Building A Logistics Facility For The Future
By Trisha Gladd, Editor, Life Science Connect
When AmerisourceBergen, a global pharmaceutical sourcing and distribution services company, decided to build a new distribution center, their focus was twofold. First, they wanted to ensure they built a facility that offered the efficiency the manufacturing community needs. Second, in order to meet patient and customer needs, they had to be able to maintain product availability. To do this, they came up with a design they refer to as a “single-drop” facility.
What Does Single-Drop Mean?
Currently, manufacturers have to ship to AmerisourceBergen’s existing 25 distribution centers located all over the country. With the new single-drop distribution center, they will only have to send to one location. Using a predictive sourcing model, AmerisourceBergen is able to help customers determine how much product they need in each region. Based on this and the specific geographic requirements of licensed healthcare providers, orders are placed to ensure adequate product in each region, which reduces expenses and logistical resource needs.
“Everyone's under the same pressure,” says Bob Mauch, chief operating officer at AmerisourceBergen Drug Corporation. “Reimbursement is challenging for everyone across the healthcare continuum, so efficiency is important because it has value for both the end users and for the manufacturers.” Located in Columbus, OH, the 87,000 square-foot single-drop facility will process approximately 96 million units of medication daily.
Key Factors Of The Design
When coming up with the design of the facility, Mauch says there are two very important constituents to consider. “First, there’s the customers we would define as providers and pharmacies, who are ultimately responsible for making sure patients get the product,” he says. “To do this, we have to ensure their provider or pharmacy has access to it but also without carrying any additional inventory. There isn’t really a reasonable tradeoff to be made in terms of patient access.” The other group to be considered is the manufacturers, who are also concerned with making sure the product gets to the customer; however, they want to be sure it is done in the absolute most cost-effective and efficient way possible.
Mauch says the intention is to have product moving in and out of the facility in less than 24 hours. This presents multiple challenges, but he says these can be overcome with planning and testing. “We're creating something new here, but we have time built into the project to make sure we have appropriate testing and any mitigation strategies, so there's no disruption in product to our customers,” he explains. Mauch adds that inventory management, transportation logistics, and layout also needed to be considered.
Making sure the right partners are selected is also an important consideration. “A successful coordination with the manufacturers and our transportation partners will be a key success factor,” says Mauch. “Certainly the stability of the partner and their ability to deliver on their commitments is very important. We work under tight timelines and have very little room for error, so we have to make sure we choose partners who create a cost-effective investment for us.”
Overall, Mauch says the future of the supply chain requires a facility model that manages inventory in a distinct way with a focus on efficiency and product availability. Because when you’re in the business of saving lives, quicker is always better.