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SPECIAL FOCUS


of space for patient services. This reality will continue the need for more creative, reliable and timely supply logistics solu- tions. Keeping this in mind, the future of warehouse storeroom physical location, design and technology must ultimately focus on meeting the changing needs and environment of the end user – regardless of available resources and technology.” Still, Slade encourages automating existing manual process flows, storage, picking, transportation and replenish- ment activities, but with a few caveats. “Automating manual processes should ideally reduce labor dependence and physical inventory space, while increas- ing service levels to user locations,” he added. Slade foresees a central warehouse/ storeroom as utilizing “robotic and au- tomated solutions to receive, put away, store, replenish and pick items in defined units of measure with little to no direct labor involvement.” That also involves the ability to order cycle times reduced to minutes/seconds for urgently needed critical to life items. “Large or multi-site central storerooms could be served from a larger offsite central warehouse and/or local micro fulfillment center established on or near campus,” he observed. To read Slade’s list of useful tools, read “Dear Santa Storage, this is what I want…” at https:// hpnonline.com/21117592.


Slade acknowledges that automation and other new tech carries a high initial capital cost and may not yield significant improvement over traditional tech. “Automation technologies that are stand alone in nature, and do not com- municate via a standard protocol, should be avoided,” Slade insisted. “Many sup- pliers have products and solutions that require custom programming to interface. Managing these complex and variable en- vironments, coupled with every changing operating system versions and different cloud databases can lead to unexpected downtime, poor reliability and system incapability issues. Successful automation system should be fully integrated under a common platform that can manage, monitor, report and adjust to desired performance outcomes.”


Fred Landgraf, Senior Vice President,


Supply Chain Solutions, Intalere, de- lineates between scaled-down, smaller hospital-centric storerooms topping off at 1,000 square feet and large warehouse space as storeroom space exceeding 1,000 square feet typically are repurposed for


revenue-generating services. As a result, redesign efforts probably should focus on the warehouse.


“Technology in a warehouse is the primary backbone of the management of the inventory, both from internal man- agement of storage locations and inven- tory levels as well as external placement of orders to vendors/manufacturers,” Landgraf indicated. That’s why he recom- mends healthcare organizations invest in a solid warehouse management system (WMS) that will provide “adequate capa- bility to manage inventory at the level of detail required than a materials manage- ment information system (MMIS) or en- terprise resource planning (ERP) system. “The appropriate level of WMS will give the system the capability to manage the inventory and operate in a paperless environment with the use of radio fre- quency technology and hand-held scan- ners,” he continued. Such technology will enable high-volume picking in case quan- tities and in less-than-case quantities with storage and material handling equipment spanning from pallet racking through carton flow rack and even potential pick modules with some level of conveyors, he added. While Landgraf sees conveyors as beneficial, he expresses concern that they “can minimize efficiency in high density picking.” Unless space constraints warrant the


use of high-density storage solutions, Landgraf expresses concern that the ex- pense of such technology may outweigh expected benefits gleaned from it. Landgraf favors a more open-concept approach.


“High-density storage generally re- quires designated pods or position for picking and give minimal flexibility in flexing to high or low volumes,” he in- dicated. “Handheld scanners in an open architecture environment give significant flexibility for scaling to high-volume output while minimizing expense when the physical infrastructure is designed appropriately.” He further notes that open architectural storage design enables inventory access even during power/ system breakdowns and outages. The economics of designing or rede- signing storage space extends beyond making expense management more ef- ficient and pushes into revenue areas, asserts Beth Riggio, Director, Solutions Management, Swisslog Healthcare. “The warehouse of the future is de- signed to maximize usable space at hospi-


12 January 2020 • HEALTHCARE PURCHASING NEWS • hpnonline.com


tal for revenue-generating patient care areas,” Rig- gio told HPN. “In many metropolitan areas, the per-square-foot cost of hospital space is at a pre- mium. That makes storing products there relatively


Beth Riggio


expensive. In addition to this direct cost there is an opportunity cost. In-hospital storage takes up precious space that could be better used by repurposing it to offer new or expanded, high-margin services. Consequently, in-facility storage has a double impact on a hospital’s budget.” By contrast Riggio notes that centraliz- ing storage and distribution of med/surg and pharmacy items at a Consolidated Service Center (CSC) liberates healthcare facility space for better use. “Moreover, administrators can drive down the per- square-foot cost of storage by purchasing or leasing space in less-costly areas,” she added.


Such realization fuels expansion and


growth in the CSC distribution model, according to results of a Swisslog Health- care survey of hospital supply chain executives last year. Survey results showed that 43 percent of respondents report currently distributing from a CSC and another 43 percent are considering it, Riggio noted. As larger distribution centers, CSCs can consider different types of technology, such as comprehensive WMS, automated guided vehicles, pick-to-voice technology and even robotic goods-to-person storage systems, she indicated.


Riggio cited Indiana University Health as a particular success story that sup- ports 17 hospitals and picks 7,500 lines per day. [See the September 2018 HPN for details or search for IU Health on HPN online.] “In a traditional manual picking model, hospital distribution centers target 60 picks per hour. However, the robotic [low-unit-of-measure] picking system at the IUH Integrated Service Center enables three people to pick 500 lines per hour at 99 percent accuracy,” she added. CSCs also provide additional avenues for service line growth, such as phar- macy, according to Riggio. She cites a recent Swisslog Healthcare survey of pharmacy executives as finding that 75 percent of health systems currently using a CSC model report an ROI in less than 12 months.


“When pharmacy can share an exist- ing warehouse space with supply chain,


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