David Hargraves may not have moved mountains, but he’s come close. In the last couple of years, the vice president of clinical supply chain, University of Pittsburgh Medical Center (UPMC), Pittsburgh, Pa., and vice president operations, BioTronics, Inc., led the design, construction and opening of a 148,000 square foot consolidated service center. Relocating to the new facility enabled UPMC to support internal growth and future hospital acquisitions, as well as move to a manufacturer-direct supply chain model.
“Supply chain management recognized the need to relocate and expand the distribution services offered to UPMC facilities,” says Hargraves. “Despite significant gains in operating efficiency in our [old] facility, which was 51,000 square feet, hospital acquisitions as well as organic growth had stretched our internal capacity and forced us to further leverage our external distribution relationships. [Relocating to the newly constructed facility] has permanently reduced supply costs by millions of dollars through the elimination of the external distribution markups and provided us the opportunity to optimize order volumes and deliveries to reduce freight and labor cost.”
Opening a larger service center created a number of other benefits as well, including:
- Improved efficiency through reduced number of orders and reduced cross docking.
- Reduced waste through eliminating double handling of products.
- Increased compliance with UPMC’s preferred suppliers and products, and fewer special-request orders.
- Reduced risk exposure and complexity though a shortened supply chain.
- Improved customer satisfaction through higher fill rates and fewer stock outs.
- Increased capacity to service additional demand, and the ability to service 100 percent of UPMC acute care facilities.
Hargraves notes that throughout the process, costs were systemically reduced or eliminated, rather than simply shifted.