Rockford Health System Standardizes Freight Program

Achieves Cost Savings, Increases Vendor Participation and Systemwide Visibility

Situation

Rockford Health System, located in Rockford, IL, is the largest health system serving northern Illinois and southern Wisconsin. It includes a 396-bed tertiary care hospital; numerous outpatient clinics with locations throughout the region; a 55-bed inpatient hospital offering a full range of rehabilitation services; and a visiting nurses association providing a variety of home healthcare services to patients of all ages.

Rockford’s process for freight prior to implementation with TRIOSE was inconsistent. The system was unable to determine its true freight costs. In fact, the initial estimate of freight costs was actually undervalued by approximately 2.5 times.

Challenge

At Rockford, freight was something that just happened, and was not monitored. Therefore, the biggest challenge was the need for education throughout the health system and its executive leadership on how freight was impacting the overall bottom line. Since there was no consistent program in place for handling freight costs, Rockford management needed to find a way to bridge its finance and accounts payable personnel with its purchasing staff to devise a method to track and better manage all costs.

The TRIOSE Solution

In 2007, the health system conducted a complete review of its supply chain process. An external consultant made recommendations regarding the entire organizational structure, and 53 cost-saving measures were identified that could be pursued immediately — one being the implementation of a freight management program. The consultant suggested that Rockford consider partnering with TRIOSE.

“The TRIOSE program was so easy to implement. We used very few internal resources and the program was implemented rather quickly to get something on the board. We have not looked back at that decision since,” said Chip Geiger, Purchasing Manager at Rockford.

The TRIOSE Difference

TRIOSE was able to onboard the health system very quickly and measurable results were seen beginning in month one. The first year produced $51,886 in savings as the system ran 43% of its freight spend through TRIOSE. Rockford currently has 70% of its spend through TRIOSE. To date, Rockford has saved a total of $505,418 over 60 months of tracking freight.

“By implementing the program, we brought a new and more comprehensive focus to freight. Instead of a necessary evil that no one wanted to address, we were able to install a consistent monitoring program that everyone from Receiving Dock to our Accounts Payable departments understood,” explained Geiger. “We have confidence that our numbers are accurate, and we can trust our reports. We can react to any figures that seem to be out of range — because we understand what our ranges are — and have a history to validate them. Now that the program is fully implemented, less time is spent onboarding new vendors. People are able to see a number and realize what it means to our bottom line.”