As health systems evaluate the concept of self-distribution, many are realizing that there are a number of ways to approach this new way of managing their supply chain.  One very important element to consider is whether to establish and implement the entire model and processes internally or outsource specific pieces, such as distribution and logistics.

These two critical elements involve the planning and management of the storage and flow of goods and their accompanying information.  Supply chain management is the integration planning and operational control of the logistics, procurement and accompanying services.

If a system is considering the outsourcing option, they are essentially considering hiring an entity that is well versed in the day to day mechanics of healthcare distribution, a company that provides this as a core competency.  These entities are known as third party logistics providers, or more commonly, 3PLs.

The 3PL concept and business model is broad-based and long standing.  Companies in numerous industries have successfully used 3PLs for decades to efficiently and effectively move their raw materials and finished goods, whether across town or around the world.

In the healthcare arena, however, 3PLs have generally only been seen on the manufacturing side, where outsourcing is growing rapidly.  We have seen recent studies that report manufacturers are in some cases doubling their use of 3PLs.

Generally, the use of 3PL's is not commonly used within healthcare systems yet, but we are beginning to work with clients to evaluate this option.

The reasons that a provider might consider outsourcing under self distribution fall under two general categories: financial and managerial: