strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
Published: August 26, 2008


Smarter Medicine

“We had to prove ourselves every step of the way,” says Dale Strimple, McKesson vice president. And they did, again and again. The due diligence process far exceeded anything that McKesson Specialty had experienced with its private-sector customers, says Phil Bolger, McKesson Specialty vice president and general manager. “They hit us with every scenario, every what-if they could come up with.” In the end, all that grilling paid off for McKesson, which won the contract and then some. It was a huge milestone. By November 2006, McKesson was officially in business, and Lane and her team could start thinking about rolling out their long-awaited plan.

Here too, the difference between government and the private sector came to bear. The big question was how quickly the CDC should transition the projects to the new McKesson centralized distribution contract. Mitchell Cohen, M.D., director of the CDC’s Coordinating Center for Infectious Diseases, wanted a much more measured approach to ensure the success of the program. First, there would be a two-month period of pilot programs in Maryland, California, Chicago, and Washington State to test the assumptions and fine-tune the program. Then the remaining 60 projects would be rolled out over a period of 13 months, with the last projects going live in June 2008. Cohen pressed the point that they could not afford to make mistakes. Sure, they could have rolled the program out in six months and saved money, “but the things that are higher priorities to us are being effectively able to get children immunized,” Cohen says. “That’s going to be the outcome that will reduce disease.”

Jan Hicks-Thomson, program manager for Washington, has felt some of the pressure ease up on her state’s children’s immunization program since it went live with the new system in February 2007. Like other vaccine distributors, Washington had its share of funding shortages, missed shipments, and refrigerator emergencies. Hicks-Thomson has had to deal with them all.

Washington delivers about 2.6 million doses of vaccine a year. During flu season under the old system, Hicks-Thomson and the rest of the state’s staff spent endless days and nights picking and packing influenza vaccine. “There were never enough people to do the job of managing vaccine inventory and furthering the goals of the state’s child immunization program,” she says. “I think under the new system we can focus more on promoting the best standards of health-care practice rather than running a warehouse.”

That doesn’t mean there haven’t been missed shipments of vaccine or other annoyances. Hicks-Thomson doesn’t like that shipments now come in many small boxes, rather than the large containers that providers used to get. But on the whole, the process is going well. Vaccine shipments arrive, on average, six to eight days from when the order is approved. “Generally, my local health departments are pleased,” she says. “We’re able to have more time for site visits, quality assurance — things we couldn’t do before.”

At the CDC, the progress of the VMBIP program is being monitored daily by dozens of people. One team is focused on setting up a provider and grantee “economic order quantity” system to minimize the costs associated with vaccine ordering and distribution, and others are using a weekly dashboard to track such key distribution performance indicators as the timeliness of vaccine shipments and the integrity of vaccine cold chain compliance.

One difficulty for the McKesson team was learning the vagaries of the tens of thousands of providers. For example, a doctor’s office might be closed for a few hours during lunch, or open only on certain days. The McKesson team would need to schedule deliveries to avoid the risk of having the vaccine go bad as it warmed up in the back of a truck. In Chicago, the McKesson team can’t use FedEx for delivery; it’s a nonunion company. If team members get these details wrong, they run the risk of inadvertently destroying vaccine. “Hospitals don’t shut down. Wal-Marts rarely do. We are not used to all these different schedules and procedures,” Strimple says. “As a result, we are revising many of our procedures, so we know what can be done and how to do it better.”

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store



  1. Bill Jackson and Conrad Winkler, “Building the Advantaged Supply Network,” s+b, Fall 2004: Collaborative strategies with examples from aircraft, consumer products, and auto manufacturers, plus advice for step-change planners.
  2. Dan Jones and Jim Womack, Seeing the Whole: Mapping the Extended Value Stream (Lean Enterprise Institute, 2000): Practice guide with diagrams and techniques for mutual analysis and lean thinking.
  3. Keith Oliver, Dermot Shorten, and Harriet Engel, “Supply Chain Strategy: Back to Basics,” s+b, Fall 2004: The best practices of companies that do supply chain management well. 
  4. Association of Immunization Managers Web site: Further information about immuni­zation policy development, partnerships, programs, and program management.
  5. Centers for Disease Control and Prevention Web site: Provides background and resources on the CDC’s goals and operations, including detailed information on vaccine and immunization programs.
  6. For more articles on supply chains, sign up for s+b’s RSS feed.
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.