If you've ever been treated for an illness or injury aboard a cruise ship, you probably didn't give much thought to where the Band-Aids or antihistamines came from. Even if you had, you'd most likely have assumed it was a regular medical supply house. But in all likelihood, the supplier was a company like West International Medical Supplies—one of a growing number of specialized distributors that focus on serving cruise ships and other remote locations. That's a bigger business than you might expect. Today's vessels boast full medical facilities: emergency first aid suites, pharmacies, even operating rooms—everything a typical hospital would have, except on a much smaller scale.
Established in 2008 as the U.S. arm of Britain-based L.E. West Ltd., West International maintains offices and a distribution center near Fort Lauderdale in Davie, Fla. The advantages of being located in the Fort Lauderdale area, the heart of the cruise industry, are clear enough. "Our unique selling point is that we are in Florida, where every major cruise line has headquarters," says Mark Galluzzo, vice president of West International. "My major competitors are in New York and Seattle."
But it also has its drawbacks. Florida has the strictest pedigree requirements for pharmaceutical distribution of any state in the union. The state's Prescription Drug Safety Act, which took effect in 2006, requires distributors to track products down to the lot number and expiration date as they flow throughout the supply chain. These stringent requirements caused approximately 1,200 pharmaceutical wholesalers to flee the state during the past five years.
Complying with the pedigree law requires robust software capable of gathering, tracking, and sharing relevant data with customers and state regulators. That presented a problem for West International. As a newcomer to the U.S. market, the company couldn't afford the complex IT infrastructure other pharmaceutical distributors use to meet these requirements. It would have to find another way to keep detailed records on the items moving through its supply chain while still meeting customers' demands for swift order turnaround.
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The company solved the problem by going with a warehouse management system (WMS) delivered on a software-as-a-service (SaaS) basis. It signed on to use San Francisco-based SmartTurn's Inventory and Warehouse Management System (SmartTurn has since been acquired by RedPrairie, and the system is currently being rebranded as RedPrairie's On-Demand WMS). The system essentially allows West International to outsource most of its IT functions, storing the hardware, software, and data offsite. The company simply accesses the system when needed.
For West International, the SaaS approach offered a number of advantages. The company was able to avoid a huge upfront capital outlay for software licenses; instead, it simply pays a monthly "rental" fee to the vendor. It also avoided the hassles and expense of a lengthy implementation. Galluzzo reports that the system was up and running in a month—a fraction of the time needed for WMS implementations he's been involved with elsewhere. And because the vendor maintains the application on the server end (including secure backup systems), West International doesn't have to devote in-house resources to servicing and updating the system. All the company needs are a computer and a T-1 line.
"We are pharmacists, not IT people. We did not want to invest in an IT infrastructure," explains Galluzzo. "SmartTurn allows us to track every single item that comes into our warehouse. Anything we need, it can do—and at a price point where we could not lose."
Today, West International uses the system to track thousands of products throughout its network. As incoming shipments arrive at the Florida warehouse, workers sort the items by SKU, lot, and expiration date and place them in containers. Meanwhile, a bar-code label "license plate" is generated for each container. When the sorting is finished, workers attach the labels to containers and scan the bar codes in order to capture the data for the SmartTurn system.
From receiving, most supplies and pharmaceuticals are moved via cart to storage. As workers in the storage area place the containers on shelves, they scan the storage location's bar code so the SmartTurn software will know which products are stored where. The system then sends the updated information to West International's QuickBooks software, which keeps track of inventory.
Orders at the Florida DC are received through QuickBooks and then transferred to the SmartTurn WMS for processing. The system generates a paper pick list for each order that specifies the location, item SKU, lot number, expiration date, and quantity of products to pick. As pickers select the items, they verify the information against the list. Before shipping, orders undergo a final review to assure accuracy, which currently stands at greater than 99 percent. Order accuracy is particularly critical for West International because of the obvious difficulty of replacing incorrect items once customers are at sea.
"We can't afford returns. It has to be accurate. No mistakes is our goal," says Galluzzo.
After final inspection, orders move on to a checkout area, where an associate at a terminal keys in the data to complete the order. Once it receives the data, SmartTurn passes it along to QuickBooks for inventory updating and billing. The system also generates a printed copy of the tracking data, with lot numbers and expiration dates, for inclusion in the shipment to the customer. SmartTurn provides similar tracking data to a third-party provider that generates reports for the state of Florida as part of the compliance process. Galluzzo says he eventually hopes to bring the state reporting function in house.
As for how the software has performed so far, Galluzzo has nothing but praise. "The price and flexibility of the system as well as the people we work with at SmartTurn have been fantastic," he says. "I have done a lot of software implementations and it can be painful. But this has been an absolute pleasure."
The results have been impressive too, he says. Not only has the SmartTurn system eased the compliance burden, but it also reduced order turnaround times. That's a huge plus for a supplier to the cruise ship industry, where delivery windows are tight—cruise ships are only in port for a short time—and orders tend to be complex. (Because ships have to stock a wide range of products in a limited space, an order may contain 50 to 100 line items but in very small quantities—say, six cotton balls or eight pills.) The SmartTurn software allows West International to turn orders the same day, which is a huge competitive advantage.
But perhaps the best endorsement of the system is Galluzzo's advice to West International's parent company, which is grappling with the demands of rapid growth. With business expanding at a rate of nearly 30 percent a year, L.E. West's paper-based system is reaching the limits of its capacity. Rather than put further strain on the system, Galluzzo is recommending that the U.K. operation replace it with something different—a solution similar to SmartTurn.