These farsighted businesses have adopted a common set of global data standards that form the basis for electronic information sharing, transactions, and movement of synchronized data from manufacturer to end-user. Data synchronization, or "data sync" is a tool that brings consistency of product information right to the desktop of everyone in the supply chain — from catalog clerk through ordering, purchasing, shipping, receiving and billing. With data sync underpinning their operations, these companies reap big savings in time and money. Findings show increasing sales, speeding products to market, improving on-shelf availability, productivity and item maintenance, and reducing transportation costs.

Entire industries are bending their systems more and more toward e-commerce, including the apparel, automotive, electrical, grocery, home improvement, drugstore, and office supply industries. In the U.S., the growth in companies signing on to data sync has shot up: from just 25 companies in 2003, to more than 3,000 in 2004, and in 2005 more than 4,000.1 Data sync is increasingly becoming a discriminator in the world marketplace.

Data sync is two-step process. First, one must get one’s own "house in order," and make sure that information in your own ordering, inventory and billing systems, etc., is consistent throughout your organization. (Tools and services exist to do this efficiently.) With that done, data is submitted to a central data repository or utility where it is synchronized, audited, verified, and distributed to members of the supply chain.

Healthcare industry lags behind
Despite the work of other industries who engaged with data synchronization and "tamed" the supply chain to allow participants to work harmoniously together, the healthcare industry, one of the largest industries in the U.S., has yet to adopt these logical, cost-effective, and proven processes. The pleas for such a tool couldn’t be louder – from the media stories about healthcare costs and errors, to White House initiatives, which are investing in electronic solutions to problems that cost Americans billions of dollars and thousands of lives.

"Ten years ago, the healthcare industry wasn’t ready for data synchronization," said Bob Perry, President of the AHRMM, the Association for Healthcare Resources & Materials Management of the American Hospital Association, "but with so much technology, so much knowledge of the value of data synchronization and e-commerce, so much use in other industries, the momentum and all factors point toward using this. The buyers of healthcare products need to encourage their manufacturers to lead the effort to synchronize all the product information with an industry gold standard."

John Stelzer, director of industry development for Sterling Commerce and a frequent writer on data sync, echoes that sentiment, warning that inaction will yield too much of an advantage to one’s competitors and separate one’s company from its customers who are proactive in data synchronization.

Fewer errors, lower prices
Data sync would bring tremendous value to hospitals. It would offer accurate and consistent item information and easier and faster sourcing of products. It would enable matching of files to assure lowest contracted price for purchases, allow for quicker, automated new item entry and promote standardized identification of product information. It allows leveraged purchasing to achieve lower prices based on visibility of purchased volume, contributes to greater patient safety, improved product standardization and use, greater operating efficiencies, and at least 50 percent fewer invoice and other errors.

It would significantly reduce "rogue" purchasing and "unofficial" inventories. The results would not only improve the bottom line operating margin, but would also free nurses to care for patients rather than wade through disparate product information.

Results of the DoD pilot PDU study indicate that all sectors of the supply chain will benefit from synchronized data, but the most benefit will come to the provider, the hospital, at the end of the supply chain. Hospitals’ profit margins are very slim and their operating practices lean. Findings indicate that hospitals have the most to gain from improved data. Since the hospital is the end customer, it would serve their best interest to strongly encourage the manufacturers and suppliers to lead the way.

DOD’s pilot study shows
promise, value
An ongoing pilot project by the U.S. Department of Defense’s Defense Logistics Agency, illustrates how data synchronization can work for healthcare. DoD became involved in this pilot study shortly after the start of the current Iraq war. They determined that support of medical surgical products to the warfighter could be greatly improved with process efficiencies gained by standard product identification and synchronization of product data across the supply chain. They began synchronizing the DoD system data with their distributors’ and manufacturers’ data to get to the one source of "truth" for product data. A pilot Product Data Utility (PDU) was created for the standardization, synchronization, and verification of pilot study data. The results have shown great promise as a proof of principle for the healthcare industry to follow.

As an indication of the high visibility of this effort, DoD received Congressional funding to support this key initiative both within the DoD system and to promote the concept across the healthcare industry. Reinforcing the importance of this data effort on the Federal level, the program recently has also been awarded Joint Incentive Funding for partnering and collaborating with the Department of Veteran’s Affairs (VA) on Data Synchronization. The Federal healthcare community is united in its’ effort to bring clean, standardized and synchronized data into the healthcare supply chain.

U.S. Army COL. Mike McDonald, director of medical materiel, calls data synchronization a key priority for the DoD, "The best medical support starts with the right data, which gets the right product, to the right customer, in the right place, at the right time—every time!"

Debra Thompson, deputy chief materiel branch, Brooke Army Medical Center, Fort Sam Houston, TX, participated in the pilot. She was pleased with the results, and said, "Synchronizing our logistics system data with the supply chain has allowed us to monitor contract compliance by ensuring that we are getting the best price for the products we order and ensuring the items are purchased from e-commerce sources of supply whenever practical. This entire effort puts us in a great position to enjoy all the benefits of seamless supply chain management to achieve optimal savings."

Visionaries at work
In addition to the work done by DoD in their PDU pilot, the Coalition for Healthcare eStandards (CHeS) has been promoting eStandards for the healthcare supply chain for several years. CHeS is at work on three major initiatives to promote and implement healthcare industry-wide supply chain standards. These standards include: 1) promoting the existing standard Global Locator Number (GLN) to identify customers and trading partners; 2) the United Nations Standard Product and Services Code (UNSPSC), an open, global standard taxonomy that allows organizations to consistently classify the products and service they buy and sell; and 3) a Product Data Utility (PDU) that provides a centralized industry resource for standardized and synchronized product data for use across the supply chain.

CHeS is actively working Data Synchronization and a PDU by leading an industry wide PDU Organizing Committee to discuss the strategies of moving forward to implement the concept. During a working session for strategy development the members of the committee voiced the following end goals of synchronized data in a PDU: reducing costs, reducing or eliminating manual re-work, reducing clinical frustration, reducing operational expense; facilitating patient safety, improving speed of delivery, improving spend analysis, improving the recall process, increasing collaboration, improving business intelligence, and improving back office productivity, to name but a few.

Data sync starts with the manufacturer
Manufacturers are the key to good data in the supply chain. For data sync to work, manufacturers need to commit themselves to an industry-wide solution. They are the source of product data that would populate a healthcare Product Data Utility.

Distributors would enjoy many benefits too, including faster identification of a new item in the field, fewer pricing errors, more accurate invoices, more e-commerce sales and better order fulfillment. All of this touches and impacts the bottom line of improved patient care, safety and service.

Some of the healthcare manufacturers have expressed concern about Return on Investment (ROI) with regard to data synchronization. A 2003 paper published by AMR Research answers the ROI issue in these terms: "Despite the millions of dollars some companies have spent on their data synchronization efforts, most have gone ahead without a formal business case or Return on Investment (ROI) analysis. Nearly all the companies we talked to were able to do this because data synchronization is seen as foundational work. In other words, it is being considered as a cost of doing business. High profile business case analysis is publicly available: studies by Cap Gemini Ernst and Young (CGEY) and A.T. Kearney (ATK) detailed the ROI experienced by early adopters. The industry has generally accepted these results, and those that have forgone a formal business case have used this data as justification."

The time is right, now
A trusted PDU will ensure the rapid transmission of standardized product data among trading partners — to everyone’s advantage. Right now, the data in the healthcare supply chain is broken. The e-businesses of the future require accurate, timely, synchronized data. Now is the time for the industry to recognize and accept the challenge.

With RFID (Radio Frequency Identification) usage on the horizon, unless the industry commits to standardized and synchronized data in a central repository/utility, RFID will only push our bad data faster and more efficiently. Its use will not enhance the supply chain – unless it starts with the Right Data!

There is no doubt it will take time and a serious commitment to clean and organize data and build this system. But ridding healthcare of its serious error rate and the costs associated to correct errors, and the prospect of improved patient safety, reduced transaction costs and increased efficiencies will make data synchronization an agent of transformation for the healthcare industry. Now is the time for the industry to take the lead and bring healthcare down the data sync path to more efficient supply chain operations. Ultimately data synchronization will result in improved patient care – the real bottom line for every hospital. HPN

To get involved in Data Synchronization for the Healthcare Industry please contact Kathleen Garvin, program manager, DoD Medical Data Synchronization
at Kathleen.Garvin@dla.mil,
215-737-9092 or Peggy Brody, director of communications, Coalition for Healthcare e-Standards (CHeS)
at Peggy@chestandards.org ,
734-677-3300 x127.