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Flowers or Chocolate – Quantifying Business Value

February 13, 2014

As we get close to Valentine’s Day, many of you may be wondering what to buy for your loved ones: flowers or chocolate?

You will, of course, look at various options, their features and potential benefits. While weighing features and benefits may lead to a quick subjective and usually completely sufficient answer at the individual level, the corporate world relies on a different, much broader approach to quantify the value of a purchase. Value Quantification (often referred to as VQ) is not new to FedEx. By assuming the customer’s perspective, FedEx consultants have been developing shipping solutions and strategies assessing and weighing the value of different operational options to the customer

When it comes to healthcare shipping in particular, many factors need to be considered while looking for packaging solutions, such as reliability, cost, reusability, technical features or quality aspects. Critical healthcare commodities will be placed in packaging solutions during transportation. Shippers need to compare alternatives in the large portfolio of niche transportation solutions available in the market place.

Should active, passive or hybrid cold chain technologies be selected? Active solutions provide tight thermal control, and are delivered through equipment similar to fridges, being able to cool and heat the inside of a container. Active systems need power supply and may run on batteries during transit. In contrast, passive systems tend to be cheaper, but overall packaging insulation design, shipment preparation, external environmental conditions, and duration while in transit affect performance dramatically. Gel packs or phase change materials are typically added to the passive solution prior to shipment pickup to maintain the desired temperature range over a defined time. Hybrid technology incorporates both active and passive components.

Performing a VQ between active and passive solutions, for instance, helps shippers of temperature-sensitive products to quantify the potential annual savings or present value of one alternative versus another. A thorough consulting analysis incorporates costs associated with packaging solutions (purchasing or leasing expenses, overall weight, number of healthcare products per shipment), labor costs (shipment preparation and conditioning), transportation costs (transportation mode, speed at moving inventory, monitoring services), and product costs (probability of products destroyed by temperature excursions, related investigations).

The overall numerical value of the VQ exercise obtained in close collaboration between shippers and transportation provider enables logistics departments to take advantage of an analytical method to make educated, near optimal shipping choices. The final decision around shipping solution is reached in a transparent manner while strengthening the business relationship.

As for the question posed at the beginning, well, you can never go wrong with both. Happy Valentine’s!


Christelle Laot

Technical Fellow

Dr. Christelle Laot joined FedEx Express in 2007, and is currently Technical Fellow in the FedEx healthcare industry vertical. In this role, she provides direction and raises awareness around trends, transportation regulatory frameworks and shipping solutions. Prior to her work with FedEx, Dr. Laot held managerial positions in R&D, innovation and strategy at Bayer in Germany for about six years.

Dr. Laot obtained PhD and MS in Chemical Engineering from Virginia Tech (USA), a Diplôme d’Ingénieur from UTC Compiègne (France), as well as an MBA from HEC Montreal (Canada).

View all Christelle Laot’s blog posts

Comments

    Rory says:

    wonderful use of metaphor to get an effective method across Christelle.

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