Choosing transportation alternatives for highly perishable goods

Abstract

The selection of a transportation alternative to ship perishable goods is dependent on several interconnected factors, the most important usually being speed of delivery. This study focuses on the distribution operation of Tyco Healthcare's (THC's) nuclear medicine group in the continental United States. It studies the system constraints, service requirements and costs involved in shipping highly perishable radiopharmaceuticals. The first stage of the study describes aspects of THC's radiopharmaceutical supply chain from order taking at the manufacturing plant to distribution of the prepared doses at the radiopharmacies. The second stage establishes the unit costs of shipping products to three sample regions via the four transportation alternatives currently used: ground courier, FedEx Express, commercial airline and chartered aircraft. The third and final stage of the study analyzes three hypothetical distribution scenarios. Its purpose was to challenge the restrictions and determine the opportunity cost of distributing the nuclear medicine under the current operating policies. Based on the results of all three stages, a set of cost savings recommendations is provided.