Aug. 11 2006 12:53 PM

Scattered across Canada from St. Johns, Newfoundland, on the east coast to Vancouver, BC, on the west coast are 14 warehouses for Medis Health & Pharmaceutical Services, Inc. Until last year, warehouse tracking of the pharmaceutical and related items it shipped across the nation was primarily a manual chore. However, over an 18-month period, each warehouse is now being converted to an electronic tracking program. By the time all 14 are automated, Medis expects to eliminate a whole day of safety stock.


"With a $4 billion company, that is a lot of stock," says Martin Losier, vice president of Information Technology and CIO at Medis. "We have close to 30,000 SKUs, so efficiency and accuracy are important."


Medis is a wholly owned subsidiary of McKesson HBOC and Canada's largest distributor of pharmaceutical, health and beauty aides with headquarters in Montreal. Its warehouses ship products to Canadian pharmacies, hospitals and health care institutions.


"We must manage all inventory movement properly to service our customers efficiently and quickly. We have to make sure we can track all goods and quantities from when we receive them in the warehouse to when we ship them to the customer," explains Losier. With warehouses ranging in size from 50,000 square feet to 200,000 square feet, that is a challenge.


A new radio frequency (RF) system meets that challenge by electronically recording the movement of barcoded items on conveyors, in totes and in cases on pallets. Each movement is sent via RF communication or hardwire to the Medis proprietary warehouse management system (WMS) residing on an IBM AS/400. As a result, the WMS knows at any moment exactly what was received and what purchase orders were fulfilled.


Immediate Benefits

Even at the half point mark in warehouse conversion, Medis saw benefits. Among the first were less "scratch" incidents where a needed product was not in the warehouse as expected. The increased accuracy from barcode scanning and the up-to-the-minute information from real-time data collection improved the record keeping information, so warehouse workers weren't sent on wild goose chases.


Efficiency gains, even from a simple printer location change, were soon evident. "Before, someone had to collect the pick sheets from the computer room, then start putting stock into the totes. Now the pick sheets, created on a small, lightweight IBM laser printer, are at the starting lines. We easily moved them, even to the mezzanine. The previous printers were way too big to move out of the computer room. As a result, we start our production a half hour sooner," says Losier. "This makes us much quicker at fulfillment than ever before."


Mistakes and discrepancies are rare with the RF system, but if they do occur, they're quickly spotted much sooner than a batch system would spot them, says Losier. For example, scanning products at receiving ensures the correct amount is recorded, and it is immediately compared with the purchase order. However, if a quantity is key entered as 10 instead of 100, the immediate cross-check with the purchase order alerts the worker of the discrepancy. The worker can then verify or change the quantity.


Simple speed of receiving is yet another system advantage. "Tons of little packs come into the receiving area," explains Losier. Previously, each one was manually checked with a receiving document, key entered into the warehouse management program and then matched with the purchase order to identify discrepancies. Now, all that is done simultaneously as received products are scanned. Medis also reduced the need for emergency replenishments during the picking process. Since receiving and put-away is done more quickly, more products are shelved when picking starts.


"Overall," says Mario DiBattista, director of Network and Technology at Medis, "the RF system has brought many quality improvements. It has increased the accuracy of the orders because stock is where it is supposed to be, stock location is accurately recorded and, therefore, fewer product shorts occur. As a result, the number and subsequent cost of returns is reduced."


At one point in the development process, Medis had to choose between speed and accuracy. With the new system, its replenishment process takes a bit longer than before because of the number of scans done to track products in and out, onto pallets or skids, to temporary locations and then to replenishment. "It was a trade-off between quality and speed. We had to choose which one to emphasize more. We decided quality, and we haven't regretted our decision," comments Losier.


The Tools and Integrators

Montreal-based Scanpak Inc., a system integrator and label supplier, installed the entire RF-based tracking system with assistance from Positive ID Wholesale, a distributor of SATO printers and product tracking hardware tools including RF systems and barcode scanners.


The Scanpak team provided the implementation expertise including a special password-restricted, Scanpak-monitored Web site. The Web site log reduces multiple phone calls and helps Scanpak provide hardware replacements within 24 hours, says Joe Pace, director of Operations at Scanpak. The Scanpak-designed system features tiny wearable scanners worn on the back of the hand of warehouse workers for most of the product tracking. Other workers use handheld integrated scanner/terminals. Overhead omnidirectional scanners read barcodes on totes as they move on conveyors to shipping. All but these hardwired overhead units communicate to the warehouse management software program via Symbol's Spectrum 24 Network RF system. The overhead units are wired to the WMS via an Ethernet network for real-time tracking. All scanned data is therefore immediately entered into the proprietary WMS.


The Challenges

Every installation faces some challenges, and for this one, there were three: project size, printer communication compatibility and jumping from manual to automated operations. Teamwork and training resolved all of the issues.


"The biggest challenge was going from fairly manual to partially automated and wireless all at the same time," says Jeff Klossner of Positive ID Wholesale.


Medis used a swat team to train users, test the equipment online and support the workers going online. Members of each distribution center's swat team included three levels of learning. Some people came from centers already using the new system. Others came from the center installing the program and still others came from the next place scheduled to install the system, explains Scanpak project manager Michelle Baechler, based at Medis headquarters. Once the swat team had satisfactorily tested the equipment, it began training employees in blocks based on their tasks.


Training was treated as a valuable and essential part of the implementation. It helped increase support of the system, reduced errors, and it cut down on learning curve time. Medis and its system integrators faced the project size issue by starting out slowly, using a Web site for trouble shooting issues, doing the installation over several months and with continuous commu-nications vital in a teamwork environment.


Warehouses: Unfriendly to Printers

The teamwork paid off, for example, when questions arose about the brand of printer. Scanpak brought in samples for a test run, which lead Medis to select SATO America's thermal-transfer printers. Since labeled totes are recycled back to Medis, the label adhesive had to be strong enough to keep the label attached until it returned to Medis yet capable of releasing from the tote when the container was reused. A printer needed to accept the adhesive labels without causing the system to get gummed up.


In a warehouse environment, printer operation is a challenge. "When printers get caked on with dust, there's always the possibility for dust to get stuck on the labels," says Pace. That affects adhesion and the ability to scan. "But for the Medis environment, the SATO M-8400Rve printer is a little workhorse. Its internal Ethernet connection makes it impervious to dirt and damage," explains Pace.


The heavy-duty peel and present capabilities of the printers were a definite plus to Medis, but their ability to communicate with legacy Medis software was the clincher. Other brands could not meet that challenge.


Success from Enterprise-wide Support

"The success of such an enterprise-wide and smooth implemen-tation is to have a team of people coming from all the levels of specialties and knowledge," says Baechler. Medis made sure the project involved people from all levels, "from the picker to engineers to the head office."


As a result of the successful installations, Medis is increasing each warehouse's processing volume. It has increased receiving, put-away and replenishment accuracy to nearly 99.9%, shortened turnaround, cut shipment errors, reduced product returns and reduced safety stock.


Medis was acutely aware that accuracy and speed for coast-to-coast shipping must start in its own backyard. It made sure it could accomplish its mission from the ground up with an enterprise-wide team supporting a barcoded, real-time data tracking system.


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