Outsourcing warehousing and distribution
Warehousing and distribution of medical and pharmaceutical supplies are currently outsourced. There was a long-term business relationship with the supply partner. However, the relationship had become very tactical and there were performance concerns.
We developed a new way of working with the supplier. We developed common objectives and created a performance dashboard to track performance. We worked with key stakeholders to understand their future warehousing and distribution requirements. We asked the current supplier what changes they would make to meet the future needs. To understand the cost to serve we built a financial model. The model provided alternatives should the DHBs insource this service. During the commercial negotiations, the model supported setting the service price.
The result was the development of a new way of working with clear accountabilities. The supplier committed to investment to improve the effectiveness of the supply chain. From the commercial negotiations, the DHBs achieved certainty about future service cost.