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You can’t improve what you can’t see. Gaining visibility is the key. And data analytics, guided by logistics experts, is the way.

By Emily Gallo, SVP and general manager of Cardinal Health™ OptiFreight® Logistics

Editor’s note: OptiFreight® Logistics is an industry leader in helping healthcare organizations across the continuum of care gain greater control of their logistics operations and shipping needs. The business helps drive value for customers by identifying savings (reduced rates) on shipments that come directly from suppliers and implementing shipping best practices.

Emily Gallo, who leads  OptiFreight® Logistics, recently wrote about how supply chain visibility can help produce operational savings and efficiencies, among other benefits. This story was originally published in Supply & Demand Chain Executive.

When you think of supply chain visibility, oftentimes “tracking products” is the first thing that comes to mind. That level of visibility is critical, especially when delivery dates are consequential. In the healthcare industry, patients’ well-being is on the line.

Now let’s take visibility to the next level. What if you had a total view into your shipping spend, understanding precisely what, how and where you’re shipping – and how those trends are changing over time? You’d gain complete transparency into shipping behavior across your entire organization and supplier relationships. And with those insights, you could make more informed decisions to help increase value across your supply chain.

How can you achieve this level of visibility? Let’s take a closer look.

It starts with behavior

Unlike savings related to pricing alone – such as product savings – shipping savings can also be achieved by influencing behavior. Examples include increasing supplier compliance with a logistics management program or improving mode optimization for outbound shipments. Both count on the shipper to make a cost-saving decision; think of it as a “moment of truth.”

With the right strategy, resources and commitment, behavior can be changed and the value-driving decision made more often. By changing those behaviors, the supplier uses the program’s carrier account number, and your staff member realizes that next-day delivery isn’t always necessary.

To get there, you first need robust visibility into your supply spend:

• How and why are your costs increasing?
• What internal and external influences are impacting them?
• How can you mitigate these factors to help lower costs and increase value?

Digging deeper, you can answer such granular questions as:

• How much value are you leaving on the table by shipping outside of a freight management program?
• How often do you use the most expensive shipping option (such as overnight delivery) when it’s not always necessary? And how much are you overpaying as a result?

To achieve and act on this level of visibility, you need to gather shipping data from every available internal and external stakeholder, compare the data with industry benchmarks, and then apply data analytics, guided by logistics experts, to reveal actionable insights.

Many organizations don’t have the internal logistics resources and IT bandwidth to make it happen, or they prefer to allocate those resources for other priorities. If you’re one of them, consider collaborating with a logistics management provider that has proven expertise in transforming data into new savings opportunities. The impact may surprise you.

Data analytics drive change

Imagine sitting down at your desk, pulling up an intuitive dashboard, and having a current snapshot of your shipping program spend, such as:

• Managed vs. unmanaged
• Cost per pack
• LTL (less than truckload) vs. ground vs. express

Now imagine a waterfall chart that reveals how your shipping spend is evolving month over month. You see changes not only in shipping volume, but also the impact of your service mix, accessorials (the added fees carriers charge for services other than the standard cost of transporting shipments), contracts, GRI and fuel costs. What is each data point telling you? By understanding the trends, you can turn those insights into new behaviors that can impact costs.

Many supply chain leaders like to take this hands-on approach to discovering and managing new insights. Others value being able to focus on other priorities and know that their third-party logistics experts will proactively bring forth insights-driven actions. Whichever approach works best for you, the insights gained could help you achieve specific goals for your supply chain. These goals could include driving greater utilization of a logistics management program – optimizing shipping services via such strategies as mode optimization ­ and reducing accessorials.

To maximize savings opportunities, it’s important to analyze data across your entire shipping spend. By achieving data integration across all shareholders, organizations can achieve complete, 360-degree visibility into shipping spend across their facilities and total supplier network.

Then, it's important to track shipping spend performance against key industry benchmarks. These added insights help determine if there are easily identifiable areas to improve, based on industry best practices.

Turning insights into action

As with many industries, healthcare produces an abundance of supply chain data. Many organizations have told us that, while some logistics providers offer visibility into data, there’s little if any guidance on how to leverage it all. You need the right combination of technology and expertise to create the new behaviors to increase overall value.

If external support is warranted, collaboration with an experienced logistics management provider can help you understand how your shipping spend is changing and where the opportunities are, to not only address these challenges but also thrive in the new environment.

That includes seeing where the future of supply chain visibility is headed. Look for a logistics provider attuned to the latest predictive technology, and, just as important – the expertise to guide it to its full potential. Artificial intelligence (AI) has been a useful tool in generating actionable insights quickly from massive amounts of data. There are exciting new capabilities in development as well, such as predicting whether shipments could be delayed.

Into the future

It's a timeless truth that organizations everywhere want to streamline operational costs. To achieve early and significant wins, gaining greater visibility into your supply chain is a proven place to start. Beyond shipment tracking alone, focusing on shipping costs and trends can yield significant insights for increasing overall value.

And that’s just the beginning of how total supply chain visibility can yield new savings and efficiencies. Other advantages include:

• Improving inventory management: Monitor stock levels to know what’s coming in, out and when it’s time to replenish. Adjust labor based on incoming shipping volume. And in healthcare, align product deliveries with clinical schedules.
• Managing risk more effectively: Monitor potential supply chain disruptions, such as shipping delays and product shortages, to help improve proactive planning.
• Increasing regulatory compliance: Improved shipment traceability, which is critically important in healthcare and many other industries such as automotive, food and beverage.

You can’t improve what you can’t see. Gaining visibility is the key. And data analytics, guided by logistics experts, is the way.

Emily Gallo is the senior vice president and general manager of Cardinal Health™ OptiFreight® Logistics, focused on building tech products to innovate the way healthcare supply chain leaders manage logistics and remove cost. While at Cardinal Health, Emily also has led executive customer engagement strategy and several medical product businesses.