Up on the mezzanine level of Medline Industries’ 600,000-square-foot distribution center in Libertyville, Ill., 47 mobile robots are in constant motion. The red bots travel back and forth across a grid, moving 27,570 plastic storage totes in and out of 37,750 storage locations.
Once a pick wave is released, totes are delivered to goods-to-person workstations, where order selectors pick items to order totes. In all, the system is managing 11,000 unique SKUs—primarily items that will require some kind of value-added service before they are packed for shipment.
This is the first North American implementation of the AutoStore technology (Swisslog, [url=http://www.swisslog.com/na]http://www.swisslog.com/na[/url]), an automated goods-to-person technology first used in Europe to manage service parts distribution. Medline chose it for Libertyville—one of 42 distribution centers the distributor of medical and surgical supplies operates in North America—because it best met the unique order characteristics and volumes required at that location, which services customers in select zip codes of Illinois, Wisconsin, Iowa, Michigan and Indiana.
“We evaluated a variety of goods-to-person technologies,” says Bill Abington, president of global operations for Medline. “In our view, the sweet spot for this technology was 8,000 to 12,000 less-than-case lines per day, and at the time, we needed to do about 8,000 less-than-case lines per day.”
Since going live two years ago, volume in the AutoStore has increased by 25%, peaking to as much as 12,500 less-than-case lines per day on some days. Yet, Medline has been able to accommodate the growth in volume without adding to its head count at the facility. And, the system displays images and a detailed description of the unit level to be picked, which led to an improvement in the number of defects per 10,000 picks (DPTT) in that area, adds Daniel Schwartz, Medline’s director of engineering, operations. “Our extremely high accuracy rate improved as a byproduct of installing the system,” Schwartz says.
More importantly, the system illustrates how new goods-to-person technologies, including mobile robotics, are meeting the evolving needs of distributors who are grappling with more piece picking, shorter windows to fill orders and a tight labor market. “As some places in the country experience a tight job market and customers demand later cut off times, less-than-case volumes increase, then you have to look into automation,” says Abington.
Of course, the goods-to-person concept is not new. Horizontal carousels and VLMs have been doing that for years. But the justification for those technologies was typically space savings.
Over the last five or so years, new technologies have come to market that take a different approach to the goods-to-person problem, including shuttles and mobile robots. The challenge has been convincing end users that the solutions are reliable, viable and can deliver an ROI beyond the cool factor.
Enter Medline Industries Inc. Founded in 1966 with headquarters in Mundelein, Ill., Medline is the largest privately held manufacturer and distributor of healthcare supplies across the continuum of care in the United States. With more than $7 billion in annual sales, Medline was ranked No. 62 on the Forbes 2014 list of largest privately held companies in America. The company’s roots date back to 1910, when A.L. Mills, the great-grandfather of the current leadership, started sewing butcher’s aprons in Chicago. The current CEO, COO and president represent the fourth generation of the Mills family to manage the company.
The Medline network features more than 40 DCs in North America and a total of 50 throughout the world, serving customers in more than 90 countries. It also counts 17 manufacturing facilities worldwide and a dedicated truck fleet with 400 MedTrans vehicles traveling more than 17 million miles each year.
Distribution centers like Libertyville serve as regional hubs that can provide next-day service to a vast customer base that covers the continuum of the health care industry, from hospitals, surgical centers and long-term care facilities to physicians’ offices, big box retailers and retail pharmacies and labs. However, every DC in the network, including Libertyville, serves as a potential backup for another DC.
Medline’s distribution and order fulfillment requirements are evolving. Hospitals used to receive large bulk case orders. Now they require small deliveries to hundreds of internal addresses. “As hospitals acquire physicians’ offices and expand their services, we are becoming their central store room, shipping to both internal and external physical addresses for them,” says Abington. While Medline’s own fleet delivers the majority of orders, Medline still ships to tens of thousands of small customers who receive parcel or LTL orders daily. “Hitting order cutoff times for parcel and LTL shipments is critical because everything we do is next day,” Abington says.
Those aren’t the only changes in a complex order fulfillment environment. Today, a majority of orders are received within a two-hour window during the day—a challenge with those aggressive order cutoff times. There can be a wide variation in demand: A nursing home with a new patient may order something that hadn’t been required for months; or an outbreak of the flu may create a sudden spike in demand for a vaccine. Some products must be temperature controlled. And, all of those changes have been exacerbated by an increase in “each” piece level orders. “Nine years ago, split case picking accounted for less than 20% of our line volume,” Abington says. “Now, it represents more than 60% of the business lines.”
Bring in the robots
The Libertyville facility came online in 2008 with best-of-breed warehouse management system (WMS) and RF picking capabilities. However, processes began to change to meet these new requirements, according to Schwartz.
A labor management system (LMS) and a robust employee incentive program were implemented, followed by voice-enabled activities including batch picking to cart. Soon, even that was maxed out; not only was Medline adding more SKUs, but associates were walking 4 miles to 7 miles a day in the split case modules. “We wanted to handle more orders, more SKUs and increase efficiencies without increasing our footprint in that area,” Schwartz says.
Goods-to-person appeared to be the best solution to meet both of those criteria. However, Medline would not automate just for the sake of automation. “We’re not a field of dreams,” Abington says. “We won’t put in automation and hope that the need follows.” The key, he adds, was matching the right solution to the volume and customer needs for the ideal automation.
To that end, the Medline team evaluated a variety of goods-to-person technologies, including mobile robotics, shuttles and mini-loads, from more than 10 suppliers before choosing AutoStore as the best match for Libertyville’s specific application, volume and ROI. Shuttles, for instance, were capable of handling higher order volumes and more picks per hour and Medline is even in the process of implementing shuttle technology at a couple other DCs. But the higher cost of the system couldn’t be justified based on Libertyville’s specific volume.
The solution offered at least two other benefits: The system can be enclosed and temperature controlled, both of which are important to Medline, and it’s easy to maintain compared to other technologies evaluated.
There were some challenges since not only was this the first implementation in North America, but the technology needed to be adapted to meet the unique requirements of the healthcare industry. For one, Medline worked with the system integrator to design and develop the workstations to allow one order selector to simultaneously pick from two donor totes into three customer totes to reduce latency between picks.
“The main focus in Europe, where we viewed the technology, seemed to be more on cube utilization than picking efficiencies,” Abington says. “A typical speed we saw was 120 picks per hour. By redesigning the workstation, we can pick between 220 and 320 picks per hour. Additionally, the cubic footprint of our picking grid uses almost a fifth of the cubic feet required in a split case pick module.”
Slotting also became an important issue—figuring out how many items can be in a tote and how many SKUs should be in one of the 37,500 storage locations to reduce the number of moves required of the robots for replenishment. The software had to integrate with Medline’s enterprise resource planning (ERP) system and WMS, and it had to be tweaked with each redesign of a process. “One of the benefits of being a first implementation is that we had the ear of the system integrator,” Schwartz says. “They are helping us grow with the system.”
The system went live two years ago. To get it up and running, Medline took a slow and methodical approach to the implementation, moving in one business unit at a time, adjusting as needed and then moving in the next business unit. “Every time we added a business unit and increased the volume, we would learn where the latencies were and we could improve the system and our processes,” Abington says.
After two years and one expansion, Abington says the solution is meeting Medline’s needs in Libertyville. “It has allowed us to continue to increase our cutoff times, expand our product offering in a temperature-controlled environment and cover our expanding customer base,” he says. “And it’s allowing us to challenge the norm and continue to drive a world-class supply chain that benefits our customers and differentiates our business. As a result, Medline is continuing to install AutoStore technology in two additional sites.”
Slotting at Medline
Automation is not the only way Medline drives efficiency. The distributor is also a firm believer in slotting, according to Daniel Schwartz, director of engineering, operations.
The fastest moving items are slotted in a forward pick zone. Once a month, to increase picking efficiency, Schwartz’s team runs slotting algorithms developed in-house to move pallets based on how often order selectors are visiting a slot.
“The big win is that it drastically reduces the travel time for our team members,” Schwartz says. “Travel time per line is tracked closely and the engineering team is held accountable to improving this metric annually.”
Mobile robotic order fulfillment: Swisslog
WMS: Catalyst by Aptean
Labor management system: Tom Zosel & Associates (TZA)
Mobile computing and ring scanning: Motorola Solutions
Voice recognition: Lucas Systems
Lift trucks: Raymond and Associated Material Handling
Wire Decking: Worldwide Material Handling
Powered trailer loader: Caljan Rite-Hite