Shipping costs need to be actively managed or they can get out of control and encompass more of your budget than you had anticipated. Using data analysis, OptiFreight Logistics helps HealthTrust members better manage inbound shipping from suppliers and outbound shipping from healthcare facilities to lower freight costs.
John Waller, national system director of supply chain distribution at Catholic Health Initiatives (CHI) in Englewood, Colorado, is pleased with the resources OptiFreight has provided to help him maximize savings.
“OptiFreight’s onboarding, customer service and follow-up have been extremely helpful in introducing us to its freight management portal,” he says. “I have nothing but good things to say about the program and how they have worked with us to gain significant savings.”
HealthTrust’s contract with OptiFreight Logistics, renewed through 2021, aggregates members’ spend on shipping for everything from small parcels to large freight, and provides rates that members could never achieve individually.
Through an agreement with Cardinal Health, OptiFreight Logistics gives members flexibility in choosing freight services in addition to the competitive pricing.
“Our freight management program has a decade’s worth of data to help customers benchmark performance and the know-how to uncover more savings,” says Brad Wilson, national vice president, sales and service, OptiFreight Logistics. “It is this unique combination that sets us apart.”
Waller appreciates OptiFreight’s data-driven and user-friendly system. “The online portal is very intuitive and easy to use, whether by an executive or someone in shipping and receiving,” he says. “It gives you relevant information to make better business decisions. If you choose not to follow its insights or the cheaper routes it prompts you to take, it gives you the cost of your decisions. Sometimes there are reasons you would have to override its recommendations, but it’s helpful to know there are options.”
Customers like CHI that employ OptiFreight’s three performance standards are on the fastest path to cutting shipping costs. Customers realize the biggest savings when they:
- Share their freight history. Because OptiFreight manages more than 19 million shipments per year at more than 32,000 shipping locations nationwide, it has more data than any other third-party program, enabling it to find greater efficiencies and cost-savings opportunities. When a customer regularly shares a detailed report of supplier and outbound shipping charges with OptiFreight, the program can uncover hidden fees in freight charges, reveal when suppliers ship outside the program and identify other discrepancies. Sharing freight data increases compliance by an average of 8 percent—translating into thousands of dollars in savings.
- Refine PO (purchase order) instructions. Making shipping instructions more easily visible can help drive supplier participation to ship through the program by more than 12 percent.
- Fine-tune supplier contract language. OptiFreight ensures that suppliers are provided the most up-to-date instructions on how to use the program and maintain ongoing compliance to enhance customer savings.
Large Freight Coordination
OptiFreight estimates that materials managers overpay by 40 to 50 percent on each shipment if a supplier doesn’t use the program for bulk orders and large freight over 150 pounds, such as laboratory and IT equipment. The OptiFreight account management team helps members capture the savings in practical ways, such as providing questions to ask suppliers before placing POs. Account managers also connect customers’ shipping docks with OptiFreight’s large freight team to coordinate large outbound shipments—doing so in less than two minutes.
No Savings Left on the Table
Members who have never actively managed their freight costs and decide to use the program could see a 30 to 50 percent savings from their previous spend within the first year of using OptiFreight Logistics.
OptiFreight Logistics by the Numbers
30-50%: Average savings per shipment
19+ million: Shipments managed a year
32,000+: Shipping locations
$420+million: Total savings per year
And, those savings multiply as members manage more of their spend and root out inefficiencies. “We’re always looking to improve year-over-year expense through education and expansion of the program to cover any new, unmanaged shipments,” Wilson explains. “If a HealthTrust member is managing less than 100 percent of their freight costs, we can drive additional savings by continually benchmarking spend against the previous baseline or other metrics.”
Not content to leave any potential savings on the table, Waller’s embrace of the program has meant a reduction in CHI’s cost per package over time. Before the full utilization of the program, CHI was spending $22 per package. Now it is around $20, and the savings have added up. Last year, Waller estimates savings in the range of $421,000.
When new OptiFreight customers are brought onboard, they’re supported by an implementation team, including a project lead, project specialist, IT specialist and an account manager. “We start by obtaining a full understanding of the customer’s systems and requirements to ensure the program is set up the right way, the first time,” Wilson says.
The onboarding also includes helping the facility’s point person introduce the program to other departments, such as the OR, lab or pharmacy, to discuss their specific operations. The OptiFreight onboarding team educates customers on tasks such as ordering from suppliers, sending large freight shipments and shipping directly to patient homes.
Department leads are also trained to use better shipping methods, such as not automatically sending packages overnight that could get there at the same time via ground.
“If your destination is in a two-day time zone and the carrier is going to drive the package those 100 miles in the same time frame, choosing next-day air is unnecessary,” Waller explains. “Choosing a limited service option can still fulfill the same goal—getting the package there at 10 a.m. the next day—but it will cost a lot less.”
The program features both in-person and online training, including two-minute videos that customers can share with internal teams to provide a high-level overview on how best to order and ship.
Waller is eager to introduce more CHI hospitals to the program. “Our goal is to get closer to $18 per package, which we can do by expanding our user base and educating our internal and external users that there’s a better way than what they’re used to.”
For more information, visit the contract package on the HealthTrust member portal.