Health Information and Publications Network (HIPNET) HIPNet Collaborative Warehousing & Distribution Proposal

Proposed Activity: Collaborative outsourcing by HIPNet members for warehousing and distribution of health information materials

Timing: Ongoing basis throughout the year

Background and Need: Using funds wisely is an ever-growing concern for both USAID and cooperating agencies. With cost-efficiency and cost-reduction in mind, HIPNet proposes to initiate collaborative outsourcing by members for warehousing and distribution of materials that they produce and disseminate. This will reduce current costs incurred by participating HIPNet members to store and distribute their materials to health provider, manager, and policymaker audiences in developing countries.

As part of their mandate, CAs produce a range of health information materials in print, on CD-ROM, and on the Web with funding from USAID and distribute them for free or at low cost. Health providers, program managers, and policymakers use these CA-produced technical information materials to strengthen the performance and sustainability of health care programs, organizations, and services around the world.

The expenses currently incurred by individual CAs to warehouse and distribute (ship) information materials vary widely and depend on the CA’s location, the volume of materials shipped per year, and other factors. Warehousing and distribution budgeting line items commonly include maintenance of storage space, shelving or other storage units, a climate-controlled environment, warehouse staff, an inventory control system, packing supplies, and distribution staff, as well as mailing costs.

Some CAs outsource all health information material warehouse and distribution functions and negotiate a contract for these services on an annual basis. Other CAs warehouse their materials on their own premises and handle distribution in-house, maintaining one or more staff members devoted full- or part-time to these functions. Some CAs do a combination of both, for example, they may outsource bulk mailing of materials but handle ad hoc requests in-house.

Distribution costs incurred by CAs vary also. For example, an informal survey of six HIPNet CAs (POLICY, DELIVER, FRONTIERS, IRH, MSH, FHI and INFO) found that their mailing fees in the past year ranged from $7.15 for a three-ounce envelope to $6.13 per pound, to $3.50 per pound including re-mail of returned items. The majority of the six CAs surveyed expressed interest in participating in this activity in the 2004-2005 fiscal year to meet some or all of their information material storage and distribution needs.

Implementation and Costs: The Info Project has already negotiated a comprehensive, cost-effective contract with a Maryland-based vendor for warehousing of health information materials and distribution of same. All HIPNet members will be eligible to use this vendor for these services at the negotiated rates, no matter what the volume of their participation. The CAs that elect to participate will send their materials to the vendor, which will store them on pallets in its warehouse. Each CA will process its own orders and send the appropriate paperwork on a daily or weekly basis to the vendor for packing and shipping, with guaranteed delivery within two weeks. Paperwork can be shipped or emailed. After one year, the Info Project will renegotiate the contract, and CAs will again be eligible to use the vendor for the specified services at the negotiated rate.

This proposal is intended to meet CA needs for two types of fulfillment: bulk mailings and routine requests. Some CAs may choose to use the vendor for bulk mailings only. Others may choose to use the vendor for bulk mailings and routine processing of requests, and fulfill ad hoc or last-minute requests in-house.

The Info Project has negotiated excellent rates with reputable vendor for a range of warehousing and mailing services, including storage fees, daily/weekly order processing, postage fees, bulk mail-processing services, and supplies. The negotiated rates are:

Storage Fees

Transport materials to Maryland vendor $.34 per pound
Transport materials from printer for future publications $.34 per pound
Annual Inventory Reconciliation $25.00 per item
Monthly Skid Storage $15.00 per month

Daily/Weekly Order Processing-Services
Receive, process, package, and ship order requests $1.69 per piece
(does not include postage costs)

Postage Fees
All the below rates are up to 14-day Air Economy Worldwide Mail and Parcel rates with Consolidated Return Service. The rates are calculated based on using the combined services of the United States Postal Service and Deutsche Post Global Mail (The German Postal Operator).

Letter Class (Letters, Flats, Packets up to 1.5 oz– piece charge and pound charge)

Piece Charge $.15 per piece
Pound Charge $3.50 per pound

Publications and Fulfillment (Letters, Flats, Packets 1.5 oz to 4 lbs)
Pound Charge $3.70 per pound

Bulk Publications and Fulfillment (Flats, Packets, Parcels over 4 lbs.)
Pound Charge $2.95 per pound

Bulk Mail Processing-Services

Convert Data Files $75.00 per file
Multi-File Cross Duplication Removal (if requested) $350.00 minimum
Output Panel Splits (if required) $125.00 per split
US Address Standardization and Presort $4.50 per thousand
INTL Address Standardization and Presort $8.25 per thousand
Advanced Data File Programming $75.00 per hour
Output PS Labels $18.00 per thousand
Laser Print Address Carrier Sheet (includes
carrier sheet-for polybagging Only)
$40.00 per thousand
Inkjet Address Imaging (Includes Return Address) $20.00 per thousand
Machine Inserting (#10,6×9, or 9×12) $50.00 per thousand
Each Additional Insert $5.00 per thousand
Folding of Additional Insert (If necessary) $10.00 per thousand
Minimum Machine Inserting Fee $125.00
Minimum Machine Addressing Fee $125.00

Recycled materials will be used free of charge when available. Corrugated boxes are provided free of charge for any package weighing more than 4 pounds. Should each CA wish to use their materials (Kraft envelopes, Tyvek envelopes, or boxes) they may store the materials at the vendor’s warehouse. The fee for supplies is dependent upon generic or personalized stock and the volumes ordered.

Cost Savings to Be Realized: All but one of the six CAs that participated in the informal survey about current costs to store and ship materials are paying higher rates for warehousing and mailing than the rates negotiated by the Info Project for HIPNet. Some CAs are paying much higher rates. Thus, it is likely that all the CAs who elect to participate will incur some cost savings, particularly for bulk mailing of information materials. In the case of bulk mailings, some CAs may realize additional cost savings by having their materials sent directly to the vendor from the printer.

At the same time, individual CA decisions on participation in this activity will depend on many factors, and not just on costs. For example, CAs who currently have employees assigned to handle warehouse and distribution functions in-house will need to determine whether it is feasible, let alone cost-effective, to reassign those staff.

This activity can begin implementation almost immediately, even with the participation of just two or three CAs, and the participating CAs will begin to realize cost savings very quickly. Additional CAs can join the activity by negotiating a contract with the vendor at the HIPNet rate any time throughout the year.

Monitoring and Evaluation The Info Project will routinely track CA customer satisfaction with the quality of the vendor’s services, most likely on a quarterly basis. Next spring, before negotiating a contract for 2005-2006, the Info Project will survey the participating CAs to determine their level of satisfaction with the vendor and the services supplied, and use this information when negotiating the terms of a follow-on contract, as determined by the Info project in consultation with interested HIPNet members and USAID.

Possible Expansion of This Activity in Future HIPNet members may join this activity any time throughout the year. As HIPNet experience with this activity grows, it is likely additional CAs may elect to join and realize the cost-savings that will ensue.