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I.4 Radio Frequency Identification to Revolutionize DoD Supply Chain Management

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Colonel Cathy Erickson, USAF, MSC, CHE Program Manager Defense Medical Logistics Standard Support (DMLSS) Falls Church, Virginia

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Presentation Overview
Define Radio Frequency Identification (RFID) capabilities Analyze current business practices Discuss RFID potential implementation in the healthcare supply value chain Outline DoD medical logistics future approaches using RFID

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DMLSS Mission
Dramatically Improve the Responsiveness of Medical Logistics Support
Implement business innovations that significantly increase effectiveness of clinical healthcare delivery while reducing costs Develop a high-quality, integrated medical logistics automated system for use by all Army, Air Force, & Navy forces in peace & war
Return on Investment (FY2002-2012)

Benefit to Cost Ratio 6.4:1

JMAR JMAR
Wartime/ Peacetime Contingency MHS Operational Continuum BENEFITS $3,829M Asset Visibility

$599M

COSTS

For every $1 DMLSS needed, $6.40 is realized

Materiel * Facilities * Equipment & Technology Management * Wholesale Functions

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DMLSS Enterprise Wide Medical Logistics Management

DMLSS Wholesale
Negotiate Supply and Contingency Contracts

DMLSS Retail
Conduct Research & Make Purchase Decisions

Army, Navy, Air Force Military Treatment Facilities

Materiel Readiness Planning Prime Vendor Management Manage Contingency Contracting Product, Prices and Financial Reporting Requirements Business Intelligence Situational Awareness Provide

Continuous Process Improvement

Provide Medical Data Repository

Materiel Management Facilities Management Financial Reporting DMLSS Clinical Systems

Nutrition Management Defense Blood System Special Needs Program

Business Intelligence, Situational Awareness and Web-based Ordering

Provide Transaction and Management Capability

Asset Visibility:

Joint Medical Asset Repository (JMAR)

In-Process In-Storage In-Transit In-Theater

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(Sense and Respond to Clinical Events)

Clinical Decision Support Patient Identified Clinical Care Path Determined Clinical / Materiel Order Generated Medical Supply Chain Management Clinical Event Scheduled

DMLSS Supports a Clinically-Driven Supply Chain

Decision Support
Resources Managed Care Received

Analyze

Supply Selection

Billing

Generate Purchase Order

Medical Supplies Dispensed and Delivered Replenishment

Supply Distribution

Pick, Pack, and Ship

Receiving/ Reconciliation

PO Payment

Measure, Track, and Analyze Demand Forecasting

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Reengineering Medical Logistics Key Business Processes

2.5% Depot-Stocked Items 40%

Commercial Suppliers

20%

Prime Vendor Web-Based Ordering e-Business

Goal 95%

Medical Customers

40%

Local Purchase and Credit Card Buys

2.5%

Past (1996) GOALS:

Future (2011)

Price we pay for supplies/drugs is lowest in U.S. Health care 80% of items received in less than 24-hours Other 20% of items received in 48 - 72 hours DoD inventories of supplies/drugs nearly eliminated Contracting, ordering and bill paying totally electronic Current-use supplies/drugs go to deploying units via commercial vendors One standardized medical logistics Automated Information System

Electronic Commerce The Technology to Accomplish the Vision

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Prime Vendor Business Practice The Highest Payback Area For DMLSS
Before
Inventory: 20 Days 90 Days 270 Days 30 Days 12 - 48 Hours Hospital Customer
Order to Receipt

20 Days

90 Days DoD Depot

Hospital Warehouse

Manufacturing

Reengineered
Inventory: 10 Days

NDCs
12 - 24 Hours Order to Receipt

30 Days 7 Days

30 Days

Hospital Customer

UPNs

Prime Vendor

Manufacturing

Order to Receipt Time: 20 Days to 1 Day Days of DoD Inventory: 380 Days to 10 Days Cost of Materiel: 15% Reduction
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DMLSS Brings Electronic Commerce to Health Care Operations

Order Verified and Supplies Stocked 7am 8am Daily Supply Usage Daily Supply Orders Received 5am 6am

AIT enables E-Commerce

Daily Supply Orders Prepared and Shipped 5pm 4am

Tomorrows Supply Needs Determined 2pm 3pm Tomorrows Supply Orders Processed 3pm 5pm

Medical/Surgical Pharmaceutical Electronic Payment

Defense Finance and Accounting Service (DFAS)

Electronic Invoice

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Why Investigate RFID?

Appropriate application of RFID technology to current business processes could be another opportunity to increase efficiency and customer service Need to understand the technologys maturity and integration path in regards to how it fits with the DMLSS architecture Initial studies will determine the location and level of technology insertion DMLSS is an enabler to the services DMLSS must ensure that investment in RFID meets the DMLSS mission and provides benefits to the war-fighter

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Automatic Identification Technologies (AIT)

AIT encompasses a variety of read/write data-storage technologies that can be used to capture asset identification information

Optical Memory Cards

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RFID: An Enabling Technology

Features of RFID: Read/Write Capabilities Ability to add information directly to tags enables each unique asset to carry its own unique history (e.g., maintenance record directly attached to vehicle Non-contact Reads Ability to read tags at distance, under a variety of environmental conditions, without physical manipulation of the asset Fast Read Ability to simultaneously read large numbers (1750 tags/sec) of items Links with Sensor Technology Ability to directly capture environmental information Declining Costs Economics of tagging small items becoming more viable as cost per tags declines

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Automatic Identification Technology Concept Overview

ASSET IDENTITY IDENTITY REALIZATION TECHNOLOGY ENTERPRISE

Barcode Readers

DATA

RFID Reader

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RFID and Wireless Solutions Have Broad Applications in the Medical Field
Wireless Technologies
RFID Wireless LAN (802.11 a/b/g) WIMAX Commercial Wireless Services Bluetooth RTLS (Real Time Locations Services) LMR (Land Mobile Radio)

Wireless Applications
Drug Counterfeit solutions Cold Chain Management Point-of-Care applications - Accessing electronic medical records at patients' bedsides Telemedicine Autonomous Supply Chains Patient Safety (e.g. medication administration Asset / Personnel Tracking Inventory management Voice Communications

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MHS Organizations and Commercial Entities are Exploring RFID Technology

US Navy, Fleet Hospital Three, Iraq Using RFID to track wounded soldiers, refugees and POWs Ft. Bragg Employed active RFID to track medical equipment VA developing concept for a number of RFID pilots within the hospital setting to enhance patient safety

80% of healthcare organizations have deployed wireless LANs or plan to deploy one in the next 12 months.
Source: IDC Research

Boston, MA Beth Israel Deaconess Medical Center wireless asset tracking

MHS MTFs are using Wireless LANs in receiving gates, enabling mobile workers untethered access to the DMLSS application

Charlotte, NC passive RFID infant tracking security system

Houston, St. Luke RFID to improve bed management

Yale, New Haven RFID used to improve equipment management and flow of patients and medical staff

79% of healthcare executives plan to use wireless information systems this year while 54 percent plan to use handheld devices.
Source: 2005 HIMSS survey

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Many Technology Initiatives Have Had Mixed Track Records

16% delivered on time/on budget Clear statement of requirements Stakeholder involvement Executive Management Support Proper training 31% cancelled before completion Business case invalid Funding Prioritization

Successful 16%

Cancelled 31%

Under Perform 53%

Source: Standish Group International

53% late, over budget and/or delivered less than requirement Incomplete requirements Lack of stakeholder involvement Lack of resources Unrealistic expectations Lack of senior support

With proper planning wireless initiatives can avoid similar pitfalls

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A Comprehensive Approach for a Successful Wireless Implementation Includes

Planning
Look at strategic needs of organizations and consider how wireless solutions align with those strategies POM process to fund all aspects of technology insertion (hardware, software, site survey, installation, etc.,). Will technology be funded centrally or through operating budgets? Consider impact of Enterprise Architecture on desired solution

Policy
Create clear, targeted policies to provide guidance on implementation and security considerations Consider BPA contracts for hardware, software and services to ease implementation of comprehensive solutions across multiple locations / services

R&D - Understand the technologies, how they may best be used and their limitations Communication and Feedback
Educate personnel on policies and technologies Solicit feedback from end users via working groups

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DoD is Looking at Benefits From Use of RFID Technology

Reduction of Out of Stock Inventory Accuracy / Visibility Reduction of Safety Stock Faster Product Recalls Better Management of Shelf Life Reduction of Internal Errors Improved Decision Making Real Time Inventory Monitoring Fewer Lost Assets Better Human Resource Utilization Product Authenticity Total Asset Visibility Across the DoD Supply Chain

Vendor/DC/Depot

POE / POD

Forward Depot/DC

Tactical Field

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DoD RFID Policy for Incorporating RFID Within the DoD Supply Chain
Passive RFID Policy Applied to cases, pallets of materiel: January 2006: Comfort Items, Petroleum, Lubricants, Oil, Chemicals, Additives, Barrier Material, Ammunition, Pharmaceutical and Medical Materiel shipped to specific DLA sites January 2007: All DoD manufacturers and suppliers must tag all individual cases, all cases packaged within palletized loads, all pallets, and unit packs of UID items FY 2007: AIS Integration Active RFID Policy (Updated July 30th 2004) Applied to all freight containers, consolidated air pallets and large engine containers shipped to/from overseas DoD receiving points and War Reserve Materiel

Nested Visibility

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Overall RFID Pilot Objectives

Develop technical requirements for integrating RFID into the existing DMLSS medical supply chain management application Develop operational recommendations for integrating RFID into DMLSS operations based upon best practices in industry and government Provide cost estimates for introducing RFID into DMLSS operations Support tactical / field level deployment of the technology Provide a benchmark for future DMLSS RFID implementations Determine vendors roles and capabilities in making RFID successful and understand how the vendor relationship will evolve to include RFID
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Overview of an RFID System Deployment

Assets Operational Data

Network Edge

Transactional Data

Enterprise Network

External Network

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DMLSS RFID Pilot is Designed to Emulate Three Key Medical Logistics Business Processes
Receiving
Receive advance shipping notices (ASN) from vendor for incoming shipments Receive RFID tagged materiel from vendor and reconcile shipments RFID tags to ASN

Assembly
Create RFID labeled pallets for outbound assemblages Affix DoD RFID label onto outbound cases and load them onto outbound pallets

Shipping
Apply active RFID tag to air pallet (463L) or cargo container (SEAVAN) and load container Write container manifest to active tag Update ITV server with active tag data and WAWF for passive tag data
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The Pilot Will Measure Changes in...

Operational efficiency
Reducing number of errors Reducing time to complete tasks Improving resource utilization

Improved Readiness
Accomplish through higher responsiveness and accuracy Few ways to currently gauge accuracy RFID will provide future accuracy statistics Faster throughput (pick-pack-ship) means faster response to the warfighter Decrease Shipping errors

Improved asset visibility

Improve perpetual inventory accuracy by reducing effort to find specific assets (emergency orders, recalls, expiring material) Improve inventory accuracy especially retrograde material

Reduction of time to pay vendors (prompt payment act)

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Deploying RFID Readers and Tags in the Field is Only One Part of the Engineering Challenge
With the recent RFID mandates for supply chain, the proliferation of RFID devices (readers and tags) in the enterprise network will introduce vast amounts of RFID data that needs to be collected and managed. One Wal-Mart warehouse received 30 terabytes of data in one day with only 62 vendors sending RFID tagged suppliers! Data management and data integration are critical components of a successful RFID system design Legacy AIT systems and networks must be upgraded to accommodate RFID data

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Proper Planning and Design is Required for the Integration of RFID Technology with the Back-end Enterprise Network & Systems
Without the right strategic vision, technical architecture, and planning
Legacy networks will not be able to cope with the volume of data Legacy applications will not be able to consume operations data (from RFID processes) RFID data elements will not be standardized across the system implementation Manual effort will remain the same or increase

A technical architecture that is both data-centric and network-centric is required Such architecture will
enable smooth integration with legacy systems extend existing business processes utilize network bandwidth in an optimized way
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DMLSS RFID Pilot Study Update

DMLSS RFID pilot study phase III was initiated at Kelly USA (San Antonio, TX) June 2006 Summary of key observations Recommendations / outcomes from the study

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Summary
Define Radio Frequency Identification (RFID) capabilities Analyze current business practices Discuss RFID potential implementation in the healthcare supply value chain Outline DoD medical logistics future approaches using RFID

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DMLSS Healthcare Force Enabler Medical Logistics in Peacetime & Wartime

Peacetime MHS

Wartime/Contingency

Operational Continuum www.tricare.osd.mil/dmlss

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