Pharmaceutical and healthcare fulfilment operations are under enormous pressure, with a need to navigate multiple supply chain challenges.
Scalable systems are required to accommodate just-in-time distribution demands, avoid stockouts and meet tight service level agreements (SLAs). At the same time, operators must maintain real-time visibility over every stock-keeping unit SKU, batch, and temperature-sensitive package to meet exacting regulatory requirements. From temperature-sensitive drug shipments to first-expired-first-out (FEFO) sequencing of batches, every movement must be verified, auditable and compliant.
For many organisations turning to automation to handle fulfilment, the instinctive focus is on the hardware: the robots, conveyors, and automated storage systems that handle the physical throughput.
But operators cannot scale throughput and assume that compliance, traceability and efficiency will follow.
Scaling up healthcare operations and managing risk
Without the software layer at the back end, orchestrating and synchronising the robots, shuttles, workflows and human workers, a pharmaceutical or healthcare logistics operation of whatever size simply cannot unlock the desired scalability while protecting compliance, which gets ever more complex.
Any software must control an extensive array of multitier hardware: autonomous mobile robots (AMRs), shuttles and robotic picking arms, as well as optimise ultra-high-volume item-level work and point-solutions for picking, sorting, cubing and packing.
And there’s more.
The software layer must also integrate with existing warehouse management systems (WMS), which are not always operated by the same technology provider.
In short, the modern warehouse is a multitude of levers and springs that, with the right orchestration, can work effortlessly together.
Without the right software stack, throughput gains can become chaotic. Stock may go missing, order delays are inevitable, regulatory trace-records fall short, and the opportunity to scale becomes a liability. Yet in a fast-paced pharma industry, unlocking hidden efficiencies has never been more critical against a continued backdrop of supply chain uncertainty and with inventory sizes getting bigger and more fluid.
“Without intelligent software embedded into the foundations of your logistics operation, scaling up means scaling risk,” says Andy Ingram-Tedd, VP Advanced Technology, Ocado Intelligent Automation (OIA). OIA provides unique next-generation warehouse software and robotics-driven infrastructure to industries including pharmaceutical and healthcare.
Ocado is a company that truly understands this business problem.
Launched in 2000 in the early days of the internet as the UK’s first pureplay online grocer, the company has experienced many of the challenges the healthcare industry is facing today in terms of scaling up a fulfilment operation. For more than two decades, Ocado has been developing its own software, hardware and processes to overcome ecommerce challenges in retail and grocery as large shopping baskets, perishable goods and tight delivery turnarounds overwhelmed traditional retail technology.
That commercial landscape in the early 2000s on the cusp of digital transformation was the sandbox for Ocado to prove its logistics technology innovations. Now the company’s pioneering systems not only power its warehouses, but also the fulfilment operations of some of the largest supermarkets and retailers in the world, including France’s Groupe Casino, Lotte in South Korea and Morrisons in the UK.
“The choreography of the robots – a swarm – is something to behold as they navigate around warehouses the size of several football fields, pick up bins and deliver them to pick stations to complete customer orders,” notes business and technology author Bernard Marr in a blog[i].
The pharma warehouse of the future
Ocado created these systems to be fully scalable to help an online grocer respond rapidly to situations such as promotions, changing seasons and adapt to peaks and troughs in business demand without sacrificing profit in a low-margin operating environment – all powered by a unique combination of machine learning, computer vision and advanced sensing.
In 2023, Ocado opened the doors to a separate division of its business, Ocado Intelligent Automation, to offer its expertise and logistics technology to industries outside food. OIA launched with a contract to provide its proprietary automated fulfilment technology to McKesson Canada, one of the largest pharmaceutical distribution companies in North America.
Ocado’s Storage & Retrieval System (OSRS), an ultra-high-density cubic automated storage and retrieval system, is now set to go live at the
The deal will see McKesson Canada use Ocado’s ultra-high-density cubic automated storage and retrieval system (OSRS), which many global grocery majors successfully use for their ecommerce businesses, as well as its propietary AI-powered software to operate the technology.
Ingram-Tedd explains why the OSRS is particularly well-suited to the pharmaceutical and healthcare sectors.
“The OSRS isideally suited to supply chains that require dense storage, highly accurate inventory management, traceability and secure stock control,” he says.
Fleets of bots traverse lanes in AI-optimised routes on top of a tall, dense storage grid orchestrated by OIA’s proprietary warehouse execution system (WES). The WES assigns tasks, routes robots, optimises line speed and ensures steady flow to the pack-out lines. This is critical when each minute impacts temperature-controlled lorries and urgent direct-to-patient shipments.
“The system sequences orders for dispatch, considers storage conditions, transport requirements, SLA status and product priority – all in real‐time. In a healthcare context, for example, dispatching a high-value biologic to a hospital may require immediate prioritisation over a less time-sensitive bulk order,” adds Ingram-Tedd.
“FEFO is non-negotiable in pharma. Expired, mis-sequenced stock is a risk. Our software links batch-level traceability with real-time visibility and sends alerts if expiry thresholds approach or if inventory is mislocated.
“The OSRS can pick and pack a 50-item order in just five minutes, while remaining in an ‘open status’ until the designated route has been allocated prior to dispatching.”
This provides a unique opportunity via captive fulfilment functionality to continue to add to custom orders until the cut-off period has been reached. This yields an increased order bin fill rate, a reduction in overall out-loaded bins, and a reduction in the number of final mile delivery assets, routes and personnel required.
In addition, patented algorithms built into the OSRS software allow for optimised warehouse slotting – or smart putaway. This means the system’s robots spend less time surfacing stock from within the storage grid – a process known in the fulfilment world as “bin digging”, which reduces the number of robots required, avoiding congestion and achieving greater overall throughput .
Warehouse intelligence at every stage
Significantly, the design of the OSRS infrastructure through to its operation and maintenance is guided by data. Terabytes of data, generated by each task and asset, are analysed in real time and used to optimise routes, plan paths, rapidly address issues and continuously make improvements to productivity and efficiency.
Ocado has integrated more than 100 applications of AI into its offerings, driving quality, productivity and efficiency savings across the entire value chain. At numerous R&D hubs across the UK, Europe and North America, more than 1,000 software engineers, robotics specialists, data scientists and UX designers are working to continuously optimise the technology powering these next generation warehouses.
“At OIA, we’re embracing AI in all its forms, with the pragmatism required to ensure each warehouse AI application results in a tangible uptick in productivity, transforming our warehouses into intelligent, automated hubs that people like to work in,” says Ingram-Tedd.
[i] The amazing ways Ocado uses artificial intelligence and tech to transform the grocery industry
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