UPMC

Award Submission
Presented to: IDN Expo

Contact:
James Huff
Process Analyst, Supply Chain Consulting Services
UPMC
412.647.6741 | huffjd@upmc.edu

November 2010

Copyright © 2010 UPMC. All rights reserved.

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:
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



 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 Michael S. DeLuca
VP and Chief Supply Chain Officer Director, Supply Chain Solutions & Consulting
UPMC Services
UPMC

Jeffrey N. Andersen
Manager, Consulting Services
UPMC



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


UPMC

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