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Copyright © 2010 UPMC. All rights reserved.

Award Submission

Presented to: IDN Expo

Contact:

James Huff

Process Analyst, Supply Chain Consulting Services

UPMC

412.647.6741 | [email protected]

November 2010

IDN Summit & Expo – Awards


Section 1 Please identify the ONE (each is equally weighted) primary innovation that your healthcare system is

going to focus on in its submission:

Product utilization: Implementation of an innovative warehouse solution: voice-directed picking

technology.

Describe the challenge or problem you were experiencing that motivated your system to make a

change 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 South

Side neighborhood. The warehouse plays a vital role in helping to maintain an exemplary level of

patient 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 order

lines (representing 38.4 million discrete picks) are picked, packed and shipped to these facilities

annually. Furthermore, the distribution center additionally services UPMC facilities thru centralized

receiving services and cross-distribution of non-inventoried products.

The operation historically relied upon traditional paper-based picking methods that were prone

to human errors, inefficiencies and redundancies. These shortcomings resulted in wasted time and

unnecessary costs for the health system; ultimately having a trickle-down effect on the quality of patient

care. Additionally, continued growth of the enterprise and increasing demand for Materials

Management services posed a further challenge for UPMC leadership with potentially significant cost

implications.

UPMC faced several choices: a costly warehouse management system (WMS); increase head-

count, thereby potentially relinquishing itself to diminishing pick rate percentages and increased error

rates; move into a larger distribution facility at extreme cost and effort; or explore cutting-edge

technology previously unchartered in US Healthcare to potentially improve both process efficiencies and

pick errors while continuing to utilize existing infrastructure (people, buildings, and systems). Months of

evaluating these various options led UPMC’s Supply Chain leadership to a clear choice: voice-directed

picking.



Who were the people, departments, suppliers, distributors or GPO’s involved in this process? How did

they impact the results you were looking for?

This Supply Chain Management led initiative had enterprise-wide implications – from supplier

distribution 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 key

leaders 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, UPMC

What was the initiative you implemented?

Voice technology uses speech recognition and speech synthesis

to allow workers to communicate with UPMC’s ERP system, PeopleSoft.

Warehouse operatives use a wireless, wearable computer with a

headset and microphone to receive instructions by voice, and verbally

confirm their actions back to the system. This approach allows the

associates to work hands-free, keeping their eyes and focus on the task.

The algorithms behind the voice technology constantly scan work

patterns to optimize warehouser efficiency, and warehouse voice

confirmation dramatically reduces pick errors. The technology has

recently been implemented by several premier healthcare distributors

but 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 processes

before effectively defining a future state. Upon evaluation, many redundant and inefficient processes

had to be eliminated or modified to pave the way for a successful implementation. Several of the

process 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.



Were there institutional or individual prohibitions that became apparent as the process was reviewed

and improved? If so how did you overcome them?

The initiative was not met with organizational resistance due to a well documented business

case and the overwhelming support from key leadership. Instances of individual resistance, primarily

from warehouse associates, surfaced during the early phases of the initiative. Certain warehouse

associates, who would ultimately become users of the technology, were apprehensive of the change and

some feared it could negatively impact their job duties. The resistance was addressed through

education, training and employee involvement. Since the implementation, these associates have

embraced 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 this

implementation. 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 in

excess of 20%. Certain associates have achieved average pick rates in excess of 100 lines per hour.



Cost 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 imprecise

process 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 level

confirmation inherently reduces picking errors over the former paper based process. Additionally,

enhanced real-time reporting capabilities have created transparency in picking errors; thus facilitating

continuous 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-term

and long-term?

The benefits from this implementation are extensive. The following is a recap of the key results

experienced 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



Summary of Key Improvements:

Hands free Improved

worker safety Ergonomically

friendly Improved

employee morale

Increased efficiency

Increased productivity

Staff optimization

Automates formerly manual processes

Dual zone picking

Delivery staging mechanism

Reduction in cost per pick

Reduction in training time

Improved inventory management

Increased operational visibility

Real-time and historic views of associate productivity

Ability to monitor shift progress

Notification of problematic areas

Increase in on-time deliveries

Decreased lead-times

Reduction in errors

Employee Safety & Morale

Productivity Cost Savings ReportingCustomer

Service



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).



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.



Section 2 – Process Maps Scenario: Two warehouse associates picking products using paper-based picking method

PRE-IMPLEMENTATION

PROCESS



Scenario: Two warehouse associates picking products using paper-based picking method

POST-IMPLEMENTATION

PROCESS



Pick by Voice Video Please take a moment to view a brief demonstration of voice-pick technology:

Click HERE to view the video

Section 3 - Signatures In order for the application to be complete, please provide the signatures of the person(s) submitting

and at least one senior manager involved in the initiative application before submission to the IDN

Summit & Expo. Once certified by the IDN Summit Education Advisory Board the submission will be

placed on our website (www.idnsummit.com) for peer review and balloting.

James A. Szilagy VP and Chief Supply Chain Officer UPMC

Michael S. DeLuca Director, Supply Chain Solutions & Consulting Services UPMC

Jeffrey N. Andersen Manager, Consulting Services UPMC

http://www.youtube.com/watch?v=O1_dc84jmOQ



Exhibit A – UPMC Fact Sheet The following excerpts from UPMC’s fact sheet are provided:

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