimization is running in the background…
Now they have more time to dedicate to patient care.”
Linda Bottorff Corporate Director, Materials Management, Baptist Health

cardinalhealth.com
© 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the
Cardinal Health LOGO, ValueLink, InventoryLink and Essential to
care are trademarks or registered trademarks of Cardinal Health. All other
marks are the property of their respective owners. Lit. No. 2CHL11392 (04/2013)
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