The pharma distributor has made multiple upgrades to its South Carolina DC in the past seven years to maintain its competitive edge. And it's not done yet.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
In the highly competitive world of pharmaceutical distribution, regional players must find a way to differentiate themselves if they hope to compete with the big national firms. Such is the case with Smith Drug. The Spartanburg, S.C.-based distributor operates in the Southeast, serving 1,200 independent pharmacies, regional hospitals, and long-term care facilities. To separate itself from the pack, the company has chosen to play the service card, filling orders with speed and accuracy that's second to none.
"Our primary focus is customer service. We have to be better than others to compete," explains Isaac Rogers, the company's vice president of operations.
For that reason, Smith Drug hasn't been shy about introducing process improvements aimed at helping the company maintain its competitive edge. In fact, operations at its 240,000-square-foot Spartanburg DC have undergone several major overhauls in the past seven years—all designed to increase accuracy and turn customer orders faster.
Phase one
The first of those projects took place in 2004, when the company retooled the facility's picking area to convert it over from a pick-and-pass setup to a zone-bypass design. The goal in this case was to speed up the order fulfillment process. "With pick-and-pass, you're only as fast as your slowest picker," says Rogers.
One drawback of the pick-and-pass workflow was that it required order totes to be routed through all of the zones whether items were needed from those areas or not. With the revamped system, which was designed and implemented by SSI Schaefer, an order can bypass a zone if no stock-keeping units (SKUs) from that section are required. And if work is backed up in a zone, the order tote can bypass that zone and return later when the bottleneck is cleared up. (Picking in the zone bypass area is directed by a voice system supplied by Vocollect.)
Along with retooling the pick area, Schaefer supplied three A-frame automated order picking units for the facility's fast movers. Together, the units feature 6,300 channels that hold 4,600 different products—mostly small bottles and boxes. Fast movers in Spartanburg account for about 22 percent of total SKUs, including 92 percent of prescription drugs.
A conveyor belt runs under the A-frames. When products are needed for orders, they're dropped onto the belt and then gently deposited into an order tote that waits at the end of the line. Approximately 78 percent of picks in the building occur within the A-frames, which can service up to 1,800 totes per hour.
Along with these process improvements, Schaefer added a tote buffer system, two tote destackers, an automated tote labeling system, and software that cubes the totes. In combination, these systems have virtually eliminated the need to handle totes manually.
"We have to be more efficient here to offset decreased margins and higher labor costs," says Rogers. "The automatic label machines and the zone bypass are where we gained most of our labor productivity, saving the equivalent of 16 positions."
No resting on laurels
These productivity gains notwithstanding, the facility was not done with improvements. In 2008, it embarked on another round, installing eight Schaefer carousels containing 43,000 dense storage locations. This system, which is arranged in two pods of four units each, has a footprint of only 6,600 square feet. Storing the same amount of inventory on static shelving would require more than 45,000 square feet. On top of that, a mezzanine was installed over the carousels, further boosting capacity.
When items are needed for orders, the carousels spin to make the required storage tubs accessible to a worker stationed at each pod. Lights direct the picking, indicating the location and quantity of items needed. Since a single storage bin might have as many as eight compartments, the system is set up with an additional light to indicate which compartment holds the required SKU. Up to seven orders can be selected at once.
Workers gather the picked items into order totes located at a lower put station, following directions provided by lights. Smith Drug has workers deposit items one at a time, with a light barrier above each tote keeping count of how many times the worker reaches across. This assures that the correct quantity is placed into the tote.
With the new system, a single worker can complete 1,000 picks an hour, compared with 175 picks per hour with manual picking. Not only is the process faster; it's also more accurate. In fact, inventory tracking with the carousel system has proved to be so good that Smith Drug now uses the equipment to process and hold returns. "The system knows when an item is a return, and which customers we can assign a return to and which customers won't accept a returned item," says Rogers.
So far, so good
As for the results, the process improvements introduced over the past seven years have allowed Smith Drug to accommodate volume growth that prior to the recession, averaged 20 percent annually. Better yet, the facility was able to absorb the added volume without any loss of productivity or accuracy. In fact, Rogers reports that productivity at the Spartanburg DC jumped 55 percent after installing the A-frames, zone-pass picking, carousels, and the automatic tote labeling equipment. Order accuracy now stands at 99.99 percent.
The system has also helped alleviate backups during peak periods—typically, Sunday and Monday nights. "Before, we had two or three nights a week when trucks would always go out late. Now, that happens only about five times a year total," says Rogers. "And often on those days, workers would be here 12 to 14 hours to get the orders out. With the automation, we rarely have any overtime now."
The success of the Spartanburg projects led Smith Drug to duplicate many of the automated processes at a facility it opened in Valdosta, Ga., in 2009. Among other benefits, the system's space-saving features enabled the company to keep the building's footprint to just 108,000 square feet. "The carousels paid for themselves the first day because they allowed us to build a smaller facility," says Rogers.
Not satisfied with standing pat, Rogers says he has Schaefer working on automating the quality control area, where prescription drug orders are verified. It will be just the latest chapter in Smith Drug's ongoing search for ways to reduce costs, create efficiencies, and improve customer service.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”