Bar code labels help control shipment accuracy: automatic tracking lets pharmaceutical distributor reduce inventory and returns, as well as associated costs - Problem-Solving Case History - Medis Health and Pharmaceutical Services - Brief Article

Food & Drug Packaging, Dec, 2001

Medis Health & Pharmaceutical Services distributes pharmaceutical products from 14 warehouses located across Canada. With $4 billion worth of stock moving each year, keeping track of everything is a major chore.

That task has just become much easier over the past year, as Medis has converted from manual tracking to a radio frequency (RF) automated tracking and warehouse management system.

"The RF system has brought many productivity gains and quality improvements," says Mario DiBattista, director of network and technology at Medis. "It has increased the accuracy of the orders because stock is where it is supposed to be. As a result, the number and subsequent cost of returns is reduced. That's a significant advantage."

The radio frequency system tracks bar-coded products throughout their journeys in Medis' warehouse system. It records every movement from shelves to conveyors to totes to pallets. Each movement is sent via radio or hardwire to a proprietary warehouse management system on an IBM AS/400 computer.

The system lets Medis know precisely what products have been received, what's on the shelves, which purchase orders are being filled and what has been shipped. "The system greatly improves both inventory management and customer order fulfillment," DiBattista says.

With 30,000 stock-keeping units (SKUs) housed in warehouses ranging in size from 50,000 to 200,000 square feet, managing the inventory is a major feat. The system, which was installed by Scanpak Inc., consists of a number of components.

Bar codes are at the heart of the system. The codes are placed wherever they seem useful to the process, including on pick lists, shelves, totes and cases. The label design is managed by AS/400 label design software from T.L. Ashford. Labels are printed by SATO America M-8400Rve and CL608e heavy-duty thermal-transfer printers.

The next vital component is the scanning system. Most warehouse workers wear tiny scanners on the backs of their hands. Others use handheld integrated scanner/terminals. Both products, designed by Symbol Technologies, communicate via radio to the warehouse management software program.

In addition to the portable scanners, overhead omnidirectional scanners from Metrologic read the bar codes on totes as they move along the conveyors. These scanners are wired to the warehouse management software system via an ethernet network.

The scanners are used continuously throughout the warehousing system, starting at receiving and ending when the product ships out the door.

For example, at Receiving each item is scanned as it comes in. The management program automatically logs in the product and matches the information with the purchase order to identify discrepancies.

The products are scanned again when they picked, moved onto pallets or skids, put in temporary locations and shipped. All this scanning adds a bit of time to certain parts of the process, but the control is far greater than with the way it was done before.

"It was a trade-off between quality and speed," says Martin Losier, Medis' chief information officer. "We had to choose which one to emphasize more. We decided quality--and we haven't regretted our decision."

With a project of this size, installation and training are key issues. Scanpak Inc. is installing the system with the help of ScanSource (previously known as Positive ID Wholesale). The installation, which is still going on, is expected to take 18 months.

Key to the installation has been a password-restricted website that allows Medis employees to log problems. Logging the problems on-line is easier than trying to reach people over the phone, and the system has helped Scanpak provide hardware replacements within 24 hours.

Training has been a special challenge, since operations at the warehouses haven't stopped during the changeover from manual to automatic tracking. Medis used teams of workers to handle training, on-line testing and support at each warehouse.

The teams consist of three groups of people: Some who come from warehouses already using the system, some from the center currently installing the system and the rest from the next center scheduled to install it. By having the three groups on each team, the company ensures a consistent training program for each warehouse.

Though the installation is still not complete, many advantages are already apparent. Receiving, put-away and replenishment accuracy is nearly 99.9 percent now; turnaround is shortened; and shipment errors and product returns have been reduced.

Ultimately, the company hopes the new system will allow it to eliminate a complete day of safety stock. Says Losier: "With a $4 billion company, that is a lot of stock."

IN A NUTSHELL

Goal: Increase warehouse accuracy and reduce amount of safety stock

How: Install new bar-code inventory management system

Results: Accuracy is 99.9%; returns are down

Metrologic 856-228-8100; www.metrologic.com

SATO America 408-745-1300; www.satoamerica.com

Scanpak Inc. 888-252-7226; www.scanpak.com

ScanSource 800-944-2432; www.positive-id.com