Illuminating the Way to LUM

The allure of the bulk delivery is understandable. A truck pulls up, drops a large shipment of medical supplies on the dock, and the facility theoretically has what it needs.

But it’s not that simple.

When supplies arrive at a facility in bulk, they set off a long chain of tasks. Pallets come off the truck and get broken down over several hours. Staff manually receives the items into a system, then store them in a central storeroom—only so they can be picked again later when a floor needs them. Every one of those steps adds a touchpoint. And every touchpoint adds labor, cost and the chance for something to go wrong.

That’s the case for moving from bulk to lowest unit of measure (LUM), a delivery model where supplies arrive in their component numbers, organized by delivery route, and can even roll straight to the floor we’re they’ll be used. The efficiencies realized can be game-changing for health systems.

But according to Alex Semonite, Medline’s senior director of operations, the decision on whether to go from bulk to LUM isn’t automatic. The right move depends on a health system’s geography, space, labor, processes and appetite for change, and the decision should only come after a thorough assessment of the organization’s processes.

Before bulk to LUM

LUM isn’t new to supply chain. Though often referred to as “lowest unit of measure,” there are some who prefer “logical unit of measure,” because it’s about getting the right amount of product where it needs to go.

And just like the definition, there is no one path to LUM. About half the time, Semonite says, customers come to Medline directly: they’re interested in LUM and want help modeling the financials and reviewing their operations to see if it makes sense. The other half of the time, the idea surfaces during an on-site assessment, where Medline is already helping a system find operational and labor savings and identifies LUM as a way to drive more value from the partnership.

Either way, Semonite says the most important thing his team brings is a transparent assessment of whether the model actually fits. In some cases, the honest recommendation is to stay bulk.

“Not every health system is a good candidate for LUM,” he says. “At Medline, we’re going to transparently partner with a customer that might be looking to do this, and we’re going to advise and consult them based on the numbers and the facts that we have.”

Weighing LUM before the transition

Before a system moves to LUM, Semonite says his team and the health system’s supply chain leaders look hard at a handful of factors. The considerations include:

• Geographic distance. If a facility is in a remote location, it may make sense for them to keep sufficient safety stock on hand.
• Physical space in PAR locations. Counterintuitively, tight space can mean LUM may not work. LUM runs lean, but each PAR location still needs to hold enough days-on-hand of inventory to bridge between deliveries. If a PAR location can only carry one day on hand and deliveries come five days a week, it won’t make it through to the next delivery. “If you want to run lean, we can help you run lean,” says Semonite. “But you also need to make sure you’ve got a plan in case there’s a disruption, and that there’s sufficient safety stock to continue your operation.”
• The ability to capture labor savings. The financial case rests on reallocating the labor freed up by removing touchpoints. If a system can’t actually capture or redeploy that labor, the move may not make sense.
• Operational maturity. LUM removes buffer from the supply chain, so day-to-day discipline matters more. Medline typically recommends foundational work first—clean PAR inventory processes, clean ERP processes and sound inventory management practices—often including a PAR optimization before go-live.

When LUM makes sense—and when it doesn’t

Moving from bulk to LUM is not an all-or-nothing decision.

Semonite frames the decision with a simple contrast. A system in the middle of a dense metro area—limited on space and close to a distribution center—is a natural fit. A remote facility far from a DC, without the space or safety stock to absorb a delayed delivery, may be better served staying bulk.

“If you were in the middle of Alaska or North Dakota, I might not advise you going LUM,” he says. “But if you’re in a city, and you’re limited on space and you have labor concerns, it’s a natural fit for your supply chain.”

Moving to LUM doesn’t mean every item ships in eaches. Most Medline customers land somewhere around a 40-to-60 split between LUM and bulk. Some products like fluids are better shipped and transported by the case. Others may need to come vendor-direct in bulk, or some store better as critical safety stock. Even systems pushing toward near-100% LUM keep certain items in bulk.

The benefits of moving from bulk to LUM

For systems that are a good fit, the payoff shows up quickly and compounds over time.

“There are two immediate values that a customer gets in moving from bulk to LUM,” says Semonite. “One is the immediate labor efficiency gains—you’re removing those touchpoints in their supply chain processes. A process that would usually take four to six hours receiving and storing in the storeroom is now only as long as it takes someone to bring it from the dock upstairs to the PAR location.”

Semonite says that switch alone could take a process that consumes hours down to 15 minutes. Health systems also benefit from having lower inventory on hand. They no longer need to hold two or three weeks of stock in the storeroom. Inventory shifts up to PAR locations and is replenished daily. Keeping items in the PAR locations means they’re there when a clinician needs them, and can help avoid product expiring.

“When we do a supply chain assessment, we’ll map how many times that product actually gets touched, from the moment it leaves our distribution center until the point that it’s in the final location to be used by a clinician or a patient,” says Semonite. “And sometimes that’s 8, 10, 12 times. We want to get it down to as few as possible. Each touch is a person, it’s a manual effort, it’s prone to human error, and it costs money, time, and resources for the facility.”

Removing the reverse logistics of hauling cardboard back to the dock and paying to have it removed can also be a substantial time and resource savings, especially for large facilities.

What sets Medline’s approach apart

Anybody can drop a low-unit-of-measure delivery at the dock, but that alone doesn’t create efficiency. The value is in integrating Medline’s distribution operations with the customer’s supply chain so tightly that supplies arrive genuinely Put-Away-Ready™. That means aligning sort codes, account setups and operations-center processes so carts are sorted exactly the way the customer needs to put them away.

The sharing of data also improves. In a LUM setup, each PAR location becomes its own ship-to in Medline’s system. That granular, validated demand data lets Medline segment issues down to a single PAR room.

Medline’s bulk-to-LUM offerings include:

• Put-Away-Ready™ delivery. Supplies arrive at the dock organized by delivery route, ready to roll straight to the floor.
• Advanced LUM cart delivery. Supplies come in the right quantities, pre-organized in totes on carts (Medline’s signature “U-boats”), with LUM also available on pallets.
• Perioperative decasing. A service in which packs, drapes and gowns arrive shelf-ready with the corrugate removed, cutting waste and saving labor.
• 3PL. Some customers store their own inventory in Medline’s DCs and 3PL programs, then use LUM delivery with auto-sub to pull from their resiliency stock if a product isn’t otherwise available.
• Warehouse automation. Where Medline has an AutoStore at the primary branch, LUM volume can run through robotics that pick far faster than manual bulk picking.

“If we can move the work upstream to Medline and allow that team to focus on strong inventory management practices, that helps them focus on what they want to focus on,” says Semonite. “They don’t want to focus on breaking down boxes and receiving things in. We can do that work for them systematically.”

Bulk-to-LUM is really an ongoing partnership, not a one-time conversion, says Semonite.

“Bulk to LUM is step one,” he says, noting that his team meets regularly with the customer to look at data and look for any gaps in the process. “We need to have two people come to the table. If we’re both aligned that this is what we want to do, Medline’s there to help guide you—and we’re going to do our best to ensure that it’s successful.”