One Year In

Serendipity doesn’t happen often in supply chain. In an industry where everything is picked, packed, tracked and processed, there isn’t a lot of room for coincidence.

For more than two decades, Novant Health had run its own consolidated services center (CSC), servicing its extensive health system with more than 900 locations across North and South Carolina. They had built deep operational expertise along the way, but by 2024, that experience was colliding with a hard reality: their growth was outpacing their infrastructure.

Novant Health’s existing CSC stood on a roughly 100,000-square-foot footprint, and as its Senior Vice President of Supply Chain, Mark Welch says, their processes were largely manual. As Welch and his team considered expansion, he knew it would mean a major greenfield build, which could take upwards of two years.

As luck would have it, Medline was getting ready to move out of a CSC it owned and operated in Lincolnton, NC, right in Novant Health’s backyard. It was a highly automated facility, with an AutoStore installation, and its footprint was nearly twice the size of Novant Health’s warehouse.

What followed was not a traditional outsourcing arrangement or a standard distribution contract. Instead, on February 1, 2025, Novant Health and Medline embarked on a unique partnership that blended ownership, technology, talent and trust—reshaping how a health system CSC could operate. One year after going live, the results are redefining what’s possible in healthcare supply chain operations.

A new model

Welch says Novant Health had evaluated different models multiple times over the years, but because his team had built up their expertise running their own CSC, it didn’t make sense to go a traditional route.

“We know how to manage our inventory, we wanted to stay responsible for it,” Welch said. “It’s always come back to that: Having that control and that closed loop supply chain has benefited us greatly over the years.”

At the same time, the health system recognized it could not scale its existing model without significant investment and risk. A new CSC would take 18 to 24 months to design, build and launch—time the organization did not have. When conversations with Medline resurfaced around the Lincolnton facility, a different idea emerged: What if Novant Health owned the inventory and procurement, while Medline provided the facility, automation, warehouse management system (WMS) and operational expertise?

For Medline, the opportunity aligned with its own strategic goals. The Lincolnton site was Medline’s first North Carolina facility equipped with AutoStore technology—the large, automated sorting system—and the company was looking for innovative ways to deploy its infrastructure and talent.

“This wasn’t about a landlord-tenant relationship,” said Peter Saviola, Medline vice president of Supply Chain Optimization. “It was about creating a model that worked for both organizations—and that neither could have achieved alone.”

From concept to go-live in four months

The speed of execution remains one of the partnership’s most striking achievements. Novant Health and Medline signed the agreement in October 2024. The CSC went live February 1, 2025.

In four months, Novant Health transitioned from a small, manual warehouse to a highly automated, 300,000-square-foot expanded facility, fully integrated with Medline’s WMS and AutoStore systems. Novant Health’s ERP remained the system of record for procurement and finance, while Medline’s WMS handled unit-level transactions—eliminating layers of rebate reconciliation and invoice complexity.

“All we transact back and forth is units,” Welch explained. “We own the inventory, we pay the vendors directly, and Medline manages the movement. It simplifies the entire back office.”

Equally important was continuity. Rather than displacing the existing workforce, the partnership preserved jobs and institutional knowledge. Approximately 70 Medline employees who worked in the CSC stayed on to work in the new operation for Novant Health. And the Medline operations leaders work beside them in the facility. CSC employees transitioned into the new operation, supported by experienced Medline leaders and training programs.

“We intentionally set it up so we would all work closely,” Saviola said. “When you work in the same building every day, there’s no ‘you messed this up’ mentality. We made decisions together—and we fix issues together.”

Measurable gains in scale, service and resilience

One year in, the operational impact is clear. Welch says the larger footprint and automation capabilities have allowed the organization to expand its active SKU count from approximately 4,200 to nearly 7,000, while maintaining high service levels across the network.

Throughput has also increased sharply. In 2024, Novant Health’s CSC processed approximately 1.6 million lines. In 2025—without a full year of operation—it shipped just over 2 million lines, a 23% increase.

Service reliability has improved as well. Raw fill rates now consistently run in the high 90 percent range, and emergency courier usage has dropped by 61 percent since go-live—reducing cost and improving clinician satisfaction.

“With our old facility, our hospitals would order products, and because you had to walk the whole warehouse to pick orders, stuff could be missed or didn’t get on the right cart,” said Welch. “So, we would have to send a courier on a special trip to ensure delivery.”

Beyond efficiency, the partnership has fundamentally strengthened supply chain resilience. Previously, Novant Health’s CSC was a single point of distribution, meaning there was limited backup. Today, the Lincolnton operation is connected to Medline’s national distribution network, enabling rapid support from other facilities in the event of disruption.

“If something goes wrong at our site, we can lean into other Medline distribution centers almost immediately,” Saviola said. “That kind of resilience simply didn’t exist before.”

Redefining the role of the CSC

The partnership has also changed how Novant Health views its CSC.

“This is a totally different world for us now,” said Welch. We look at our distribution, not as a cost center, but as a quality, control, and opportunity center.”

Cross-docking capabilities now allow purchase order items to move through the CSC and onto hospital-specific carts, eliminating downstream receiving work at the facility level. Bulk buying has become more feasible. Welch points to Novant Health recently saving more than $100,000 on a single syringe buy by leveraging available space and improved inventory visibility.

Perhaps most importantly, the model scales. As Novant Health expands geographically, it can replicate the same system within other Medline facilities, maintaining consistency without rebuilding infrastructure from scratch.

“This gives us the ability to grow and continue to ensure our teams have the supplies they need to provide remarkable care, without reinventing our supply chain every time,” Welch said. “That’s incredibly powerful.”

Looking ahead

With the foundation in place, Novant Health and Medline are already exploring what comes next: expanded bulk purchasing programs and new distribution models to serve ambulatory surgery centers and physician clinics more directly.

None of those initiatives were possible under the old model. All of them are enabled by the partnership now in place.

A year after opening its doors, the Novant Health Consolidated Services Center stands as a working example of what happens when a health system and a supply chain partner move beyond transactional thinking. By combining infrastructure, expertise and shared accountability, Novant Health and Medline didn’t just open a new facility—they created a new blueprint for collaboration.