Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide


  1. 1. Award Submission Presented to: IDN Expo Contact: James HuffProcess Analyst, Supply Chain Consulting Services UPMC 412.647.6741 | huffjd@upmc.edu November 2010 Copyright © 2010 UPMC. All rights reserved.
  2. 2. IDN Summit & Expo – AwardsSection 1Please identify the ONE (each is equally weighted) primary innovation that your healthcare system isgoing to focus on in its submission:Product utilization: Implementation of an innovative warehouse solution: voice-directed pickingtechnology.Describe the challenge or problem you were experiencing that motivated your system to make achange or improve collaboration and efficiency in the area(s) you chose. UPMC owns and operates a 60,000 square foot distribution center in Pittsburgh’s historic SouthSide neighborhood. The warehouse plays a vital role in helping to maintain an exemplary level ofpatient care by inventorying over 3,500 operation-critical SKUs and providing service to 10 hospitals,scores of physician offices, cancer centers and long-term care facilities. More than 2.2 million orderlines (representing 38.4 million discrete picks) are picked, packed and shipped to these facilitiesannually. Furthermore, the distribution center additionally services UPMC facilities thru centralizedreceiving services and cross-distribution of non-inventoried products. The operation historically relied upon traditional paper-based picking methods that were proneto human errors, inefficiencies and redundancies. These shortcomings resulted in wasted time andunnecessary costs for the health system; ultimately having a trickle-down effect on the quality of patientcare. Additionally, continued growth of the enterprise and increasing demand for MaterialsManagement services posed a further challenge for UPMC leadership with potentially significant costimplications. UPMC faced several choices: a costly warehouse management system (WMS); increase head-count, thereby potentially relinquishing itself to diminishing pick rate percentages and increased errorrates; move into a larger distribution facility at extreme cost and effort; or explore cutting-edgetechnology previously unchartered in US Healthcare to potentially improve both process efficiencies andpick errors while continuing to utilize existing infrastructure (people, buildings, and systems). Months ofevaluating these various options led UPMC’s Supply Chain leadership to a clear choice: voice-directedpicking. Copyright © 2010 UPMC. All rights reserved.
  3. 3. IDN Summit & Expo – AwardsWho were the people, departments, suppliers, distributors or GPO’s involved in this process? How didthey impact the results you were looking for?This Supply Chain Management led initiative had enterprise-wide implications – from supplierdistribution to warehouse processes to hospital materials management to core clinical operations.Who was involved in the review process?The support of top-level leadership laid the foundation for a successful initiative. The following keyleaders were involved in the review process for this initiative:  James Szilagy, Chief Supply Chain Officer, UPMC  Michael DeLuca, Director, Supply Chain Solutions & Consulting Services, UPMC  Charles Watson, Vice President of Enterprise Applications, UPMC  David Hargraves, Senior Director, Clinical Supply Chain, UPMCWhat was the initiative you implemented? Voice technology uses speech recognition and speech synthesisto allow workers to communicate with UPMC’s ERP system, PeopleSoft.Warehouse operatives use a wireless, wearable computer with aheadset and microphone to receive instructions by voice, and verballyconfirm their actions back to the system. This approach allows theassociates to work hands-free, keeping their eyes and focus on the task.The algorithms behind the voice technology constantly scan workpatterns to optimize warehouser efficiency, and warehouse voiceconfirmation dramatically reduces pick errors. The technology hasrecently been implemented by several premier healthcare distributorsbut had yet to be widely implemented by a large IDN.When did you start the implementation process?The implementation formally began in January of 2009.Did you incur any challenges or difficulties in the initial stages? If so, what were they? The initiative obliged UPMC‘s supply chain group to evaluate its current warehouse processesbefore effectively defining a future state. Upon evaluation, many redundant and inefficient processeshad to be eliminated or modified to pave the way for a successful implementation. Several of theprocess were longstanding and had become engrained in the culture of the very tenured workforce.The support of top-level leadership greatly contributed to overcoming early obstacles and barriers. Copyright © 2010 UPMC. All rights reserved.
  4. 4. IDN Summit & Expo – AwardsWere there institutional or individual prohibitions that became apparent as the process was reviewedand improved? If so how did you overcome them? The initiative was not met with organizational resistance due to a well documented businesscase and the overwhelming support from key leadership. Instances of individual resistance, primarilyfrom warehouse associates, surfaced during the early phases of the initiative. Certain warehouseassociates, who would ultimately become users of the technology, were apprehensive of the change andsome feared it could negatively impact their job duties. The resistance was addressed througheducation, training and employee involvement. Since the implementation, these associates haveembraced the system and now value the benefits it has brought to their duties.How are you measuring the results of your initiative(s)? UPMC’s supply chain group continues to measure and monitor the results of thisimplementation. The group reports on a variety of metrics to senior management. Key metrics include:Average Pick Rates: Measures the average number of lines picked per hour by warehouse associated.The average pick rates have increased dramatically since implementation – with productivity gains inexcess of 20%. Certain associates have achieved average pick rates in excess of 100 lines per hour. Copyright © 2010 UPMC. All rights reserved.
  5. 5. IDN Summit & Expo – AwardsCost per Pick: While many variables are considered when calculating the average cost per pick,productivity gains have contributed to an 8% reduction in the cost per pick (compared to pre-implementation values).Perceived Error Reduction: Error identification and reporting had historically been a very impreciseprocess that led to substantially underreported values. Post-implementation, associates speak a bin-specific confirmation number (check digit) to the voice pick system before each pick. This bin levelconfirmation inherently reduces picking errors over the former paper based process. Additionally,enhanced real-time reporting capabilities have created transparency in picking errors; thus facilitatingcontinuous associate-level improvement and helping to ensure the correct product is being selected.What have been the tangible results thus far, and what do you determine the results will be mid-termand long-term?The benefits from this implementation are extensive. The following is a recap of the key resultsexperienced 4 months post-implementation:4 months post implementation: • Cost Savings: 8% reduction in average cost per pick • Productivity: 20% increase in productivity • Errors: Reduction in picking errors • Automation: 100% fully automated picking process – elimination of paper Copyright © 2010 UPMC. All rights reserved.
  6. 6. IDN Summit & Expo – AwardsSummary of Key Improvements: Employee Customer Safety & Productivity Cost Savings Reporting Service Morale Hands free  Increased  Reduction in  Increased  Increase in on- Improved efficiency cost per pick operational time deliveries worker safety  Increased  Reduction in visibility  Decreased Ergonomically productivity training time  Real-time and lead-times friendly  Staff  Improved historic views  Reduction in Improved optimization inventory of associate errors employee  Automates management productivity morale formerly  Ability to manual monitor shift processes progress  Dual zone  Notification of picking problematic  Delivery areas staging mechanism Copyright © 2010 UPMC. All rights reserved.
  7. 7. IDN Summit & Expo – Awards  Hands Free: Associates are voiced work instructions via a mobile computer and headset, allowing them to work hands-free and keep their eyes on the task.  Safety: Associates work hand-free, improving awareness of surroundings and potential hazards. (mobile equipment)  Ergonomically Friendly: Eliminates repetitive motion and eye strain associated with pencil and paper method.  Employee moral: Elimination of the cumbersome “paper and pencil” method has improved moral among warehouse associates.  Efficiency Gains: increased velocity of picking activities; decreasing the amount of time an associate spends on each customer order.  Increased Productivity: Increased operational productivity reduces transaction costs.  Staff Optimization: Efficiency gains allowed management to move associates to more strategic and value-added activities.  Automation: Fully automated the order dissemination process; eliminated paper based orders.  Dual Zone Picking: Orders are split between two zones: main floor and mezzanine levels. The orders are picked separately and then merged at the end of the assignment.  Delivery Staging Mechanism: Associates are directed to the customer’s staging area upon completion of the picking assignment.  Reduction in Cost per Pick: Ability to pick more order lines with less resources.  Reduction in Training Time: Employees quickly acclimate to the technology, decreasing the amount of time spent training new hires. New hires can be working autonomously within a few hours of first using the system and can reach standard pick rates weeks sooner than with the paper-based method.  Improved Inventory Management: Inventory is decremented by the quantity actually picked (previously decremented by quantity ordered). Copyright © 2010 UPMC. All rights reserved.
  8. 8. IDN Summit & Expo – Awards  Increased Operational Visibility: Management can pinpoint the date, time, location, item, and quantity of each action, and easily trace any error to the source. Improved associate visibility provides management the desired level of accountability.  Productivity by Associate: Ability to easily monitor and track associate productivity metric using both real-time and historic data.  Shift Progress: Real-time view of completion of work during a given shift; ability to react by shifting workforce for increases/decreases in volume.  Problematic Areas: Management can view wear problems are occurring on the work floor: stock outs, etc.  On-time deliveries: More on-time and accurate orders lead to higher levels of customer satisfaction.  Decreased lead-times: Efficiencies gained in picking customer orders reduces customer lead- times.  Reduction in Errors: Decreased the number of picking errors by requiring associates to validate the location of the pick. Copyright © 2010 UPMC. All rights reserved.
  9. 9. IDN Summit & Expo – AwardsSection 2 – Process MapsScenario: Two warehouse associates picking products using paper-based picking method PRE-IMPLEMENTATION PROCESS Copyright © 2010 UPMC. All rights reserved.
  10. 10. IDN Summit & Expo – AwardsScenario: Two warehouse associates picking products using paper-based picking method POST-IMPLEMENTATION PROCESS Copyright © 2010 UPMC. All rights reserved.
  11. 11. IDN Summit & Expo – AwardsPick by Voice VideoPlease take a moment to view a brief demonstration of voice-pick technology: Click HERE to view the videoSection 3 - SignaturesIn order for the application to be complete, please provide the signatures of the person(s) submittingand at least one senior manager involved in the initiative application before submission to the IDNSummit & Expo. Once certified by the IDN Summit Education Advisory Board the submission will beplaced on our website (www.idnsummit.com) for peer review and balloting.James A. Szilagy Michael S. DeLucaVP and Chief Supply Chain Officer Director, Supply Chain Solutions & ConsultingUPMC Services UPMCJeffrey N. AndersenManager, Consulting ServicesUPMC Copyright © 2010 UPMC. All rights reserved.
  12. 12. IDN Summit & Expo – AwardsExhibit A – UPMC Fact SheetThe following excerpts from UPMC’s fact sheet are provided: Copyright © 2010 UPMC. All rights reserved.