Controlling Costs / Improving Delivery HHS SUPPLY SERVICE CENTER

 Has the right amount of the right products  Is damage free  Arrives on-time  Arrives at the correct location  Is filled completely on the first call  Is entered correctly  Is communicated via a customer-specified medium  Has no invoicing/collection errors Our Goal... The Perfect Order

Pacific Islands  Order from Pre-defined Formulary  Develop Comfortable Safety Stock Levels  Routine Orders  Prompt Payment Communication is THE Key

Formulary Development Reasons  Issues of Safety, Effectiveness, and overall Value - SSC has staff pharmacist on staff for help  Product Availability  Cost Savings  Supply Chain Speed Problems with Non-Stock Items  Sometimes Difficult to Procure  Dating Issues  Require Multiple Small Shipments - high transportation costs

Formulary Advantages Cost Issues  No Price Changes  Minimize Pricing - Quantity Discounts - Repackaged Items  Optimization of Transportation Costs - Maximization of Ocean Freight - Minimization of Air Freight - Minimize Minimum Charges (Customs Fees, Hazard Fees)  Minimize Labor Required to Correct Issues

Satellite Warehouse Reasons  Gain Shipping Efficiencies - Negotiate favorable tenders - Minimize emergency shipments  Emergency Product Availability  Decrease Response Time  Cost Savings (buy larger quantities) Requirements  Formulary  Minimize Non-Stock Items Requirements  Utilize SSC Information Systems  PIHOA Endorsement is a Critical First Step Product Pricing is Important – Transportation Optimization MORE Important!!!

Satellite Warehouse Can a satellite warehouse support itself?  Most shipments now go Air Freight  Ocean freight is an appropriate response  What cost savings can be achieved?  Can these cost savings cover potential 3PL expenses? Variables to Address  Formulary Volumetrics and Velocity  3PL Storage and Transaction Costs

POINTS OF CONTACT Steven Pearson, Director Work #: Cell #: Mark Burchess, Chief, Logistics Operations Branch Work #: Cell #: Trisha Futty, Management Analyst Work #: Irene Grubb, Business Operations Manager Work#: Cell #: Timothy Bouchelle, Acting Chief, Procurement Work #: