In an effort to streamline operations and provide citizens with access to better, more affordable healthcare, XPO Logistics Inc. and Trinity Health have announced plans to execute a $26 million supply chain project.
Four distribution centers will be built to service the Trinity network, which consists of 90 hospitals across 21 states, with the first being developed in Fort Wayne, Indiana.
The move offers the multi-institutional healthcare system more control and leverage over supply chain operations, a goal it has been working toward for several years.
In addition, the deal reportedly marks Trinity Health as the biggest health care system to take on this level of control over its supply chain management and that, in doing so, the organization could see as much as an annual $20 million in cost reductions.
"This initiative represents an enormous change in the way we stage and move supplies to our hospitals," said Trinity Health senior vice president of supply chain and fixed asset management Lou Fierens. "The modern, world-class facility and distribution process we are creating with XPO will help us further our Lean/Kanban approach to supply chain management for the benefit of the individuals and communities that rely on us for high-value services.
“It also allows us to collaborate with our suppliers in a much deeper and more productive way by eliminating non-value-added work for all the participants in the supply chain, including our caregivers."
The logistics hub in Fort Wayne will be the single point of entry for the network's suppliers and manufacturers and will eventually be equipped with satellite warehousing technology. The Northeast Indiana location is a low-cost region that is ideal for improving the distribution processes of Trinity Health.
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Conlan Construction was named the general contractor for the project, which will take a year to build to completion, though the preparation phase is expected to begin in the first quarter of this year. XPO will assume the role of contract logistics manager and oversee all operational and management responsibilities.
This strategy emphasizes the value in consolidating operations. The healthcare system is nearly twice the size it was six years ago and that, and through centralizing the procurement of medical supplies and standardizing inventory management throughout the network, Trinity has already seen $10 million in savings and a 20 percent increase in supply chain efficiency.