Anyone who has been in a big-box retailer knows two-gallon buckets of mayonnaise have lower per-unit prices than 20-ounce jars. It’s just basic bulk purchasing power at work. And as interagency collaboration within the Defense Department is proving, it applies to more than just condiments.
Since fiscal 2014, Medical supply chain professionals at Defense Logistics Agency Troop Support have partnered with the Defense Health Agency’s Medical Logistics Division to improve and expand Troop Support’s electronic catalog of military medical materiel.
The catalog, known as ECAT, is an online system where customers can browse, compare and order pharmaceutical, laboratory, dental, optical fabrication and commercial medical and surgical equipment items.
So far, the ECAT partnership has yielded more than $34 million in savings for the military medical community.
Before DHA was formed in 2013, DLA played a larger role in engaging multiple military medical customers from each of the services, determining their individual requirements and then trying to convince them to align their requirements to take better advantage of bulk purchasing power.
“Given DLA’s customer-provider relationship with all the players, this engagement and reconciliation process took resources and, in some cases, led to suboptimal solutions,” said Eileen Motta, a contracting officer and team chief in Troop Support’s Medical supply chain.
DHA was established with the authority to standardize in areas such as medical logistics across the military medical enterprise, enabling the consolidation of the services’ medical requirements.
“We represent all of the medical services with one voice,” said Air Force Lt. Col. Christopher Estridge, a medical service corps officer with DHA Medical Logistics Division.
As DHA serves as the primary, consolidated customer for medical materiel, DLA is able to focus resources on meeting DHA’s requirements.
In essence, DHA ensures the services buy in bulk so that DLA can negotiate the best prices.
Estridge said the early success of the collaboration is expected to continue, and forecasts call for an additional $33 million in savings through fiscal 2019.
Increasing the number of vendors who participate and the product lines available in ECAT will help ensure the forecast becomes reality, Estridge said.
DHA has been helpful in getting more customers to use ECAT and more vendors to make their products available on ECAT, said Charles Reimer, a contracting officer with Troop Support’s Medical supply chain.
As new medical materiel vendors use ECAT, DHA reaches out to their competitors, explaining that if they want their products to be available in the military medical supply chain, then they too must use ECAT.
“If vendors want to maintain market share, they need to get on ECAT,” Motta said. “This type of direct customer-vendor exchange is a very powerful incentive for vendors to get on the ECAT bandwagon.”
In some cases, the vendors are the ones driving business toward ECAT.
“Our vendors on ECAT are telling other customers to use the system to lower their delivered costs,” Reimer said. “When vendors are promoting the use of your system, you know you are doing things right.”
ECAT’s success is getting noticed. The Office of Management and Budget has recommended ECAT to the Department of Health and Human Services, which would increase overall buying power for all ECAT customers, Reimer said.
“We have a great partnership with Troop Support because of the relationships we've been able to build through our combined commitment to serve,” said Air Force Maj. Blake Smith, a medical service corps officer at DHA Medical Logistics Division. “In the end, it's about making our medical logisticians in the field more efficient and being good stewards of the dollars entrusted to us by taxpayers.”