Leading a revolution in freight management for hospitals
Lisa Emiliusen, GPO manager at Mayo Clinic Laboratories, and Matt Wood, director of Supply Chain Solutions developed by Mayo Clinic, recently had a conversation about a little-known program available to help hospitals and other organizations greatly reduce their freight expenses.
Matt, thanks for taking the time to speaking with me. I have heard “SCS” being mentioned recently by clients who have seen large reductions in their freight expenses. Who and what is SCS?
SCS is short for Supply Chain Solutions developed by Mayo Clinic. We are a program operated by Mayo Clinic Supply Chain employees, dedicated to bringing a better solution to freight management across the country. Years ago, Mayo Clinic realized we could lower our costs, increase supplier conversion, and get better data and transparency by developing our own independent freight management strategy, rather than using the typical third-party logistics (3PL) freight management solution we had used for years. We soon were saving $4M a year across Mayo Clinic, and we saw an opportunity to use the same strategy to help other health care organizations as well.
We have heard the SCS program has received a lot of attention over the last couple of years. What is driving that?
I think we have been gaining momentum as the SCS program is approaching its 9th year, and we have a proven track record of saving money for over 80 hospitals. Hospitals are acknowledging the legacy solutions have stalled and are now looking for something new and innovative. During this time when cost reduction is especially important, it is difficult for hospitals to ignore the average cost reduction SCS is bringing of 43%. In health care, we are usually happy if we can bring a 5% reduction in cost with a new contract. It just shows how disruptive and unique our solution is in freight management.
Speaking of cost reductions, hospital systems throughout the country are looking to save money. What kind of value does SCS bring?
Two words about value…It’s SUBSTANTIAL. Because we are a health care organization and not a 3PL reseller of carrier rates, many of the constraints put on 3PL’s do not exist for us. FedEx has allowed Mayo Clinic to extend our FedEx contract to other health care organizations, regardless of size. So simply put, with our FedEx contract we will immediately lower hospital shipment costs. But we are proud to say not only do we bring substantial dollar savings, we bring immense knowledge and experience in our proven strategy which we use every day in our own supply chain.
How does the support you offer differ from what a hospital might be used to?
SCS believes a freight program must be consistently worked by both SCS and the hospital. Our clients are assigned a dedicated client lead, who is able to learn and understand the needs of their client and their spending trends, and make recommendations based on real-time data and firsthand knowledge and experience of what has worked for other hospitals and Mayo Clinic. We don’t believe managing freight can be done by a customer service call center. In our model, our clients have direct access to their SCS client lead and SCS support personnel.
Hospitals are operating in a more remote environment due to COVID-19. Can SCS be implemented remotely?
We have adapted our business model to make this a seamless transition for clients in a remote environment. Once a client decides to join the program, we will set up a series of 30-minute weekly meetings leading up to “go-live.” The majority of the onboarding work is done by the SCS support staff who is working with FedEx account listing, and to learn about how you want your program to operate. This is all done on a timeline that is defined by our clients.
If we have a Mayo Clinic Laboratories client that is interested in learning more, how can they contact you?
Matthew Wood is the Director of Supply Chain Solutions developed by Mayo Clinic program in Rochester, MN and has been with Mayo Clinic since 2012. He oversees the freight management program developed by Mayo Clinic that is helping health care organizations around the country reduce their freight expense, increase supplier compliance, and utilize freight data to bring further cost reductions. He has more than 25 years’ experience in freight and logistics from starting out as a customer service representative and sales representative at BAX Global, to managing regional cargo operations at Northwest Airlines Cargo and Delta Air Lines Cargo.