The Problem: Value Drug Mart, an Edmonton, Alberta-based cooperative of independent pharmacies, was experiencing rapid growth. At the same time, the pharmacies were adding to their front-of-store product mix in a bid to compete with big box retailers. The combined effect of that growth in both volume and stock-keeping units (SKUs) handled was to put enormous pressure on fulfillment operations at the group's central DC in Edmonton.
The DC features multiple pick zones, including pallet rack, flow rack, standard shelving, and bulk areas, but the strain was particularly acute in the shelving area. There, workers picked from shelving on a two-level mezzanine, with front-of-store items on the top level and pharmacy items on the bottom. Trouble was, the manual process could not keep up with store demand. "We were picking as fast as staff, shelving, and technology would permit, but it wasn't fast enough," says Dwayne Bilawchuk, operations manager at the Edmonton DC.
Customer: Value Drug Mart
Primary business: Distribution of both front-of-store goods and pharmaceuticals to shareholder stores. These include Value Drug Mart stores, Apple Drug stores, Rxellence Professional Dispensaries, and about 300 affiliated stores.
Headquarters: Edmonton, Alberta
Supplier: Kardex Remstar LLC, Westbrook, Maine
Solution: Horizontal carousels and pick-to-light technology
The Solution: Value Drug Mart found a solution to its problem in automation. After evaluating several options, including A-frames, horizontal carousels, and vertical carousels, Bilawchuk and his team eventually settled on horizontal carousels from Kardex Remstar. "We came to realize that horizontal carousels were best, given our high unit picks," he says. The DC replaced two zones of static shelving with six horizontal carousels arranged in two zones of three carousels each.
Under the new system, orders are transmitted by Value Drug's inventory management system to the carousel zones. Operators are directed to picks via a pick-to-light system. After selecting items, they scan them with a reader mounted at either end of the carousel to confirm the pick, and then place the goods in one of 10 order totes—each representing an order for a specific store—as directed by the put-to-light system. While workers pick one SKU, the carousels queue up the next pick, which eliminates most of the wait time.
Goods picked from the two horizontal carousel zones move by conveyor to a consolidation area, where they're combined with goods picked from other zones to complete orders for individual stores. The consolidated orders move by conveyor to shipping.
The result has been a major improvement in productivity, along with near perfect pick accuracy. "We reached our goals even before we finished implementation," Bilawchuk reports. Under the previous system, pick rates ran to about 50 lines per hour on each level. After the new equipment was installed, pick rates jumped to an average of 350 lines per hour in the lower carousel zone, which houses 3,100 front-of-store SKUs, and 575 lines per hour in the upper carousel zone, which holds 7,100 pharmacy SKUs.
Using carousels also led to a sharp reduction in the labor needed to manage the orders. With the old system, it took three workers six hours a day to handle picking in each zone. With the carousels, a single worker can complete all picks in a zone during a five-hour shift. The system also freed up floor space that is now used for bulk storage.
Bilawchuk says the DC manages a total of 18,000 SKUs, which are now available to all member stores the next day. Stores have until 1 p.m. to order front-of-store goods and until 7 p.m. to order pharmaceuticals.
He adds that the carousels have enabled the company to expand special offerings. In particular, he cites a program offered at the start of each school year, Value Valet, in which school supplies are selected for individual students and shipped to the schools marked with each child's name. "The carousels are one of the main reasons we're able to do that," he says.
Gartner, Inc.