There are times in business when external pressures push a company to the brink, forcing it to adapt swiftly to changing circumstances in order to survive.
Pharmaceuticals distributor Harvard Drug Group faced such a challenge a few years back. In this case, the crisis was precipitated by regulatory requirements. To combat a rising tide of drug tampering and counterfeiting incidents, both the federal and state governments had begun imposing tighter controls over the distribution process. One result was a spate of drug "pedigree" laws—legislation requiring suppliers, wholesalers, distributors, and/or repackagers to maintain detailed records documenting each stage of a drug's journey through the supply chain.
For wholesaler/distributors like Harvard Drug, the pedigree laws brought a new set of record-keeping burdens. In addition to their own internal records, they would now be responsible for gathering item-specific information (like drug names and exact lot numbers) on all of the products they handled. They would also be required to certify the accuracy of the pedigrees and the orders they shipped.
That may sound more like an inconvenience than a body blow, but it was a serious concern for Harvard Drug. The company was already under intense pressure to turn orders around swiftly. Now, it would have to find a way to incorporate an additional, time-consuming step into its process. For a time, the company was genuinely worried that the rigorous pedigree requirements might put it out of business.
To understand why Harvard Drug found the prospect so alarming, you need to know a little about its business. The Livonia, Mich.-based company distributes pharmaceuticals, over-the-counter drugs, vitamins, and veterinary medicines to independent pharmacies, small drug store chains, hospitals, clinics, and veterinary offices. These are customers with high service expectations. Because of the high cost of drugs, stores and pharmacies tend to keep very little stock on hand; instead, they rely on their suppliers to ship them products as needed—and there's little tolerance for delays. An order placed today is expected to be at the store or clinic tomorrow.
To assure swift processing, Harvard Drug has designed its Livonia DC to turn an order around within two hours. But the pedigree requirements threatened to gum up the works. First, there was the problem of squeezing tasks like lot and expiration date validation into an already compressed cycle. Then there was the question of technology. As the company began looking into the new data gathering requirements, it quickly realized that its current system wasn't up to the job.
"Our legacy software system did not have the ability to track items at the lot level," explains Dale Swoffer, Harvard Drug's senior vice president of information technology and chief information officer. And that wasn't all. It was also clear that the RF picking system used at the Livonia DC wouldn't be able to keep up with the new demands. "To get the volume and the validation we needed, it would not have been possible with RF, because there are no bar codes [from the manufacturer] to identify each lot," Swoffer says. "We would have had to put a bar-code label on each bottle with a unique ID. It was just not practical with the amount of volume we put through."
There was no way around it. In order to survive, the company would have to make some big changes. "We had no choice," says Swoffer. "The bottom line is we had to make it work or we'd be out of business—period."
By the numbers
Harvard Drug found the answer to its pedigree problems in new software and a voice-directed picking system. The software includes a warehouse management system (WMS) from Manhattan Associates that connects to an Axway software solution that handles the pedigree tracking. The Manhattan software also interfaces directly with the Vocollect Voice voice-directed picking system, which provides workers with real-time order fulfillment instructions and captures the data needed for lot and expiration date validation.
Today, 40 workers use the voice system at the company's Livonia distribution facility, a 70,000-square-foot center that fills orders for small piece items and cases. Individual orders are gathered into totes, which are conveyed to zones within the pick modules. As a tote enters a zone, a worker reads the last five digits of the tote's ID number into a headset to notify the WMS of the tote's arrival. The system responds by giving the worker verbal directions to the location of the first item to be picked. When he or she reaches that spot, the worker confirms the location by reading off the rack's check digit number.
About 90 percent of bin locations contain multiple lots, which means the voice system must be very specific in the instructions it provides regarding the lots and quantities to be picked. The worker confirms the pick by reading back the last four digits of the lot number and the quantity selected before depositing the items into the tote. The voice system then repeats the process for any other items needed from that zone. Once all the picks in a zone have been completed, the tote is passed to the next zone until the order is complete or the tote is full.
For the remaining 10 percent of bin locations—those that contain a single lot—pickers follow a slightly curtailed procedure. In those cases, the software automatically skips the request for lot confirmation, which helps speed up the picking process.
The voice system is designed with flexibility in mind. For instance, if a worker receives instructions to select items from a particular lot but finds the lot is no longer available within the zone, he or she can pick from another lot of the same SKU, informing the voice system of the change so it can update the pedigree record.
Since converting over to the new software and voice-directed system, the Livonia DC has been able to ship orders on time and handle higher volumes, Swoffer reports. "We have more than kept pace," he says. "We actually do more lines today and have increased our volume, while adding the additional steps for the pedigree requirements." The facility now averages about 12,000 lines picked a day, with a peak of 18,000.
Order accuracy is up as well. Picking accuracy this year has run about 99.93 percent, up slightly from 2008 numbers. But with the strict pedigree requirements, 99.93 percent isn't good enough—the company will accept nothing less than perfection. So Harvard Drug has set up an additional validation process to ensure that all errors are corrected before orders leave the building.
As for what's ahead, the company hopes to roll out the voice system (which is currently used only for picking) to the putaway and cycle counting functions at the Livonia DC. It is also looking to implement voice technology next year at its facility in Indianapolis, a smaller center that houses a case picking operation.
"I really do not think we could have gotten through all of our processes with the speed we needed without voice," says Swoffer. "It gives us a clear competitive edge, and that is why we want to expand it to our Indianapolis DC."