Just-in-time (JIT) refers to the inventory management method of maintaining leaner inventories on site and relying on smaller, more frequent shipments that arrive when needed. Utilizing lean inventories allows facilities to maximize operational efficiency and improve the cost effectiveness of their services. If a supply chain is reliable and a company can get what it needs when it needs it, it doesn't have to stock extra supplies or inventory. For example, if space is at a premium in a hospital or other health care facility, reliable JIT logistics can help those providers optimize care by devoting space to patients rather than inventory.
just in time
Space is at a premium in health care settings, and reliable just-in-time logistics are helping providers optimize care by devoting space to patients rather than inventory. What's more, utilizing lean inventories also allows health care facilities to maximize operational efficiency and improve the cost effectiveness of their services.
"[Health care] organizations would rather use space for patient care than a storage closet," said Jeff Jackson, senior vice president of operations for Penske Logistics. "That is driving more just-in-time shipments and less storage. Order frequencies have increased, and the quantities have decreased as the confidence in the network grows."
Optimizing the supply chain can help drive more effective patient care at the lowest operational costs. "As long as they have a reliable supply chain to get what they need when they need it, they don't have to stock extra supplies," Jackson said.
Dependability is critical for lean inventories to work, and Penske helps facilitate just-in-time deliveries by providing visibility throughout the supply chain. "We give real-time traffic and weather updates along with the estimated time of arrivals and exception reporting," Jackson said. "If various storms roll across the U.S. over the period of one week, it stresses the supply chain, and our customers need that visibility."
Through its ClearChain® technology suite, Penske Logistics houses information in a central repository that makes it organized and easily accessible. Multiple parties within the supply chain can access and use the information to improve service and decision-making.
At the same time, Penske works with its customers to create emergency action plans to get ahead of potential disruptions or recover quickly if a disruption occurs. That can be especially important for health care providers and distributors, which often experience unpredicted demand surges. "During some events, a lot of our customers may not run, so we'll have drivers idle who we can move into a health care position if we need to," Jackson said.
During COVID-19, for example, Penske was able to pivot drivers to critical accounts as some customers' operations slowed. "We can also scale our operations by tapping into Penske's fleet of rental trucks," Jackson said. "We just don't have equipment issues because we have so much availability."
The ability to leverage multiple sources of capacity can help mitigate supply chain disruptions no matter what has caused them.
Health care facilities, such as hospitals and surgery centers, often require multiple delivery points. "We may be there for multiple hours delivering to various points within the facility to ensure each division has the appropriate supplies," Jackson said, adding that Penske completes attended and unattended deliveries. "Some are done overnight or very early in the morning when things aren't quite as busy, so they're ready for the day."
The deliveries are highly customized depending on the health care facility's needs. "We may have a tote for a knee replacement for a specific operation or a tote for various kits that go to a certain surgery ward," Jackson said, adding that drivers may also handle stock rotation in storage rooms.
Deliveries can be done in totes, pallets or cages and typically use returnable containers that have to be managed. "The hospital doesn't want them there taking up space, and the distribution center needs to clean them, recycle them and get them back into the loop," Jackson said.
While the health care facility dictates its specific delivery needs, Penske Logistics can accommodate a variety of equipment. "We're using electric pallet jacks, hand trucks and forklifts," Jackson said.
A Competitive Advantage
In health care, logistics is about more than the movement of goods. It is about patient care, and it is critical to have the right products available at the right time. A reliable, optimized supply chain drives more effective patient care at the lowest operational cost. That, in turn, creates a competitive advantage for health care providers and improves patient outcomes.
"Instantly knowing where your products are within the supply chain is critical in a health care setting and gives you a competitive edge," Jackson said. "The quality and efficiency of the supply chain has a direct impact on patient care."
Timely shipments can make all the difference for manufacturing and retail-related industries. Yet the speed of shipments must be balanced with affordability.
To deliver products in the most cost-effective and timely means possible, forward-thinking logistics companies are embracing hub-and-spoke models, where connections are arranged like a wheel. Freight traffic moves along spokes connected to a central hub. This approach efficiently moves products out of strategically located distribution centers and shortens travel time.
As an industry leader, Penske Logistics puts its own hub-and-spoke model into action for customers. Penske experts optimize the model to help you to speed up deliveries, increase efficiency, reduce costs and keep products moving.
Maximize Freight Efficiencies
As part of the hub-and-spoke model, hubs are positioned no more than 300 miles apart from one another. Here’s how it works:
Driver A leaves from his origin hub and meets Driver B at a switching point. They then exchange trailers. And while Driver B continues to the next switching point, Driver A heads back to his originating hub. This sequence of events keeps products in continuous motion and allows drivers to return home each night.
The hub-and-spoke model creates numerous benefits, including:
- Continuous movement for loads thanks to centralized handoffs.
- Reduced lengths-of-haul, which improve scheduling, reduce transit time and help drivers comply with hours-of-service regulations.
- Consistent on-time performance, which enhances service levels and ensures products arrive in the right place at the right time.
- Improved driver recruiting and retention. Drivers are able to return home each night, thus experiencing an improved quality of living. This produces additional benefits, including higher tenure, route consistency, increased transit dependability and performance, and improved safety.
- Reduced costs and enhanced productivity thanks to Penske’s economies of scale (larger loads reduce per-unit costs) and the elimination of the need for team drivers.
- Lower carbon footprint, because fewer empty miles driven reduces wasted fuel and emissions.
- Consistent pricing mitigates the risk of third-party carrier price fluctuations.
Fast and efficient delivery doesn’t have to mean high costs. By partnering with Penske and leveraging our hub-and-spoke system, you can strategically use your transportation resources and steer a course toward efficiency.
4 Common Questions About the Hub-and-Spoke Model
What is a hub-and-spoke network?
A hub-and-spoke system is a distribution network with a centralized hub connected to multiple surrounding lanes, or spokes, similar to a wheel. A company can rely on just one central hub-and-spoke system or utilize multiple hub-and-spoke systems within its network to get everything where it needs to go efficiently and safely. When utilizing hub-and-spoke systems within a network, a company may also use relay driving for efficiency and to avoid driver burnout.
What is a hub-and-spoke model example?
Hub-and-spoke models work similarly to airlines – planes take off from a central location and fly to multiple locations.
What is the hub-and-spoke method?
Hub-and-spoke is a distribution method that utilizes a centralized hub. A company’s products originate from this hub or are sent to the hub for customer distribution. From the hub, products travel outward to smaller locations for further processing or distribution.
What is the primary purpose of the hub-and-spoke system?
This system allows a company to utilize fewer trucks and fewer overall transportation routes. Instead, remaining vehicles may run multiple routes, transporting increased loads by picking up and dropping off cargo at various places or “spokes” of the wheel.
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