Any retailer that sells pharmaceutical products is by definition dealing in something that might mean life or death to some customers. The cameras, televisions and refrigerators that it also sells clearly don't have the same importance - except to the vitality of its own bottom line. If canned goods, kitchen appliances and easy chairs aren't in stock as advertised, it's the retailer who suffers.
That's the situation that faced London Drugs, one of Canada's largest retail chains. Founded in 1945, the company has grown from a simple, single storefront pharmacy into a variety retailer supplying a wide range of products. Larger than the average drugstore but smaller than, say, a Target, London Drugs operates in 35 major markets across western Canada. Its two distribution centers have a total footprint of 585,000 square feet and have three picking shifts per day to ensure continuous, 24-hour distribution.
Its paper-based picking operation, however, had unacceptable error rates that had the downstream effect of shorting deliveries at the store level. Operations were further hampered by time wasted at both the stores and in the DCs attempting to run down the source of the errors.
Management at London Drugs realized that less-than-perfect accuracy from its DC was eroding trusted relationships with its retail locations - and ultimately with its customers. In addition to the accuracy issues, the rising cost of printing and distributing pick instructions on paper peel-and-stick labels, led the company to consider implementing voice technology for its case-picking and split-case picking operations, says Brian Best, the retailer's director of transportation, warehousing and distribution.
Three vendors were given the opportunity to demo their solutions and services in "real-life" operating conditions in a portion of the warehouse. Vocollect won the contract, and in collaboration with technology partner Vitech, London Drugs integrated the Vocollect Voice picking solution with the retailer's IBM AS/400 warehouse management system.
The net-net? Order errors have been reduced by 70 percent, Best says. Today, London Drugs enjoys accuracy rates of 99.9 percent. Productivity and throughput have increased by 10 percent or more, training time has improved significantly and ROI - always top of mind in difficult economic conditions - was achieved in 15 months.
With 74 stores, London Drugs is no small operation, but it is competing with the "international behemoths" of variety and convenience retailing. Ensuing that shipments contained items ordered was paramount to keeping customers' loyalty.
Shipments from the company's DCs include more than 240 regular store orders per week, with over 1,000 lines per order. (The retailer also ships more than 70 prescription orders each workday, but due to government regulation of controlled substances those items are handled by another third-party specializing in such deliveries.) In order to maintain this frenetic pace, the company must pick and ship products around the clock, so it employs three shifts of 30 to 35 pickers each day.
With Vocollect, employees can start working within minutes of their assignment being processed by the WMS, rather than waiting for thousands of pick labels to be printed, split and distributed to various pick sections.
In addition to efficiency gains, the new voice system has built-in checks and balances to help ensure shipping accuracy. Prior to the implementation of Vocollect Voice, the paper-based order fulfillment system was vulnerable to human error at several stages. With the old system, employees needed to verify location, description and quantity details for each pick assignment. Now, Vocollect Voice talks employees through their orders, telling them which products to select and requiring them to use a series of check digits to verify details like location and quantity.
Employees could get right to work with the previous system as well, but of course accuracy was the issue, not timing. The challenge is very largely in hand-eye coordination, Best says. "Humans are using their eyesight, but at the same time their hands are busy trying to pick the product. They've got a pick tag in one hand and yet they've got to peel off labels to put on the cartons."
Under the old system, it was common to skip from one aisle to another. In doing so, sometimes the wrong aisle was chosen or the wrong item was retrieved. "There was no checking process. So sometimes they made visual errors. It was inadvertent, but it was an error."
The situation has changed completely," he says. "Now, their hands are free because they're not applying labels to every carton that they're picking. But more important, they are able to get voice instruction where to go next. A checking process ensures that they are at the correct location before the next pick begins."
That doesn't mean inaccuracies are impossible. Quantity errors can occur, and Best says they have on occasion. "But at least the store's getting most of what they're supposed to be getting. They might be missing one unit or something." But the shortages of the past are no longer occurring.
Humans simply perform more accurately when they have to verbally confirm that they have accomplished a certain task, says Tom Murray, vice president of product management and marketing at Pittsburgh-based Vocollect. "Problems occur because they assume, 'Oh, I've done that.' They assume they are doing the right thing. When you're working by yourself, it's easy to make errors, but voice technology takes you order by order, line by line, making you verbally confirm what you've done. It eliminates the chance of humans making quick assumptions."
By way of illustration Murray says reducing errors from five per 1000 down to one per 1000 is significant with respect to stockouts when dealing with high-volume goods. "Those few errors make a big deal to downstream operations," he says.
"I can't overstate the importance of a quick and accurate shipping system in variety retailing," says Clint Mahlman, senior vice president of retail operations, distribution and e-commerce at London Drugs. "With Vocollect Voice, our stores can maintain an 'in-stock' position for customers while reducing the costs and headaches associated with picking errors. Furthermore, voice technology has streamlined operations at our DCs, increased the production of our staff, and reduced printing costs and waste."
He says, "Nearly 80 percent of our customers routinely visit our store every two weeks. If we want them to keep coming back, they must be able to trust that we'll have the products they need on the shelf when they come in. Voice technology has helped us earn that trust, by making sure we are replenishing our stores with the products they need.
"The DC is the lifeblood of our company; because fulfillment and replenishment are everything when it comes to earning the trust of our retail locations and their customers. With Vocollect Voice, we know that our stores and customers are going to get the products they need, when they need them. That's priceless."
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