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.
- By Courtney Baker
- Jun 01, 2021
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/Jun 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 [email protected].