How E-Commerce has Streamlined Cook Medical's Supply Chain

By David Reed, Cook Medical

Eight years ago, if you were the first employee to arrive in the morning at the office of Cook Medical's North American customer service center, you'd be greeted by a pile of orders received overnight that had spewed from our fax machine onto the floor. The fax machine received the majority of our orders and each order would then have to be picked off the floor and keyed into our computer system. In those days, we were processing about 1700 orders a day. Imagine the amount of time and manpower required for—and the potential for error that results from—keying in 1700 orders every day by hand.

We’ve come a long way since then. Investing in e-commerce was an easy decision, but also required substantial investment from Cook. We knew that processing and invoicing orders electronically made sense for us and our customers, but the journey has been a long one, and we’re not finished yet. Everyone is trying to do more with less and e-commerce is one step toward that goal, but as an industry we still have a long way to go.

Cook's first step toward e-commerce, in 2007, was to look for a system that could electronically read and process faxes. At the time, there wasn’t a system that met all of our needs. Luckily, a significant piece of Cook’s history is that we have developed our own technology when possible. We ended up partnering with a vendor to develop our own system, which remains the backbone of the system we still use today. We’re now equipped to do e-commerce in multiple ways to meet our customers’ needs.

Two main challenges that prevent us from effectively using e-commerce with customers today are incompatible IT systems and the errors caused by bad data. We hope to provide solutions to both of these problems. Our corporate account managers and executives work directly with supply chain professionals to identify and correct data errors. And the recent enhancements we made to our online ordering system help us provide an e-commerce option where IT incompatibilities prevented us from doing e-commerce before.

One of the most important (and time-consuming) projects that that we’ve completed for e-commerce is assigning Global Trade Item Numbers (GTINs) to all of our products and adding the GTINs to our product labels. We were very proud to announce the completion of this conversion for our North American catalog at the beginning of 2013. GTINs are a global standard that can be used across the healthcare industry, although not everyone is using it. Creating compatibility between systems has valuable benefits. It enables both Cook and our customers to minimize data errors. Today, our order processing error rate is 0.09%, although our goal remains zero errors.

With e-commerce, Cook was also able to move 12 employees who were dedicated to order processing to other valuable jobs for the company and for our customers. We’re also working to convert more of our invoicing to electronic systems, and we’re currently able to invoice about 70% of our orders electronically.

The good news is that today 60% of our North American orders are what we consider to be automated - meaning that the order intake, processing, and invoicing is completely electronic. A human hand doesn’t touch one of these orders until the product is picked off the shelf to be shipped. In the not-too-distant future, we hope that the vast majority of our orders globally will be automated.

We see even more exciting things down the road. One of the next hurdles in the e-commerce process for Cook is order consolidation. Currently, if a hospital places 40 orders in one day, our system processes and ships 40 orders that day. We envision a system that will consolidate those 40 orders from the same facility into one, so that processing and shipping can occur at a fraction of the current cost.

Healthcare is changing quickly around the globe as it tries to become a cost-effective industry while simultaneously improving patient care. E-commerce is one way our industry has identified to help lower costs and create shared benefits. By working together, we can reach the goal of providing quality health care to patients while identifying ways that we can both significantly reduce the cost of healthcare.

David Reed is currently Vice President of Operations, Vice President of Healthcare Business Solutions and Corporate Compliance Officer for Cook Medical Incorporated. Additionally he leads Cook’s Healthcare Business Solutions team, which focuses on the business and supply chain processes within healthcare.