After Carestream Health was sold to a new owner, the medical imaging company had to design its own, stand-alone distribution network. Modeling software helped supply chain managers make the right decisions.
As any first-year college student can tell you, it's not easy to go out on your own after sharing space with family members for so many years. Perhaps that's how supply chain managers at Carestream Health Inc. felt when their company was sold by Eastman Kodak Company to Onex Corporation a year and half ago.
Prior to the sale, Carestream had shared warehouses and transportation services with Kodak. After joining a new "family," however, the medical imaging company could no longer piggyback on a parent's distribution network. Now it would have to develop a stand-alone network that included warehousing and transportation facilities and services.
But Carestream's managers did not simply re-create what the company had during the Kodak years. They took advantage of a rare opportunity: the chance to design an economical and efficient distribution network from the ground up.
One is not enough
Carestream makes a variety of products that are sold to hospitals and medical distributors. These include medical and dental film, chemistry and printing systems, digital and analog X-ray imaging systems, molecular imaging systems, and health care information solutions. In 2007 the company netted about US $2.5 billion from sales of its products in more than 150 countries.
Carestream began its life as the Health Group of Eastman Kodak, a Rochester, New York, USA-based company that is best known for the cameras and film it manufactures for the consumer, professional, and industrial markets. In May of last year, Eastman Kodak sold the Health Group to Onex, an industrial conglomerate based in Toronto, Ontario, Canada. The Health Group, renamed Carestream, retained its headquarters in Rochester.
To serve the U.S. market, Kodak Health Group had used four warehouses in the United States that were owned by Kodak. One was located in Windsor, Colorado, near a manufacturing plant that made most of its flagship product, medical x-ray film. Another was in Rochester, New York, near Kodak's corporate headquarters. The group also shared warehouses in Georgia and California with Kodak's consumer goods business.
The sale to Onex meant that the former Kodak Health Group would have to strike out on its own when it came to transportation, warehousing, and distribution. In preparation for the change of ownership, the medical imaging company adopted what appeared to be a simple solution: serve all of its U.S. customers from one location.
"Prior to the split from Kodak, we tried to get everything into one warehouse," recalls Mark Ewanow, worldwide network design and inbound logistics manager. "We quickly recognized that it wasn't the best strategy."
The company had chosen the Colorado location as its central distribution point. That worked well for products that were manufactured at the nearby plant. But Carestream also manufactured some products in Rochester and was sending to Colorado—in the western half of the country—products that would later be shipped back to the U.S. Northeast. Clearly, having a single distribution point was neither efficient nor cost-effective. It was time for Carestream to rethink its plans.
Into the pool
Fortunately for Carestream, Kodak had by that time sold its Rochester warehouse to a third-party logistics company, which was willing to provide storage and handling for Carestream. The company now would be able to use that warehouse and the one near its manufacturing plant in Colorado as distribution centers and thus avoid unnecessary shipments. But that was just a first step in the process of redesigning its network. The company would also have to analyze and revise its transportation patterns.
During the Kodak years, the medical imaging unit had saved money on transportation by consolidating customer orders into full truckloads whenever feasible and delivering them to "pool points." These were locations where truckloads were broken down into less-than-truckload (LTL) shipments for final delivery to customers. The pool points were based on a network that included Kodak's four warehouses, and the truckloads were built with orders from both the Health Group and its parent company.
Now that Carestream had two warehouses instead of four—and no Kodak products to help fill the trucks—the company needed to identify pool locations that would optimize its new outbound product flow, Ewanow says. To conduct that analysis, Carestream's managers needed specialized software. After evaluating a number of packages, the company selected Supply Chain Guru, a network-design tool from Llamasoft Inc. that models a supply chain network, identifies the optimal structure, and then runs test scenarios to predict operational performance.
Accurate network modeling requires a significant amount of information, both current and historical. "The first step is modeling the existing network and getting the model in line with costs and inventory that we saw in history," says Ewanow.
To do this, the company needed to create a single picture of historical activity. This meant that Carestream had to pull all sorts of data from its corporate information system, including SAP applications inherited from Kodak Health, and then get that information into a format the modeling software could use. Among the data required were product types, the weights and quantities bought by its 2,000 or so customers at each of their receiving locations, and the frequency of shipments to each location.
Ewanow and his colleagues knew that indiscriminately loading all of the company's historical data into the model would skew the results. Instead they had to filter that information to some extent. Otherwise a shipping lane that was used once as an exception might be treated as a routine run in the analysis.
Soon they had the information they needed to conduct the analysis and run operational scenarios. "Getting a 'steady state' representation of history is difficult," Ewanow says. "But when you do, that gives you the confidence that the results from the software reflect the savings from any future network design."
Savings all around
When Ewanow completed the modeling exercise at the end of 2007, the results suggested that Carestream use six pool points, as opposed to the nine it had when it was Kodak Health Group. By using facilities operated by its motor carriers in Pennsylvania, Georgia, Texas, California, the U.S. Northeast, and the U.S. Midwest, Carestream could minimize its costs for shipping to all of its U.S. customers. Breaking down truckloads into LTL shipments in those geographic areas would also allow Carestream to obtain better truck utilization, Ewanow says.
Modeling Carestream's U.S. supply chain network validated the earlier decision to operate distribution centers in Rochester, New York, and Windsor, Colorado. That assessment was based not just on outbound considerations but also on inbound costs and service factors. The model showed that the distribution centers were situated properly not only for the products that it manufactured in Colorado and New York but also for those that it sourced from plants in Oregon, Mexico, and China. "One of the things that surprised some folks was that the locations we chose were pretty good locations because of the impact on inbound logistics costs," Ewanow says.
On the outbound side, Carestream could clearly see how costly it would be to serve the entire country from one point; as Ewanow puts it, the model quantified "the number of trucks we wouldn't have to run out of Colorado to serve the United States."
The medical imaging company also used the model to analyze its truck routings and shipments—and found that it was wasting resources in many cases. "We saved on the elimination of hundreds of truck movements per year," Ewanow says.
The combination of two distribution centers and the six pooling points allowed Carestream to shave US $1 million dollars from its US $50 million annual transportation budget. Those savings would have been considerably greater if fuel costs had not risen so high over the past year, Ewanow says.
Modeling beyond borders
Indeed Ewanow says that supply chain modeling and analysis will become a regular exercise for Carestream, partly because high energy prices will make transportation costs a concern for the foreseeable future. He sees a number of potential applications beyond transportation and warehousing analysis; his next exercise will be determining optimal inventory holdings and locations in the United States.
The medical imaging company also plans to apply supply chain modeling outside of the United States, using the software to analyze the optimal locations for serving its many international customers. Its first target is Europe, where Carestream has just begun examining its delivery network. Making changes in Europe will take longer than it did in the United States, Ewanow says, partly because Carestream has customers in so many countries and partly because it is constrained by thirdparty logistics contracts there that it inherited from Kodak HealthCare.
Ewanow believes that supply chain modeling will allow Carestream to "right-size" its global network and look for better ways to distribute its specialized products, taking into account the medical equipment market's shift from traditional imaging to digital technology. At the same time, modeling will help Carestream respond to changing economic trends. "We will continue to look for network opportunities as our customer base changes and fuel costs increase," Ewanow says.
Business software vendor Cleo has acquired DataTrans Solutions, a cloud-based procurement automation and EDI solutions provider, saying the move enhances Cleo’s supply chain orchestration with new procurement automation capabilities.
According to Chicago-based Cleo, the acquisition comes as companies increasingly look to digitalize their procurement processes, instead of relying on inefficient and expensive manual approaches.
By buying Texas-based DataTrans, Cleo said it will gain an expanded ability to help businesses streamline procurement, optimize working capital, and strengthen supplier relationships. Specifically, by integrating DTS’s procurement automation capabilities, Cleo will be able to provide businesses with solutions including: a supplier EDI & testing portal; web EDI & PDF digitization; and supplier scorecarding & performance tracking.
“Cleo’s vision is to deliver true supply chain orchestration by bridging the gap between planning and execution,” Cleo President and CEO Mahesh Rajasekharan said in a release. “With DTS’s technology embedded into CIC, we’re empowering procurement teams to reduce costs, improve efficiency, and minimize supply chain risks—all through automation.”
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Even as a last-minute deal today appeared to delay the tariff on Mexico, that deal is set to last only one month, and tariffs on the other two countries are still set to go into effect at midnight tonight.
Once new U.S. tariffs go into effect, those other countries are widely expected to respond with retaliatory tariffs of their own on U.S. exports, that would reduce demand for U.S. and manufacturing goods. In the context of that unpredictable business landscape, many U.S. business groups have been pressuring the White House to pull back from the new policy.
Here is a sampling of the reaction to the tariff plan by the U.S. business community:
American Association of Port Authorities (AAPA)
“Tariffs are taxes,” AAPA President and CEO Cary Davis said in a release. “Though the port industry supports President Trump’s efforts to combat the flow of illicit drugs, tariffs will slow down our supply chains, tax American businesses, and increase costs for hard-working citizens. Instead, we call on the Administration and Congress to thoughtfully pursue alternatives to achieving these policy goals and exempt items critical to national security from tariffs, including port equipment.”
Retail Industry Leaders Association (RILA)
“We understand the president is working toward an agreement. The leaders of all four nations should come together and work to reach a deal before Feb. 4 because enacting broad-based tariffs will be disruptive to the U.S. economy,” Michael Hanson, RILA’s Senior Executive Vice President of Public Affairs, said in a release. “The American people are counting on President Trump to grow the U.S. economy and lower inflation, and broad-based tariffs will put that at risk.”
National Association of Manufacturers (NAM)
“Manufacturers understand the need to deal with any sort of crisis that involves illicit drugs crossing our border, and we hope the three countries can come together quickly to confront this challenge,” NAM President and CEO Jay Timmons said in a release. “However, with essential tax reforms left on the cutting room floor by the last Congress and the Biden administration, manufacturers are already facing mounting cost pressures. A 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally. The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs. These businesses—employing millions of American workers—will face significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.”
American Apparel & Footwear Association (AAFA)
“Widespread tariff actions on Mexico, Canada, and China announced this evening will inject massive costs into our inflation-weary economy while exposing us to a damaging tit-for-tat tariff war that will harm key export markets that U.S. farmers and manufacturers need,” Steve Lamar, AAFA’s president and CEO, said in a release. “We should be forging deeper collaboration with our free trade agreement partners, not taking actions that call into question the very foundation of that partnership."
Healthcare Distribution Alliance (HDA)
“We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress. Distributors and generic manufacturers and cannot absorb the rising costs of broad tariffs. It is worth noting that distributors operate on low profit margins — 0.3 percent. As a result, the U.S. will likely see new and worsened shortages of important medications and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programs,” the group said in a statement.
National Retail Federation (NRF)
“We support the Trump administration’s goal of strengthening trade relationships and creating fair and favorable terms for America,” NRF Executive Vice President of Government Relations David French said in a release. “But imposing steep tariffs on three of our closest trading partners is a serious step. We strongly encourage all parties to continue negotiating to find solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses.”
In a statement, DCA airport officials said they would open the facility again today for flights after planes were grounded for more than 12 hours. “Reagan National airport will resume flight operations at 11:00am. All airport roads and terminals are open. Some flights have been delayed or cancelled, so passengers are encouraged to check with their airline for specific flight information,” the facility said in a social media post.
An investigation into the cause of the crash is now underway, being led by the National Transportation Safety Board (NTSB) and assisted by the Federal Aviation Administration (FAA). Neither agency had released additional information yet today.
First responders say nearly 70 people may have died in the crash, including all 60 passengers and four crew on the American Airlines flight and three soldiers in the military helicopter after both aircraft appeared to explode upon impact and fall into the Potomac River.
Editor's note:This article was revised on February 3.
GE Vernova today said it plans to invest nearly $600 million in its U.S. factories and facilities over the next two years to support its energy businesses, which make equipment for generating electricity through gas power, grid, nuclear, and onshore wind.
The company was created just nine months ago as a spin-off from its parent corporation, General Electric, with a mission to meet surging global electricity demands. That move created a company with some 18,000 workers across 50 states in the U.S., with 18 U.S. manufacturing facilities and its global headquarters located in Massachusetts. GE Vernova’s technology helps produce approximately 25% of the world’s energy and is currently deployed in more than 140 countries.
The new investments – expected to create approximately 1,500 new U.S. jobs – will help drive U.S. energy affordability, national security, and competitiveness, and enable the American manufacturing footprint needed to support expanding global exports, the company said. They follow more than $167 million in funding in 2024 across a range of GE Vernova sites, helping create more than 1,120 jobs. And following a forecast that worldwide energy needs are on pace to double, GE Vernova is also planning a $9 billion cumulative global capex and R&D investment plan through 2028.
The new investments include:
almost $300 million in support of its Gas Power business and build-out of capacity to make heavy duty gas turbines, for facilities in Greenville, SC, Schenectady, NY, Parsippany, NJ, and Bangor, ME.
nearly $20 million to expand capacity at its Grid Solutions facilities in Charleroi, PA, which manufactures switchgear, and Clearwater, FL, which produces capacitors and instrument transformers.
more than $50 million to enhance safety, quality and productivity at its Wilmington, NC-based GE Hitachi nuclear business and to launch its next generation nuclear fuel design.
nearly $100 million in its manufacturing facilities at U.S. onshore wind factories in Pensacola, FL, Schenectady, NY and Grand Forks, ND, and its remanufacturing facilities in Amarillo, TX.
more than $10 million in its Pittsburgh, PA facility to expand capabilities across its Electrification segment, adding U.S. manufacturing capacity to support the U.S. grid, and demand for solar and energy storage
almost $100 million for its energy innovation research hub, the Advanced Research Center in Niskayuna, NY, to strengthen the center’s electrification and carbon efforts, enable continued recruitment of top-tier talent, and push forward innovative technologies, including $15 million for Generative Artificial Intelligence (AI) work.
“These investments represent our serious commitment and responsibility as the leading energy manufacturer in the United States to help meet America’s and the world’s accelerating energy demand,” Scott Strazik, CEO of GE Vernova, said in a release. “These strategic investments and the jobs they create aim to both help our customers meet the doubling of demand and accelerate American innovation and technology development to boost the country’s energy security and global competitiveness.”