The new corner drugstore
drugstore.com's DC allows this Internet pioneer to control its own distribution and customer service.
By -- Modern Materials Handling, 2/1/2001
Launched in 1999, drugstore.com is redefining the corner drugstore. The company has emerged as a leader in its field, exceeding projections 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 provider (3PL) for its distribution, But like many e-firms, managers realized early on that there was an advantage to building the company's 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 distribution center in Swedesboro, N.J. Until October, 1999, 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 within 2 mo.
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.
Inside the virtual drugstore
About 3-4,000 different stock keeping units (SKUs) arrive each week. Lift trucks are dispatched to take received pallet loads to reserve storage racking unless needed for immediate replenishment in the picking areas. 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.
Customer orders are first received at the company's headquarters in Bellevue, Wash., which determines how each shall be filled. Over-the-counter orders are allocated to Swedesboro, where the warehouse management system (WMS) places it in a batch pool for fulfillment.
The average order contains 6.5 items. Picking is performed primarily in three pick areas, designated A, B, and C. Picking is also done from two specialty areas, one for promotional items and another for non-conveyables.
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 primary pick areas based on pick frequency. Some product categories, such as perfume and razor blades, are found in all three areas because 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.
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 stock keeping unit (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 request 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 order picking approaches are used. The method chosen is based on the type and number of SKUs in the order.
Orders that contain at least one C item begin their journey in that area. Voice units direct the picking from the 50,000 shelf locations. 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.
Area A holds the 1,000 fastest moving SKUs. This area has four replicated modules with eight zones in each. This area uses efficient pick-to-light technology and flow racks for storage.
Most orders also receive a promotional item, which includes gift items, samples, and specials. These totes are diverted from A to the promotional area which contains six modules of flow racks and pick to light technology.
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. Williams says 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.
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 order picker trucks:
Hyster Co., 252-931-5100,
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
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