Government/Military Trends
June 2003
DMLSS: The New Era in Government Medical Logistics
 |
| Issue Table of Contents |
|
|
Earlier this year, the team in charge of the Defense Medical Logistics Standard Support (DMLSS) Program received the E-Business Transformation Award during the 2003 SecurE-Biz Leadership Awards Ceremony. The award is only the latest in a long line of tributes given to DMLSS in recognition of the program’s achievements in re-engineering the military’s $2.5 billion medical logistics supply chain.
Kicked off in the early 1990s, the DMLSS Program was born out of the lessons learned during the Gulf War: uncoordinated ordering, out-of-date supplies, and wasted materials. At that time, the U.S. Department of Defense (DoD) used ten different systems for managing its medical supply chain. Inventories were kept high to guard against stock-outs, and personnel were unable to coordinate purchasing activities, thus missing out on the opportunity to receive high-volume discounts. Meanwhile, the private medical community had begun to embrace advances in supply chain management — particularly those that leveraged the Internet to set up online trading communities and Web-based ordering — and were realizing benefits such as decreased inventory levels and costs. Clearly it was time for a change.
The DoD responded by initiating a program to improve and re-engineer business process and to support them with the right IT solutions. The result was the DMLSS Automated Information System (AIS); a centralized logistics system that controls the medical logistical needs of the Army, Navy, and Air Force. The new system offers complete inventory management capabilities supported by electronic commerce, Web-based technology, and hand-held wireless devices, and includes product and price comparison tools, medical equipment and technology management, and facility management.
The DMLSS AIS supports the DoD’s move to a just-in-time model, where supplies are ordered only when they are needed. Inventory levels have been slashed, and now medical personnel are assured that the goods they use are the most technologically advanced available to them. Now they are receiving them directly from the manufacturers rather than from inventory, where they may have been sitting on a shelf for weeks or even months.
This just-in-time model led to the development of the Prime Vendor Program, a partnership between suppliers and the DoD. In the past, the DoD maintained depots holding large stocks of inventory to fulfill the daily supply needs of medical treatment facilities. Now, fulfillment has been pushed back to the Prime Vendors, suppliers with pre-negotiated pricing contracts with the DoD. Product procurement times have been reduced from nearly 45 days to two days or less, and depots have been closed, with personnel redirected to providing direct medical support.
Another new feature of the DMLSS AIS is the Web-based ordering module, which allows medical personnel to comparison shop and make purchases online. It automates the entire procurement cycle, and saves the DoD 5 percent to 20 percent of suppliers’ catalog prices.
During 2002 and 2012, the DMLSS Program is expected to return $5.98 in benefits for every $1 of cost incurred in developing and maintaining the new system. So far, it has reduced the cost of pharmaceuticals by $389 million, and cut inventory levels by 65 percent at DoD depots and by 81 percent at medical treatment facilities.
The DoD is deploying the DMLSS AIS through a series of three releases. Currently in the midst of Release 3.0, the program is scheduled to replace all legacy systems operating in DoD medical treatment facilities by the end of 2005.