What is the issue and why is it an issue?
The issue is the need for a standardized
system for customer identification between providers,
manufacturers and distributors. Customer Identification is the
way suppliers identify organizations across the supply chain.
It is a physical number that is assigned to each receiving
entity within a specific organization.
The Problem: Current Scenario
Whenever an order is placed with a
supplier, the supplier requires that each delivery point at a
customer site is identified by using
its own unique and proprietary number.
This means:
• thousands of extra numbers are
being maintained within both the supplier's and
hospital's purchasing system
• hospitals spend significant
time looking up their numbers before placing phone and
other manual orders
• blind faith that the
manufacturer and distributor have the correct price tied to
each
location before the order is
placed
The Solution: Future Scenario
The assignment of a completely unique and
commonly available number for each location where products are
shipped by suppliers is a more reliable alternative. Just as a
social security number or tax ID number is used within the
business world, in banking and throughout the U.S. Government,
a single unique number used with all suppliers when placing
orders, resolving discrepancies, and other follow-on
transactions will be more efficient. Suppliers can always
obtain information about facility locations from a central
database, so they know everything that they need to properly
ship, deliver, and bill products.
What are standards, and why are they
important in the health care industry?
Information and data are more easily
accessible than ever before, and the wide range of
information and data needs to be assessed
and screened for its relevance in today's
health care industry. This also holds true
in the health care supply chain world.
A current issue within the health care
industry is that not all the information needed is accessible,
due to differing standards or formats. The Efficient Healthcare
Consumer Response study published in 1996 states that $11
billion is wasted each year in the health care supply chain,
largely due to the fact that data standards are either lacking
entirely or they are not as widely used or well-developed as in
various other industries.
To meet the challenge of managing all this
information, standards groups have been formed. These groups
work to reduce the cost of health care by publishing standards
and promoting their use throughout the entire health care supply
chain.
What is Global Supply Chain
Identification?
Global Supply Chain Identification is the
process of assigning one globally unique number to each
location that receives products from suppliers. Both customers
and suppliers have these numbers assigned.
You, as a health care provider, will have a
number if a supplier is going to deliver products to your
specific location. If suppliers only deliver products to your
receiving dock, only that location will have a global location
number. Alternatively, if suppliers deliver to more locations,
additional numbers are assigned.
What is a Global Location Number (GLN)?
The Global Location Number (GLN) is a
13-digit number. The associated name, address, and class of
trade is “tied” to each unique number and is
specific to only one exact and very precise location within the
world.
What is the GLN Registry?
The central database is called the GLN Registry and it keeps track of the name, address,
class of trade, and organizational hierarchy information about
each provider. Additionally, it maintains the same information
about the suppliers that an organization does business with. It
is online 24 hours a day, 7 days a week, and it is the only
place that stores all present and past GLN information. GS1 US
operates the GLN Registry.
What if distributors and manufacturers do
not want to use GLNs?
CHeS has talked to many distributors and
manufacturers about this. In fact, many of them participated on
various work teams over the last 3 years. We are confident that
a large number will support this industry program and will help
to move it forward.
Local representatives of manufacturer and
distributor organizations may not know about this program. Most
of our interactions have been with corporate representatives of
many of these same companies.
What is the role of GPOs?
All of the group purchasing organizations
that are core members of CHeS may help if you are a member.
They may each provide slightly different services, but here are
some of the ways that each may help:
• Helping organizations get the
GLNs assigned
• Standardizing all supplier
sales reporting business process around the use of the GLN
• Education and promotion
programs/materials
Please contact your GPO representative for
more information.
Tell me more about the role that GPOs,
distributors and manufacturers play in Global Supply Chain
Identification.
The goal is to have everyone use the same
number.
• If GPOs tell the manufacturers
that a member is using a GLN, the manufacturer is more
likely to associate an
organization's entities with the right GPO contract price.
• Next, if distributors use the
GLNs with manufacturers to
learn the price that the
manufacturer assigned, the facility is much more likely to get
the right price when ordering
products from the distributors.
• Finally, by using the GLNs to
order products from distributors or manufacturers, all of the
ambiguity is removed from the
supply chain.
Today, at least three different numbers
(and databases) are used in health care to do
this exact same transaction, so by everyone
using one number and one database, it
increases the likelihood that the price
charged was the price that was originally
communicated between the GPO, manufacturer,
and distributor.
The longer-term goal is that the GLN will
be as commonplace in its use as it is between distributors,
manufacturers, and customers in many other industries.
Why do facilities need a GLN?
Do you buy products from the same
pharmaceutical companies that sell to retailers? How
about food companies that also sell to
restaurants and grocery stores? How about linen and
textile companies that also sell to
retailers? Do you ever buy anything from Wal-Mart?
Hundreds, perhaps thousands, of companies
that do business with your organization, also sell to customers
in other industries. If so, they are already using the GLN with
these customers, like Wal-Mart, Kroger, and TrueValue.
For this reason, we believe that it does
not make sense for U.S. health care to adopt a customer
identification standard that is different from the number being
used by the suppliers in these other industries. The Coalition
for Healthcare eStandards recommends the use of the Global
Location Number, or GLN.
The GLN is already used in 23 other
industries within the U.S. Globally, it has been adopted by 93
countries as the customer identification standard for global
and domestic business transactions. Because health care is a key
component of the global economy, it simply does not make sense
for U.S. health care to be its own island and have its own
health care-only customer identification standard.
Why should this be a priority?
Today's provider organizations will
continue to have competing priorities based on the many
challenges facing the health care industry. By embracing the GLN
process now, the expected outcomes include:
• improved pricing accuracy
• no more maintenance of
thousands of single-purpose proprietary supplier numbers
• improve the accuracy of GPO
sales reports
Why don’t manufacturers,
distributors, and other supplies also have GLNs?
They do. In fact, many of the suppliers
that you do business with already have GLNs, albeit for use
outside of the U.S. health care industry. This will now bring
the U.S. health care industry into compliance with this common
and proven business practice.
Why did CHeS select the GLN instead of the
DUNs or some other number?
CHeS and many people from manufacturer and
distributor organizations studied this very closely for three
years. The Coalition carefully analyzed the DUNs + 4 numbering
scheme, the HIN (Health Industry Number), the DEA, and others.
After an intensely collaborative process, we finally selected
the GLN for the following reasons:
• The GLN is the global standard
for customer identification; 93 other countries have
already standardized on this
number.
• It is already in use in 23
other industries within the U.S. Because suppliers in these
other
industries also sell to
health care providers, a separate standard did not seem
warranted.
• Companies like Wal-Mart,
Kroger, Home Depot, Office Max, and many others require the
use of the GLN for all supply chain activities.
use of the GLN for all supply chain activities.
• health care companies like
Pfizer, Merck, Abbott, 3M, McKesson and Johnson & Johnson
support the use of the GLN as
they do business in many other industries (e.g. over-the-
counter drugs).
• Software companies like Lawson
and PeopleSoft already support GLN in their MMIS
products.
• health care is not an island
onto itself. It is part of the global business community, so a
separate standard did not seem
warranted.
• U.S. health care is better
positioned to adopt the best practices of the other
industries
where there is standardization around global standards. There are extensive benefits from
better supply chain practices including those that other industries have successfully used
where there is standardization around global standards. There are extensive benefits from
better supply chain practices including those that other industries have successfully used
for several years.
