The number of container ships at anchor or drifting off Los Angeles and Long Beach ports are at record levels and continuing to rise by the day. Why the backlog? Unprecedented ocean volumes from Asia can only flow out at a certain speed due to terminal limitations creating an ever-growing backlog, furthering the imbalance of containers throughout the world, and increasing shipping rates to record levels.
Successful supply chains are becoming a key differentiator and vital part of healthcare. Getting it right requires strategic systems across all functions of supply chain, warehouse, and business operations.
Dukal strives to be a trusted supply partner so that healthcare professionals can focus solely on the well-being of patients.
Here are four trends in healthcare supply chains and how Dukal is working to create a resilient healthcare system.
Trend #1: Increasing storage and self-distribution
With East and West coast distribution centers in Savannah and Riverside, Dukal has a combined size of 356k sq feet. All US customers are within 3 to 5 days of ground transportation, and our team has the ability to ship orders within 24 hours. Recognizing the need for more distribution storage, Dukal added 6,000 sq feet to our Riverside distribution center in October 2020, increasing our storage capacity in California to 83k sq feet.
Dukal's distribution centers are continually looking to reduce costs and increase productivity. Centers maintain an 80% capacity to allow for flexibility and improved productivity. In addition, we ensure processing orders, receiving receipts, and inventory accuracy beyond the business standard in partnership with logistics company Geodis.
Trend #2: Deeper relationships and resiliency
The value of trusted partnerships became apparent in 2020 as many hospital systems were left scrambling for pandemic-related supplies. By developing a collaborative forecast and safety stock program with clients, our robust disaster recovery plan, along with regular and transparent inventory status, we are committed to getting inventory to the vital healthcare systems throughout the US.
Safety stock optimization
Safety stock, or buffer stock, is the inventory invested in protecting our service levels against changes in demand and supply disruptions. Some of the main actions our team has focused on to optimize our safety stock levels are:
Identify, analyze, and implement reduced safety stock targets for items with high levels of historical service performance, low demand variability, and low supply variability.
Identify, analyze, and implement increased safety stock targets for items with low levels of historical service performance, high demand variability, and high supply variability.
Since implementation, we have maintained a 95% case fill rate while reducing our total inventory by over $700,000 related to buffer stock.
Our trusted partnerships, customer transparency, and Dukal's Guaranteed Inventory Program ensure providers have the inventory they need when they need it.
Trend #3: Flexible supply chain models
Dukal has the capacity to deliver products via multiple modes of transportation. In addition, Dukal's strong relationships in Asia and our Shanghai office allow us to consolidate products from multiple factories into one ocean container, helping to drive down healthcare costs, even while freight rates continue to increase worldwide. Whether full truckload, LTL, or small parcel, we have the ability to support different sizes of both customers and orders.
Trend #4: Smarter, faster, and predictive information
These technologies can assist decision-makers in identifying trends and providing resources to workers. Dukal has begun to utilize different mathematical formulas, particularly those that deal with seasonality, to improve our forecast. Our planning system chooses the "best fit" formula based on customer usage patterns to predict future demand better.
Vulnerability reporting
This past year, we implemented a new tool called the Vulnerability Report. This report shows our projected inventory levels over time and highlights any items that could potentially stock out. This early warning gives us time to develop strategies to work on possible substitutes and work closely with our Shanghai office to prioritize manufacturing and logistics.
Further, our team executes monthly forecast accuracy and cross-functional portfolio reviews to improve accuracy and proactively identify demand events allowing us to continually adjust our purchasing plan and help customers have the stock ready when needed.
Dukal continues to look at our supply chain and constantly evolve it to ensure that we stand ready to provide the absolute highest level of service to our customers, whether political shifts, natural disasters, or another global pandemic.
> Find more inside Dukal’s latest edition of Touchpoint
