Cardinal Health Tailors Pharma Deliveries to High-Volume Mail-Order Pharmacies

It is not hard to agree with industry consultants who say that closer collaboration in the healthcare supply chain can create efficiencies; but it is harder to find solid demonstrations of that. But collaboration between the Big 3 distributor Cardinal Health and some of its mail-order pharmacy clients, including Prime Therapeutics (Eagan, MN), plus the addition of some novel materials-handling technology, is resulting in savings of a third or more in the receiving and inventory-replenishment tasks at the pharmacies.

Cardinal has developed a new way to organize its deliveries to high-volume mail-order pharmacies, which typically involve thousands of products being delivered daily. Rather than sending hundreds of randomly stacked tote bins, which then need to be individually sorted, broken down and placed on the pharmacy’s stockroom shelves, Cardinal has developed the EZ-Cart program. Deliveries are pre-sorted into compartmentalized containers which are placed in plastic bins (see photo). The bins are then placed on mobile carts and loaded into the delivery truck. At the receiving end, the carts can be wheeled to specific stockroom locations, and the stock specified for that location is simply sorted and placed. Empty bins and carts go back to the Cardinal warehouse.

To make the process efficient, Cardinal and its client need to coordinate the ID-tagging of the bins and the locations in the stockroom for them. When the system is in place, labor savings of 35-40% can be had in the restocking process. “Cardinal Health’s EZ Cart program provides a much easier and safer way to unload and move products around our facility than traditional pallets or forklifts, offers tighter security for controlled substances and saves our shipping and receiving staff a tremendous amount of time,” said Rick Miller, senior director of logistics and inventory for Prime Therapeutics.

Law Burks, VP of marketing management for Cardinal Health’s Alternate Care business, says that this system is part of Cardinal’s Customer Value Creation program, which employs Six Sigma consulting services to streamline processes for mail-order customers. (Other services include repackaging and price/volume discounting.) The cost of the service is tied to the efficiency that Cardinal and its client work out through a planning process. In addition to the labor savings, the system can reduce stockouts as well—a benefit to both Cardinal and the client. Burks adds that the company is looking at how to roll the EZ-Cart system to other high-volume clients. PC