November 2007 | Case Studies | DC Solutions

Giving Pharmacists a Voice

Tags: Warehousing

A new voice-directed picking system administers a dose of distribution improvements to Smith Drug Company.

Smith Drug Company is a rare find in today's pharmaceutical industry—an independent company that offers a personal touch. In a field dominated by giant drug wholesalers, Smith stands apart by specializing in serving the independent community pharmacist.

It is logical that Smith stakes its claim in this niche. The company began operations in 1925 as an independent community pharmacy in Asheville, N.C. Over the next two decades, it added 16 pharmacies throughout the Carolinas and Georgia. In the 1940s, the company's founder, James M. Smith Sr., sold his interest in the stores to establish Smith Drug Company in Spartanburg, S.C.

The traditions and culture set in place by James Smith carry on and today the company thrives on its ability to understand the special needs of local pharmacies, both in a retail or hospital environment.

The JM Smith Corporation, of which Smith Drug is one of four businesses, is South Carolina's sixth-largest privately held company. Smith Drug serves more than 1,000 pharmacies throughout 13 states in the South.

In addition to touting its roots in the community pharmacy, Smith Drug places great value on its ability to be flexible when meeting customer needs.

The company credits its distribution expertise for helping it serve its customer base and differentiate itself from competitors. A key part of that expertise is the recent implementation of a voice recognition warehouse picking system.

That Was Then

While Smith Drug has a long history of serving the local pharmacist, it had to bring distribution operations up to speed to serve the pharmacists of today and tomorrow.

The company's traditional paper-based picking system wasn't keeping up with the times. And in an industry with thin profit margins, that didn't cut it.

"Any errors in the pharmaceutical industry are expensive," notes Randy McConnell, director of information systems for Smith Drug. "Our old paper-based system created far too many costly errors."

Smith operates out of two distribution centers—a 250,000-square-foot facility at its Spartanburg headquarters and a smaller, new 100,000-square-foot building in Arkansas. The company first focused its modernization efforts on the Spartanburg facility, then applied the benefits to the greenfield design in Arkansas.

The main distribution center employs about 200 people. It runs a day shift Monday through Friday and a second shift Sunday through Thursday. All orders received by 8 p.m. are guaranteed next-morning delivery.

Smith's transportation operations are split evenly between its 30-truck private fleet and contracts with 30 motor freight carriers.

Smith's old picking system required the DC to print four cases of paper each day. Picking was separated into zones; shipping into routes.

"We had to dedicate three or four workers to separate the paper by zones," explains McConnell. "It was time consuming, taking up nearly three hours each day."

Not only was the old system time- consuming and labor-intensive, but it was error-prone as well.

"The paper-based system was holding us back," says McConnell. "We knew we could be more productive and provide better service to customers."

McConnell was interested in voice picking and began researching providers to find the right fit for Smith's needs. The company chose Vocollect, Pittsburgh, Pa., and its Voice-Directed Distribution system.

This is Now

Vocollect provided Smith with six voice units for a pilot run at the Spartanburg facility, and "guaranteed us that we could meet our goals," says McConnell.

Those goals included a 20-percent increase in productivity and an error-rate improvement to more than 99-percent accuracy.

"Part of Smith Drug's customer satisfaction goal is to provide accurate deliveries," says Larry Sweeney, co-founder and vice president of product management for Vocollect. "We knew we could improve delivery accuracy substantially through the use of voice technology."

Initially, Smith implemented the new voice system side-by-side with its paper-based system. As employees grew familiar with the system, the company made the transition to the voice units.

The system includes software that facilitates the coordination of assignments and exceptions. It also includes a connection to Smith Drug's mainframe through VoiceLink, Vocollect's voice interface software.

About 130 employees in the DC now use the voice system. "The second shift at night does most of the picking," says McConnell. "The stores phone in their orders, which are automatically directed to VoiceLink from our mainframe.

"As workers arrive in the morning, they are assigned to a particular area. When they log in, the system tells them where and what to pick," he adds.

Employees make their way down the aisles as directed by the voice system. They pick the items, then confirm the order by voice. Next, an export file is transferred to the mainframe where shorts are identified and billing is produced.

Training Smith employees on the new system was easy. "It takes 30 minutes for each employee to speak about 100 words into their unit and receive a template," McConnell explains. "Fifteen minutes later, they are using the units for picking."

The voice units can accommodate Smith's diverse workforce. "We have employees who speak Spanish, Russian, and various Asian languages," he says. "Because the units handle those languages, the transition was easy for everyone."

Smith Sees Results

Results from the voice system have exceeded Smith's expectations. "It's hard to measure how many ways we have benefited from the new system," McConnell says. "For instance, we easily achieved a 20-percent improvement in productivity."

Accuracy also has improved substantially. In one recent month, by example, only one shipment ended up on the wrong truck. For a company that ships some 7,000 cases each day, that is a great improvement.

Labor savings have been dramatic as well. "We have been able to cut out all overtime," reports McConnell. "Our employees used to put in several extra hours of work every week."

The system has also proved popular with new and existing employees, leading to improvements in recruitment and retention.

"The system does not require any special technical skills. That makes it easier for us to attract employees and keep them on-board," McConnell says.

Smith's results are typical for a company that has moved from a paper-based system to a voice system. However, the drug wholesaler achieved another, perhaps intangible benefit from the voice system.

"The financial payback on the system is one thing," notes Sweeney. "But the system has also enabled Smith to retain its customer base, and perhaps gain some new customers."

The system's success in the Spartanburg facility prompted Smith to implement voice picking at its new Arkansas distribution center from the onset. The future at both DCs may include voice units on lift trucks as well as in shipping and receiving operations.

Smith Drug achieved its return on investment within six months. "The voice-picking system has been a great success," McConnell concludes.