The new corner drugstore
By DAVID MALONEY, Associate Editor -- Modern Materials Handling, 5/1/2000
Ready, set, go!
In the past, new businesses used this traditional approach as they hung out their shingles on Main Street. They had the luxury of time to ready their business model, set their distribution infrastructure, and then launch their operations.
It is not that easy anymore, especially in the age of e-business. Internet start-ups must jump out of the blocks at full speed to attract customer attention and investors. This means being ready at the word "go," or at least not having months to spend on "ready" and "get set."
Such is the case with drugstore.com .
Launched just a little over a year ago, this start-up has emerged as a leader in its field, exceeding analyst expectations every quarter. Good management and Internet experience helps, along with investors that include Amazon.com and the Rite-Aid drugstore chain.
drugstore.com first chose a Texas-based third party logistics provider (3PL) for its distribution, but like many e-firms, realized early on there was an advantage to building its own distribution capabilities.
"We wanted to be in control of our customer service," says Tom Williams, director of DC development. "You are not always the number one priority in a 3PL, but we are in our new building."
Williams is speaking about the company's recently acquired distribution center in Swedesboro, N.J. Until this past October, it was just an empty spec building with four walls and a cement floor. With construction speed that would rival the fastest modem, the company shipped its first product from the facility on December 15.
The DC features efficient picking modules designed with voice-directed and pick-to-light technologies able to handle a wide range of products with great flexibility.
"The materials handling system was chosen so it would not put any kind of constraints on the selection of products for the customer in the future," says Williams.
The facility is still ramping up, with a current throughput of about 8-10,000 orders a day. Right now only over-the-counter products are being delivered from there. Prescription processing will soon be added utilizing the latest in automated dispensing equipment and state-of-the-art control systems.
"We have the flexibility to vary product types as well as the capacity to take on additional product," adds facility general manager, Rick Batye.
This includes the name brand cosmetics that have recently joined the facility's inventory following drugstore.com's acquisition of another e-firm, Beauty.com.
Inside the virtual drugstore
An advance ship notice informs the Swedesboro DC that merchandise is arriving. The warehouse management system (WMS) assigns the receipt to one of the 11 docks.
About 3-4,000 different stock keeping units (SKUs) arrive each week. If not already palletized, an extendable conveyor reaches into the truck to make unloading cases easier. Workers then hand-stack them onto pallets.
The UPS bar code on each case is hand scanned at the dock to verify receipt. The WMS prints a license plate bar code that is also scanned and attached to the case to track it throughout the facility.
Lift trucks are dispatched next to take pallet loads to reserve storage racking unless needed for immediate replenishment in the picking areas. Most SKUs in the fast moving pick modules are replenished by conveyor, while other pick areas are replenished by lift trucks or pallet jacks.
Some products will also pass through a wrapping station on their way to replenishment. These are items, such as shampoos, mouthwash, and other liquids, that have a potential of spilling upon shipment.
Williams admits it is a painful process to shrink-wrap each spillable item individually, "But we think it is something the customer expects."
Customer orders are first received at the company's headquarters in Bellevue, Wash., which determines how each shall be filled. RX orders are forwarded to the current pharmacy facility in Millville, N.J. Over-the-counter orders are allocated to Swedesboro, where the WMS places it in a batch pool for fulfillment.
The average order contains 6.5 items. Picking is performed in three pick areas, designated A, B, and C, as well as from the Promotional and Non-conveyable zones.
Unlike your local drugstore that shelves products based on category - cold medicines in one aisle, deodorants in another - drugstore.com stores items in the three pick areas based on pick frequency, with area A holding the fastest movers. Some product categories, such as perfume or razor blades, are found in all three areas, as some brands of these products will move faster than others. The facility is designed so that SKUs can shift from one area to another as ordering volumes change.
"The system gives flexibility to adjust on-hand inventory levels," says Batye.
Flow racks hold the fast movers in area A. Included are popular items such as leading brands of razor blades, shampoo, toothpaste, diapers, and aspirin.
Area B contains medium movers, which vary depending on SKU and demand. Toothbrushes, various cosmetics, and certain over-the-counter medications may be picked from the static shelving found here.
Slow moving SKUs have a home in area C's shelving. These are items that consumers use less often but need to have in their medicine cabinet. They may also be less popular brands of typical drug store merchandise that help to round out the large product selection found online.
"If you walk into a brick and mortar drug store, you would see about 2,000 SKUs," says Williams. "We offer almost ten times that many so that people can find the products that fit their needs best."
Both batch and individual picking are used to fill orders. The method chosen is based on the type and number of SKUs in the order.
Orders that have only one SKU are batch picked. The WMS instructs workers in any of the three areas to pull an amount from one SKU that will fill a number of customer orders. The quantity is placed into a single tote that is then moved to a de-consolidation area within the pick zone. Once there, each item is removed and loaded into an individual tote that is then placed on a take-away conveyor. This tote will either pass directly to a packing station or divert to the promotional area where another item may be added before being packed.
Pick per order
Individual picking is a bit more complicated, as it is designed for orders containing multiple SKUs that may be found in any of the three pick areas. The conveyor system in the facility first routes to area C, then passes through B, and then onto A. Individual picking follows this same path. Area A is placed last in the chain so that product from this fast moving area has less distance to travel to the shipping dock.
Orders that contain at least one C item begin their journey there. Voice units direct the picking from the 50,000 shelf locations in this area. Workers wearing headset units hear their picking assignments, go to the pick location, and remove the SKU and quantity as directed. They then speak a posted check digit number back into their headset microphone to confirm the proper pick. Items are placed into totes riding on wheeled carts. These totes have a bar code license plate that is scanned into the WMS to marry the tote to the order. Once all C items for that order have been picked, the tote is placed on a conveyor for any picks required from area B.
Upon arrival there, the tote is directed to one of the two pick modules containing a total of 5,000 locations. While each module holds identical SKUs arranged in six zones, they are not held in the same relative positions. This allows the WMS to balance work, or route the tote to the module that most efficiently picks the required items. Voice picking is also used here. A six-way sort assures that a tote is only delivered to zones where additional picks are needed. The delivery process repeats until all area B picks have been selected, then the tote is conveyed to area A.
Area A holds the 1,000 fastest moving SKUs. This area has four replicated modules with eight zones in each. Each tote is scanned by an in-line scanner before it arrives, allowing the WMS to select the most efficient module for processing the order. Unlike the B conveyors that re-sort to various zones, area A conveys the tote in a straight configuration past each module's pick zones, where it stops the tote only when a pick is required. This area uses efficient pick-to-light technology (Real Time Solutions,www.easypick.com ) and flow racks for storage.
As an item is needed from a zone in area A, a light and a number indicating the needed quantity appears on a small display in front of each SKU that is to be picked. The worker pulls the item from the flow rack, places it in the tote, and hits a button on the display to confirm proper picking. The tote then passes on to the next zone until all A items have been processed.
Most orders also receive a promotional item, which includes gift items, samples, and specials that have a high probability of being picked. These totes are diverted from A to the Promotional area where the WMS assigns the tote to one of six modules based on efficiency and workload. Because of its high volume, this area also contains carton flow rack and pick-to-light technology. Its efficient design allows one operator to handle as many as 105 pick locations.
The last area where picking is performed is from carton flow racks and wire deck racking holding non-conveyable items. These make up only about 1% of the total items in the facility, such as heavy-duty scales, foot massagers, and other large healthcare items that do not fit into the standard size totes. Items from here are pulled by hand or pallet jack and delivered to the adjacent packing stations, where they join totes arriving by conveyor from the other picking areas.
There are 43 over-the-counter packing stations in the facility, with plans that will soon expand this total to 90. Thirty-six of these handle most orders, four are designed for items pulled from the non-conveyable area, and three provide value-added gift wrapping.
A packer first scans the license on the tote to notify the WMS of that order's arrival. Next, each item is removed and passed by hand under a fixed scanner to confirm proper picking. Even without this check, the efficient voice and pick-to-light systems produce a picking accuracy of over 99.5%. With this confirmation, 100% is achieved.
The operator next chooses one of six sizes of cartons to pack the order. All items are placed in the carton, and a packing list and label are printed and applied. An air fill machine is also located at each station, which allows the packer to select various sizes of air pillows to cushion the merchandise and fill void area. The carton is next weighed and sealed.
A belt takeaway conveys the carton to a nine-way shipping sorter. As the carton enters the sorter, a worker re-orients it by hand so that it can be read by a fixed scanner and diverted by pop-up rollers to a proper shipping lane. Sorts are determined by carrier and destination.
Customer oriented
With 125,000 daily hits on its Web site, drugstore.com strives to turn hits into orders through an emphasis on customer service and same day processing. Flexibility was built into the facility design to help achieve this.
Much of the construction is modular and can be easily expanded or reconfigured. The shipping sorter, for example, can be upgraded to a total of 50 sorts. Extra pack lanes can be added. Conveyors can also be easily re-routed through the pick modules as needs demand.
"We have a system that allows us to pick any configuration, size, or shape of product that could be conceived," says Batye.
Williams adds that the facility is designed to handle ten times the current throughput. That's good, because if the next few quarters have been anything like this facility's first few months, they will be reaching peak levels very soon.
System Snapshot drugstore.com, Swedesboro, N.J.
Facility size: 272,000 sq. ft.
Employees: 125
Daily throughput: 8-10,000 orders
Design capacity: 75,000 SKUs
over the counter, 25,000 RX
Average order size: 6.5 items
System suppliers:
Pick to Light:
Real Time Solutions, 510-985-6316, www.easypick.com
Integrator:
Key Handling Systems, 201-933-9333, www.keyhandling.com
Warehouse Mgmt. System:
AllPoints Systems, 781-461-8700, www.allpoints.com
Conveyors:
HK Systems, 414-860-6715, www.hksystems.com
Pallet racks/flow racks:
Unarco Material Handling, 615-384-3531, www.unarcorack.com
Lift, reach, and orderpicker trucks:
Hyster Co., 252-931-5100, www.hyster.com
Shipping sorter:
Quantum Conveyor Systems, 201-767-0300, www.quantumconveyor.com
Vertical Carousels:
Remstar International, 207-854-1861, www.remstar.com
Automated Dispensing Machines:
AutoMed Technologies, Inc., 888-537-3102, www.automedrx.com
Totes:
Flexcon Container, 973-467-3323, www.flexconcontainer.com
Voice Directed picking:
Vocollect, Inc., 412-829-8145, www.vocollect.com
Hand Scanners:
Symbol Technologies, 516-738-4915, www.symbol.com
Fixed Scanners:
Accu-Sort Systems, 215-723-0981, www.accusort.com
Label Printers:
Zebra, 847-634-6700, www.zebra.com
Air fill packing units:
Sealed Air Corp., 201-712-7000, www.sealedair.com
Packing software:
Peak Technologies, 888-275-7325, www.peaktech.com
Benefits at a glance
- Allows drugstore.com to control its own distribution
- Improved customer service
- Flexible order fulfillment
- Improved picking accuracy
- Same day processing
- Ability to increase capacity
A new recipe for distribution
11/30/2001The new corner drugstore
01/31/2001Seeing the light
07/31/2000Fancy foot work
02/28/2003Small parts specialists
12/31/2002
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