Interview with Scott Nelson

Scott Nelson, senior vice president of supply chain, North America
Cardinal Health

Repertoire/JHC Editor Mark Thill on Oct. 4 spoke with Scott Nelson, senior vice president of supply chain, North America, Cardinal Health; and Mike Wallin, operations manager, Penske Logistics. (Penske provides trucks and drivers for Cardinal Health’s medical segment, and helps optimize hospital delivery routes.) Here are notes from the Q&A with Scott Nelson. Click here for Penske Logistics storm stories and photos.

Mark Thill: What preparations did you take in the days leading up to landfall?

Scott Nelson: For these types of situations, we use a “T-minus” planning schedule, which begins roughly a week prior to landfall. The purpose behind that is to integrate efforts that span a number of areas, including operations, inventory, transportation, facilities, employees, customers and communications.

One of the first steps we took was to prepare and fill emergency orders in advance, so customers were stocked-up prior to the storm in the event there were disruptions. Penske has been Cardinal Health’s partner operating our private transportation fleet for the last nine years, so we worked closely with [Penske Operations Manager] Mike [Wallin] to identify drivers who had deep knowledge of the road systems and personal relationships with our hospital customers, to ensure we had the best expertise available to execute on alternative routing plans, so customers’ needs would be met.

At the Distribution Center, we also stocked-up on key supplies (food, water, generator fuel) to accommodate employees who might get stranded.

Lastly, we identified and made arrangements for a support team from other Cardinal Health locations to travel to the impacted location and stay at a hotel near the Distribution Center, so we could maintain operations and process emergency orders as quickly as possible. We did the same with key local operations staff.

Thill: How did you/your provider customers fare during the storm itself?

Nelson: Given the circumstances and severity of the storm, we feel everyone fared surprisingly well. Our major JIT customers enacted their hurricane preparedness plans and pre-ordered prior to the storm hitting. This helped tremendously, as it lessened the pressure for the first two to three days following the storm.

There were obvious challenges with flooding, which cut off access to certain areas for an extended time and caused some facility issues, and a few hospitals had to evacuate patients and shut down. Overall I’d say providers reacted quickly, and we were able to shift supplies as needed.

We did coordinate efforts with the National Guard and Penske to deliver emergency supplies during this time of need. A few of Mike’s drivers courageously volunteered to navigate the flooding to get the hospitals their supplies.

Thill: What were your greatest challenges (and those of your customers) in the 7-10 days following the storm?

Nelson: The greatest challenge was scaling back up to full operations as the recovery took hold. I mentioned the support we brought in from other Cardinal Health Distribution Centers to ensure continuity while our employees were tending to their families and homes. We also had moved a significant amount of our order fulfillment for non-metro accounts to neighboring distribution centers, so we had to gradually transition back to a normal staffing and fulfillment model.

We experienced delays in inventory replenishment orders, particularly with port closures, and getting deliveries into the Distribution Center. Many carriers were not operational and would not deliver or accept freight coming to the affected area.

I would say our customers experienced much of the same, as their employees had to balance dealing with personal challenges as well as logistical and freight delivery delays while supporting a ramp-up in patients being treated in their hospitals.

Thill: How about longer-term problems or challenges?

Nelson: One of the more significant challenges will be around staffing. Many people lost everything and were displaced from the area. As the city begins its reconstruction, labor required for clean-up and restoration work will place further demands on an already constrained labor market.

Thill: Finally, any lessons learned to share with supply chain colleagues?

Nelson: Plan early and involve your customers and key business partners in that process. Look beyond what could come up as an immediate need during the situation itself and plan for multiple contingencies. Without the joint planning I described earlier between Cardinal, Penske and the providers we serve, this story would have had a very different ending.

Communicate realistic expectations with your customers. We were committed to being fully operational as quickly as possible; however we set a clear foundation that it would not be “business as usual” and there would be challenges with inbound freight and outbound volume surges from the backlog. That candor and opportunity to jointly prioritize actions to achieve stabilization built a stronger relationship with our partners.

Lastly, take care of your employees first and they will make sure that the customer is taken care of. The Penske drivers were rock stars throughout this ordeal. They were so willing to put their personal challenges aside and safety in question so our customers would get what they need.

Click here to view Penske Logistics stories.


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