Friday, September 30, 2016

Do you lead the elephant...?

Image result for leading an elephant
There is a expression that relates walking with elephants. Do you lead the elephant? or does the elephant lead you?  The interesting truth is that while we would all like to think we are leading the elephant around , it's not really true. And we all know that if the elephant wants to go somewhere it's going to to go there, we really don't have the tools to change it. 
So today's lesson is about understanding the forces of change and how elephants can be lead around and applying that lesson to an elephant in your business, namely... 
Dead Inventory

Quite often, even among well-run businesses, the actual costs of inventory are inaccurate, underestimated and incomplete. While most distributors know they have dead inventory, many are unaware of just how much. Even in well-run companies, anywhere from 20-30 percent of inventory is dead or obsolete.

While that is huge and alone could have devastating ramifications for a business, how do you calculate the real costs to determine the hit that your business is facing? The easy answer is to take the unit cost for those dead items, add them up and you have your answer. But not so fast. There are many other hidden costs to consider before determining the true cost of your dead inventory. Ignorance about these costs of dead inventory place your business in peril. And addressing the dead inventory problem can breathe life back into a troubled situation. So what are some of the other very real costs that complete a more accurate calculation of dead inventory costs?

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  • Cost of capital/money
  • Finance and insurance
  • Discounts
  • Inventory housing
  • Handling costs
  • Administrative expenses
  • Lost Opportunity Cost

Paying employees to “fix” the inventory problems, as well as management time spent on solving inventory issues, is very costly. Employees paid for tactical, rather than strategic, management issues is essentially wasting your precious resources. Hopefully, your staff is making up for this by optimizing systems and procedures, such as leveraging multi location activity to reduce cost of inventory, as well as other system driven resources.

Utilizing a software system like the MDS-Nx System, can quickly identify and/or prevent dead inventory from sitting on your shelves. This will prove to be a worthwhile investment since it reduces these employee costs.

Using our Remotenet Ecommerce System's automated business intelligence module you have the option to automagically  (yes it is a word - see link)   create a category for overstock, closeouts and Daily Specials.  These categories use a combinations of length of time on the shelf, Carrying cost and Sales history if available to calculate and update automated search categories on your website.

Image result for dead inventory
So, what is the real cost of dead inventory?

When all additional costs are taken into account, the total cost of holding inventory can represent a shocking 25-30 percent more than the inventory’s unit cost value. In addition, having your cash tied-up in inventory-related expenses has an opportunity cost, which can translate to as much as 15 percent or more. Getting an accurate, realistic measurement of what inventory truly costs is a smart first step to saving money, increasing cash-flow, improving performance (inventory turns and customer service) and increasing your competitiveness.

The more inventory a company carries, the higher the ongoing costs will be, which is reason enough not to carry dead, outdated, or obsolete, inventory. A company that can reduce their inventory costs through operational efficiency will see tremendous benefit. 

Image result for dead inventoryLet us solve the problem with these three easy steps, 

  1. Identify your potential items using your software systems (use our MDS-Nx System if your's is not working for you...) 
  2. Push those items using your E commerce and Sales Force Automation tools (or use ours) 
  3. Repeat month/weekly/Daily to keep your dead inventory to a bare minimum.

So ask yourself , Are you leading the elephant of is the elephant leading you? 
Its not easy to change your practices and keep on top of inventory but as a distributor, 
don't let it be the elephant in the room  that no body will talk about, make sure it's the elephant you are leading with a sure and steady hand.
Are you ready to partner with a solution and team that knows healthcare and pharma?
Join us as the Specialty Pharmacy show in Washington this September. 


For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556.
 Or send a message to

Click here and tell us how we can help you with your business solutions.

Sunday, September 25, 2016

If we can all come together, we might just have a chance...

As a followup to our blog post from a few weeks ago, it would see that we have a new issue to join the protest on. Ok so this this will likely not make the list but in a AMAZING show of solidarity. 
 Sidebar here for an interesting note on protest songs. 

Five major Healthcare Associations came together: 
Healthcare Distribution Alliance (formerly HDMA)
National Community Pharmacists Association
National Association of Specialty Pharmacy
National Association of Chain Drug Stores
Health Industry Distributors Association

And they all signed a letter that amounts to a what most would call a fairly heavy handed response to the letter OptumRx sent out regarding the requirement of VAWD Certification. In short, the industry already has the DSCSA requirements so what do we need the VAWD Certification for? 

For those not familiar, here is the original blog post and the new letter from these groups.

In Keeping with our protest theme , One might argue... If "pro" is the opposite of "con", is "progress" the opposite of "congress"?   Then do we really need congress to fix this? However It would seem congress's actions good or bad do seem to negate the need for VAWD certification.  

So what is this all about again? 

 We were recently given the opportunity to participate in an Advisory Board for a pharmaceutical industry member.  And as a result had the unique privilege to discuss with both industry veterans, current stakeholders and pharma customers,  about how this will impact the industry. and of course the larger question of whether or not OptumRx will back down from the requirement. 
Many Industry members requested and were given extension letters but most seem to have a January deadline which given VAWD's track record doesn't seem to be enough time to gain certification. 
To give you some idea of how much this really means OptumRx was about 50 Billion in revenue in 2015   and with their latest acquistions control about 25% of the US market. 

As a point of full disclosure , we wanted to get an idea of what the NABP really makes their money from. Thankfully they post operating budgets on line, and while they are not audited financials. It is interesting to note the vast majority of revenues comes from this program as well as the other accreditation's it offers. 
Image result for follow the moneyCheck out the last few years: 
2016 (note: It says 2016 but the numbers look to be from 2015) 

While it begs the question as to what the NABP budget for next year will look like,  it doesn't really change Optum's viewpoint.  But it does add fuel to the fire for those Industry groups who feel this is not justified. 

Some view points from the meeting:

  1. Most of the industry veterans and business owners felt that given this letter and with enough pressure , some heads at OptumRx will roll and they will back down.
  2. Most customers and employees/compliance folks went the other way and said there is no way OptumRx will back down. There will be some pain but the supply chain will survive and the few larger players  (or those with VAWD certification) will get the majority of the business. However after a while it will just be another cost of doing business, much like any other license. 

All agreed that nothing will change short term. And if anything is going to happen, the most sage (IMHO) advice was that nothing will change until after the election.

As things do change we will do our best to stay in front of the issues, yet another thing to hold onto your hats for, And as i said last time...

The good news is that this an excellent opportunity for those companies with systems in place. As they are way ahead of the game. Typically VAWD certification can take months if not a year , 
So you still have some time and that means that the OptumRx business will likely be up for grabs. 
So make hay while the sun shines and get moving on those opportunities. 

Are you ready to partner with a solution and team that knows healthcare and pharma?
Join us as the Specialty Pharmacy show in Washington this September. 


For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556.
 Or send a message to

Click here and tell us how we can help you with your business solutions.

Sunday, September 11, 2016

Serial Numbers are here are you ready?

Lot and Serial number control are a key element of new regulations about securing the US drug supply chain. But implementing lot control in a warehouse environment can be a sometimes tedious and or problematic process.

Converting an item to lot controlled typically requires warehouse setups, software changes and upgrades and physical label changes for many distributors.
So how can we stay in compliance without crippling warehouse through put and business operations?

The answer is our MDS Product Lot Conversion Utility.
Rather than take an item off the shelves, remove it from open orders , change sales history or create a new item and transfer inventory. The MDS system now simplifies the process of setting up an item as lot controlled and allows you to convert items on the fly without impacting business operations.

Newly updated as part our Standard Health Care Distribution Guarantee, The MDS System has been updated to comply with the latest Serial number updates and requirements of the DSCSA. The lot conversion Utility allow clients to automatically create Serial Numbers or Scan GS1 compliant bar codes to record serial numbers.  

From GS1: 
Item Serialization
Mid-Term (2017 – 2019): Manufacturer/Repackagers serialize packages of drug products using a Product identifier (GS1 Global Trade Item Number® (GTIN®) or NDC), Serial Number, Lot Number and Expiration Date.

Serialized Item-Level Traceability
By November (2023), Make available information that would allow supply chain partners to trace the ownership back to the initial manufacturer or repackager. 

By simply setting up some defaults for your lot or serial controlled item, you can convert you existing inventory to a lot controlled item and move your warehouse over to fully lot and serial number controlled item by item, while shipping goods the whole time..

Contact Us today to learn how to make sure you have a system in place to let you easily and quickly become compliance with state and federal requirements while maintaining your margins and increasing operational efficiency. 

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556.
 Or send a message to

Click here and tell us how we can help you with your business solutions.