2021 HME Business Handbook: Strategy

Examining Your Delivery Costs to Increase Productivity

Implementing modern technologies will help turn your business into a leaner, more efficient delivery machine with lower fleet, fuel, and personnel expenses.

There are various market forces driving rapid technology adoption in the HME industry, and one key aspect of HME operations where that is taking place is in delivery management.

HME providers with delivery and setup services are closely examining the costs of delivery for the purpose of driving out waste and increasing both productivity and customer satisfaction. Vehicle payments, registration, insurance, fuel, repairs, and salaries for drivers and dispatchers are just a few of the expenses that must be considered when evaluating the cost of delivering home medical equipment.

Implementing modern technologies will help turn your business into a leaner, more efficient delivery machine with improved route planning and accountability tools that will lower your fleet, fuel, and personnel expenses.

With robust and deeply integrated delivery systems, bottlenecks can be identified and addressed or eliminated altogether. Modern systems are collecting huge amounts of data, and clever operations personnel are examining the data to improve practices and processes that have already made a significant impact on the bottom line for those willing to invest.

WITH DELIVERY SERVICES, ‘ORDER-TO-CASH’ IS MORE COMPLEX

Is a penny saved, a penny earned? We recently witnessed the installation of an integrated delivery platform that examined the process from staging an order for delivery through collecting the A/R after completing delivery.

The platform was capable of optimizing the right orders to the right trucks; mapping routes to enable the shortest distances between deliveries; using smartphones to electronically scan the products delivered, capture signatures, and update documents in a paperless electronic workflow; and finally, charge the customer’s credit card for all charges related to the transaction. The provider was getting more done with less, and the accumulation of savings was staggering.

Benchmarks were established before the installation, monitored and adjusted through the ramp-up, and revisited one year later for comparison purposes. Four broad categories had been established for the study: delivery expenses; delivery performance; labor expenses; and other/administrative. Route optimization was the catalyst behind reduced delivery expenses, realizing a 20 percent reduction in fleet expenses (leases, registrations, and insurance), a 32 percent reduction in fuel expenses, and a 28 percent reduction in vehicle maintenance cost.

Route optimization also impacted delivery benchmarks. Overall, the entire fleet increased the number of deliveries by 17 percent. Many trucks increased deliveries per day by 35 percent by cutting the miles between deliveries. And, there was a 29 percent reduction in “hot-shot” deliveries since stock on trucks could be used to fulfill spot orders.

Labor expenses examined the before-and-after use of dispatchers, drivers, and office personnel. New system tools which provided additional and timely insight, as well as enhanced automated processes, yielded percentage changes of -65 percent, -22 percent and -85 percent, respectively. Within the new delivery platform, nearly 70 percent of the total savings was directly attributable to personnel expenses.

Since the improved processes relied heavily on smart devices at the point of delivery, a shift to a completely paperless process was achieved. The costs associated to printed orders, printed documentation, and their typical filing procedures collapsed completely. By integrating credit card payments at the POD, a significant reduction in invoicing, applying payment, and ongoing collections was realized.

On-time delivery is just one metric to analyze when measuring performance and your supply chain efficiencies. Measure and evaluate this data with a system that date and timestamps deliveries to see information such as where personnel improvements is needed to gain optimal performance.

Utilizing a robust, integrated and intuitive delivery solution will give HME providers the opportunity to better manage truckload and trip routing, barcode scanning, electronic forms, dynamic delivery management, and electronic proof-of-delivery with signature and payment capture and much more.

POINTS TO REMEMBER

  • Effectively managing deliveries with a technology solution can result in substantial cost savings to the HME provider, while improving customer service and reducing DSO.
  • Improve patient satisfaction with real-time delivery tracking, reduction in paper, and logistics management.
  • Technology offers automation in each stage of the delivery process: routing, delivering, and processing and billing.
  • Boost efficiency via a solution that takes e-signatures, processes mobile credit card payments, and emails proof of delivery.
  • The delivery management solution should also fully integrate with the HME billing software.

LEARN MORE

To read more articles about IT for HME businesses, visit hme-business.com/software, and to learn more about using technology to reduce delivery costs, visit www.cu.net/hme.

This article originally appeared in the May/June 2021 issue of HME Business.

About the Author

Courtney Baker is a medical sales assistant with HME software company Computers Unlimited (cu.net), which makes the TIMS Software system. She can be reached at courtneyb@cu.net.

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