For pharmaceutical DC, a healthy dose of automation
To assure that the right medications get to patients right away, Toho Pharmaceutical built a distribution center that is so highly automated most of the products processed there are never touched by human hands.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
Some products require a higher level of distribution prowess than others. Take pharmaceuticals, for example. Total accuracy is crucial; even the slightest mistake—shipping the wrong dosage of a medication to a customer, for instance—could prove life threatening. And because a patient's health may depend on getting the proper medications in a timely manner, quick order fulfillment and delivery are equally critical.
With so much at stake, many pharmaceutical wholesalers are turning to automation to assure the accuracy and speed upon which their customers depend. One such company is Toho Holdings Co. Ltd., a leading player in Japan's pharmaceutical industry. In its quest for perfection, Tokyo-based Toho has taken DC automation to a whole new level, building a highly automated facility that features unique combinations of equipment and technology and requires little human involvement.
MINIMIZING MANUAL HANDLING
Toho's pharmaceutical wholesaling subsidiary, Toho Pharmaceutical Co. Ltd., operates six distribution centers for handling prescription drugs and another two facilities for over-the-counter medications. Its more than 106,000 customers throughout Japan include pharmacies, hospitals, and clinics.
At Toho Pharmaceutical, three miles of conveyors tie the automated systems together. Conveyors are painted in different colors to help identify the functions of each within a very complex system. Here, empty totes are transported on yellow conveyors.
In December 2013, Toho opened TBC Saitama, a highly automated logistics center in the city of Kuki in Saitama Prefecture, to distribute prescription drugs to customers in East Central Japan. The automation is so extensive that the 130 warehouse workers employed at the facility never touch about 70 percent of the products processed there. This is due in large part to several automated storage and retrieval systems (AS/RS) and a small army of robotic pickers. Tying all of the automated systems together are five kilometers (three miles) of conveyors. The conveyors themselves are painted different colors to help identify the functions of each conveyor line within a very complex system. For example, purple conveyors transport inbound totes. Green conveyors carry totes with picked items to the shipping area, while empty totes are transported on yellow conveyors.
Overall, automation has reduced the number of manual processes in the building to five, compared with 12 manual operations in the company's other logistics centers. At the same time, the design of the new facility enables the accuracy and speed of processing required for medications. The typical order leadtime is half a day, and any orders received by 8 p.m. ship out the next morning.
The main goal of TBC Saitama was to reduce errors to less than one per 10 million items processed. "The reason for so much automation is accuracy," explains Mitsuo Morikubo, executive managing director. "Errors here may directly link to incorrect medicines given to patients at customer sites. We need to assure accuracy as much as possible."
One reason Toho implemented such extensive automation was the difficulty of obtaining workers to perform tedious tasks.
Another reason Toho chose to implement such an extensive automated system is the difficulty of obtaining enough workers. Japan's available work force is declining; moreover, it's not easy to find suitable employees to perform tedious tasks like filling small, complex orders. The automation allows Toho to swiftly and accurately process orders while greatly reducing the distributor's reliance on labor. It also helps the company trim costs and improve profitability, Morikubo adds.
It wasn't easy to find a supplier that could meet all of Toho's requirements. The pharmaceutical distributor chose Japan's Daifuku Co. Ltd. to provide the design and most of the material handling systems in TBC Saitama. "When we looked at the automation we wanted for this center, we felt that Daifuku was the only company that could handle it," says Morikubo.
SMALL SPACE, HIGH THROUGHPUT
Software is crucial for operating a highly automated facility. Daifuku also supplied robots, AS/RSs, and the customized warehouse control system (WCS) that integrates optimally with the facility's NEC warehouse management system (WMS).
The software systems accurately manage a large number of orders each day. Because many of Toho's customers have limited storage space, they order products only when they need them. As a result, most of the 23,000 customers served from TBC Saitama receive shipments daily, with many receiving more than one each day.
The software also ensures that most products are processed on a first-in/first-out basis, meaning that the first medicines received into the building are the first to ship, so customers receive fresh product well before expiration dates. Product lots are also tracked by the WMS. Together, the software systems provide full track-and-trace capability for every product as it passes through the building. That information is then sent along with the product as it travels through the supply chain. Morikubo says that in Japan, only blood products and other biological products are currently required by law to have full traceability, but the company anticipates that other pharmaceutical products will soon be subject to similar legislation. "We are looking ahead to prepare for laws for greater trace requirements," he says.
The combination of automation and sophisticated software enables TBC Saitama to process 90,000 order lines daily in just under 34,000 square meters (approximately 365,200 square feet) of space. Considering the amount of picking and packing required for pharmaceuticals, you would expect to see a much larger facility. But the high degree of automation allows for a smaller DC than might otherwise be required. The facility was also constructed with three stories, which reduces the overall building footprint in a country where land is expensive.
TBC Saitama handles 28,000 different stock-keeping units (SKUs). Products come to the facility from a wide variety of manufacturers, and most are delivered on plastic pooled pallets or on wheeled trolleys. About 15 percent of the 15,000 cartons received daily do not have a bar code, so Toho installed an optical character-recognition system that automatically takes a picture of each uncoded carton, and then reads the manufacturer's original label or carton markings, including product lot and expiration date. The recognition system can process 1,000 cases an hour.
Some inbound pallets of higher-demand products are conveyed to an automated storage and retrieval system that dynamically stores pallets in 2,310 positions. The system has five aisles, with a crane operating in each aisle. Each aisle is 33 pallet-storage positions long and seven positions high. The pallets stored in this AS/RS also help to restock a miniload unit that stores cartons and totes. The cartons are depalletized by two robots.
The miniload has 18 aisles, with a crane operating in each and a capacity of 53,136 storage locations. The cranes can move 2,700 cases an hour. The cases are automatically measured using lasers and are also weighed before entering. Knowing the correct dimensions allows the system to store large, medium, and small cases side by side within one location in the miniload, thereby better utilizing space. Dimensioning information is captured for all new products and is used by the robotic picking stations downstream.
Some of the lower-demand products arrive with more than one SKU in the carton. These must be repacked manually into totes, scanned, and conveyed to the fixed rack. Products also have to be repacked into totes for the robotic picking stations positioned downstream. However, the robots are able to pick directly from certain suppliers' cartons after the carton's top has been cut off. (A second miniload system handles cases that will ship as full cases, but design flexibility also allows these cases to feed the robotic picking stations as needed.)
To fill orders, the totes and cartons are removed from the second miniload and taken to automated stations, where 16 robots perform picking and sorting at the same time. Each robot is equipped with three cameras that "see" the products as they lie in their source tote or carton. Software then determines the best way for the robot to reach into the container to gather one product at a time using an end effector with air suction and eight "fingers." The 16 robots are collectively capable of picking 10,000 individual items per hour.
Order totes are positioned at the end points of feed belts, where items slide down a flexible plastic sheet and gently drop inside.
As the containers move beneath them, the robots pick the required number of items. The robot then places the picked items onto one of three subconveyor belts that flow past it. The items are merged and directed to a particular customer order on two main conveyors. Items are then sorted onto four conveyor belts. Those four lines feed staged order totes positioned at the end points of the belts, where the items slide down a flexible plastic sheet and gently drop inside. The software coordinates the picking sequence so that heavier items are deposited into the order totes first and lighter products are added on top. The tote is then weighed to verify that the weight of the accumulated items matches the expected total weight.
Morikubo says the design for both picking and sorting with the robots was "very impressive," but notes that there were some concerns. "We knew it would be a challenge, as it was the first time that Daifuku had integrated robotic picking of this sort into a system," he says.
That challenge clearly has been overcome. Originally, Daifuku designed the robotic systems to handle about 50 percent of the facility's total throughput. However, Toho Pharmaceutical improved its operations and systems, and now 64.5 percent of its output volume passes through these stations. Morikubo says this 14.5 percent improvement in productivity has saved even more labor than initially planned.
GETTING ORDERS READY TO SHIP
While the automated system is able to handle the majority of the DC's storage and picking activities, some items either cannot pass through the automated equipment due to size or fragility or are picked too infrequently to justify their occupying such valuable space. These products are placed into static shelving that can hold 24,000 SKUs for manual picking. They include many of the original suppliers' cartons containing multiple SKUs.
The manual picking stations are located on the building's third floor. Radio-frequency units direct workers here to batch-pick items for several orders at a time into totes. The associate then takes the batch tote to one of 20 sort stations, where 10 order totes are staged to receive the products. The picker removes the first item from the tote and scans it. This causes a door above a staged tote to swing open to indicate that this is the tote where the item should be placed. The process continues in the same manner, with the worker scanning items and doors opening above the proper order tote until all items in the batch tote are sorted.
Finished order totes from this manual area are conveyed to a holding buffer, where they marry up with totes from the automated picking areas. Once gathered, the totes for each customer go to a consolidation station, where a worker removes the items from the order totes, scans them to reconfirm order accuracy, and then consolidates the products into a separate plastic tote for shipment to the customer. Containers destined for customers without inspection systems are closed and sealed with a special security tape with a chemical base that will display a message if the tape is peeled off or tampered with.
The completed shipping totes are next conveyed to a sequencing AS/RS on the first floor. This system has two aisles, with the capacity to hold 1,280 totes until they are ready to ship. At that time, they are released from the buffer in the proper sequence to match the delivery routes of shipment centers downstream, passing through a robotic system that automatically places the totes onto wheeled trolleys. SKUs picked as full cases that can ship in their original cartons are loaded onto separate trolleys. The trolleys are then wheeled onto trucks in the sequence determined by load planning software. Some trucks will head directly to customers, while others first go to a logistics consolidation center to be broken down by delivery route.
MORE PRODUCTIVE WITH LESS LABOR
The automation design at Toho Holdings has met its goals. The machines, along with the 130 associates working alongside them, are able to process 200,000 pieces a day with near-perfect accuracy. That amounts to about 30 billion Japanese yen worth of product monthly, or about $300 million at current exchange rates.
The automation has also markedly increased productivity. TBC Saitama is 77 percent more productive than the company's other logistics facilities, while using only half the amount of labor, according to Toho's executives.
But, of course, the main reason for the automation always comes back to the quality of processing. "We want to make sure that products going to patients are always accurate. That is why we pursued automation. We always want to improve our quality," says Morikubo.
The design has been so successful that it will be replicated for other DCs Toho will build in the future. A new facility in Hiroshima is slated to open next year using most of the same designs, with tweaks to improve upon TBC Saitama's capabilities. In the next distribution facility, Morikubo says, Toho is aiming to automate about 90 percent of its handling.
—Senior Editor Toby Gooley contributed to this article.
A version of this article appears in our August 2016 print edition under the title "A healthy dose of automation."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.