OhioHealth 3PL Supply Chain Program Cuts Orders by 65%, Advances Sustainability and Cost Savings Goals

OhioHealth 3PL Supply Chain Program Cuts Orders by 65%, Advances Sustainability and Cost Savings Goals

Key Takeaways:

• OhioHealth's 3PL program cuts order volume by 65%.
• The program consolidates shipments to improve efficiency.
• Fewer deliveries help reduce fuel use, emissions and packaging waste.
• Suppliers benefit from more predictable ordering and planning.
• The effort supports OhioHealth's sustainability goals.

OhioHealth has spent the past two years developing and implementing a third-party logistics (3PL) supply chain consolidation program that delivers measurable results across sustainability, inventory management, and cost savings for the system and its supplier partners.

"The Supply 3PL program delivers three main benefits: sustainability improvements, better inventory management, and cost savings for both OhioHealth and suppliers," said Casey Sattler, director of Supply Chain at OhioHealth. "While we aren't formally measuring cardboard waste reduction as a metric, it is an undoubted collateral benefit. Our collaborative planning with suppliers leads to more consistent, less wasteful ordering."

OhioHealth's supply chain operates through two primary pathways. The majority of products are ordered through Cardinal Health, the primary distributor. A separate segment is purchased directly from suppliers, which historically results in multiple, small less efficient individual shipments being sent to various hospitals across the network. The Supply 3PL program targets those direct supplier orders by consolidating them into a single shipment per supplier, sent to one central location rather than to multiple hospitals.

"As we migrate products from a vendor direct service model to our Supply 3PL program, we leverage our Demand Planning team and tools to reduce inventory variability, improve product availability, and deliver supplies to our front-line clinicians next day vs. waiting several days under the legacy model," Sattler added.

Since launch, the program has achieved a 65% reduction in orders placed and a 50% reduction in order lines with participating suppliers. Those gains translate directly to reduced administrative burden for suppliers, who now handle fewer manual order entries, invoicing activities, and customer service interactions, freeing them to allocate resources more efficiently.

"Consolidating shipments leads to operational efficiencies, including reduced order volume, fewer shipments, and associated cost benefits for OhioHealth," said Gregory Diamond, manager of Supply Chain Operations. "It is a strategic move toward greater operational efficiency."

Diamond noted that both the supply chain operations and sourcing teams collaboratively manage the program, overseeing vendor relationships and internal operations.

The consolidation effort is also making logistics more efficient. Instead of sending numerous direct-to-site deliveries, the program uses palletized, consolidated bulk shipments. That approach helps reduce freight variability and makes load and distribution planning more predictable. It also uses existing Cardinal Health routes for last-mile distribution, cutting down on the total number of delivery trucks needed.

Suppliers are seeing benefits as well through greater order predictability. Using advanced analytics, the OhioHealth Demand Planning and Forecasting team provides participating suppliers with SKU-level ordering forecasts and site-level usage reports, helping them plan ahead with more confidence. A consistent ordering schedule improves manufacturing and distribution efficiency, better aligns orders with forecasted demand, and leads to stronger service levels, fewer urgent orders, and fewer returns.

The program also delivers financial benefits. By reducing the number of purchase orders, it lowers administrative costs as well as freight and material-handling expenses. Additional metrics related to administrative and freight cost savings are available for reference. The participation framework is designed to create equitable commercial value for suppliers, supporting long-term collaborative partnerships.

The program also supports OhioHealth's sustainability efforts and helps meet Joint Commission Sustainable Healthcare certification standards. By consolidating orders through a third-party logistics model, OhioHealth is able to reduce the number of deliveries, cutting fuel use and emissions while creating less packaging waste. The approach also streamlines the supply chain, reduces cardboard waste and helps prevent product damage, which means fewer replacement orders and less material to recycle.

"This program directly supports our Joint Commission Sustainable Healthcare Certification," said Terri Scannell, principal advisor of Sustainability at OhioHealth. "Reduced transportation and waste directly advance the green transportation and waste reduction work streams required for certification, and that connects to our board-level sustainability objectives."

Bracco has emerged as a leading vendor in the 3PL program, embracing the process, realizing sustainability benefits firsthand, and serving as a model for other suppliers considering participation.