Improvement of the logistic process
Novartis Pharma b.v. is the Dutch subsidiary of the Swiss based life sciences company Novartis. Our Dutch company markets and sells speciality drugs to wholesalers, who at their turn sell to individual pharmacists.
Novartis Pharma gets approximately 99% of their drugs as finished products from the mothercompany. A vast information exchange accompanies the flow of goods. Most of it is automated using EDI.
Sales forecasts and orders are automatically transmitted to the Swiss production planning. After processing, eventual modifications like due dates or quantities are sent back, as well as the order status. This information is input for the next planning cycle in the company.
This fast data exchange leads to an improved tuning of the logistic process with the supplier.
The handling of the goods and the checking and counting of incoming and outgoing boxes in the warehouse, however, was still manual and inefficient.
In this article the reasons for changing the material management system in the warehouse of Novartis Pharma are discribed, and how quality is improved and costs reduced by implementing a bar-code based system using the electronically transmitted data.
The old logistic process
The material handling in the warehouse consists of four steps:
- receiving and checking of incoming goods
- temporarily storing in quarantine locations
- after quality control and release by the pharmacist storing in fixed pick-locations and free bulk locations
- order picking for outgoing goods.
The warehouse is made up of fixed pick locations (every product its location) and free bulk locations. In a small database Novertis Pharma keeps track of where a product is stored. During the day empty pick locations are filled from bulk locations.
Pharmaceutical companies in Holland have the obligation to keep an extensive administration of what was sold to whom. The level of detail is product, quantity, batchnumber and expiry date. This means that for every material handling the product, quantity and batchnumber is recorded. To make sure the company doesn't mix batches of one product, every batch is stored in a different bulk location, and a pick location as well contains only one batch. This makes material handling and administrative procedures time consuming and costly.
The order picking process is the most time consuming and error prone part of material handling in the warehouse. It used to be as follows:
One person picks the goods using a pickslip sorted on location with required product, quantity, batch number and expiry date indicated. In case of empty pick locations, the bulk location could be found in a separate computer file. Afterwards a second person checks and counts the products using a picklist on alphabetical order. Every product is handled twice before despatching! Despatching the wrong product or quantity leads to a return despatch from the customer; despatching the wrong batch is an error as well, leading to an adjustment in the inventory system. Error handling costs a lot of money! Novartis Pharma was aiming for a high quality, zero-defect materials management system, but has encountered too many errors in the past.
Limits to the process
Meanwhile there was a growing pressure on materials management. Within the pharmaceutical business margins are reduced, competition is growing and customers changed their order policy to more frequent, smaller orders. This increased the number of orders and the number of handlings, thus increasing the amount of errors. Novartis Pharma could not improve quality, reduce costs and handle this increased number of orders with the same procedures. Novartis had to rethink the material handling in the warehouse!
The new material management
Improve the quality and speed up the overall material handling in the warehouse was the task. Novartis Pharma had to automate the checking and counting processes, especially in order picking.
The unit boxes already had an EHIBC product identification bar-code printed onto them. The best solution was to print the product identification, quantity, batchnumber and expiry dates on the larger box types (collecting box and shipping boxes) as well. The packing department of the mother company could be persuaded to print the bar-code labels conform to our needs.
The primary code is used for product identification, and with the Unit of Measure Novartis Pharma indicates the box type (0 = unit box, 2 = collecting box and 5 = shipping box). Every boxtype contains a fixed number of unit packages, so a translation table for quantity calculations was constructed.
The secondary code contains the batchnumber and expiry date. Next to this the warehouse locations were bar-coded as well. A Long Range Integrated Laser Terminal was selected for scanning at close and long distance (0,5 - 3 meters).
New Order Picking
The “electronic pick list” is loaded to the bar-code scanner. After checking the label of the fixed pick location, the required number of boxes is scanned and automatically checked for product, quantity, batchnumber and expiry date. In case of empty pick locations the bulk location for the product is shown on the display. As soon as an orderline is completed, the next location is shown on the terminal display.
Now only one person does the picking and checking at the same time.
Occasional deviations on stock level are sent back to the logistic system. The stock level is adapted, and a correct shipping document for the customer is printed.
The handling of incoming goods has changed as well. The EDI despatch note from the supplier is transmitted to the bar-code scanner in the warehouse. Incoming goods are checked on product, quantity, batchnumber and expiry date by scanning the labels.
The overall result as Novartis Pharma measured the first year after implementation is a faster throughput and considerably less errors, meaning less costs in repairing what went wrong. Zero defect remains the ultimate goal, but speed and quality of the materials management processes have considerably improved. Bar-coded data processing, especially when coupled to the data transmission opportunities of EDI, clearly adds to efficiency and efficacy in our warehouse!
Novartis Pharma is in a special situation that they have only one supplier, the mothercompany, so it is fairly easy to make arrangements on printing bar-code labels; all of the products in the warehouse are labeled the same way. No doubt the overall costs in the pharmaceutical supply chain can be reduced dramatically if only every player conforms to one standard of bar-codes and labels.
by Willem Cramer, Novartis Pharma BV