The Science & the Art of Warehousing
Hanging from the ceiling of Intermountain Healthcare’s Utah facility are bright banners with photos of patients, doctors and nurses. Among the towering shelves, pallets and forklifts, one of them reads, “Patient-centered.” It might seem incongruous, but it’s demonstrative of the company’s commitment to its core function: helping people live the healthiest lives possible.
The $40 million, 327,000-square-foot space is home to the first health care distribution center certified by the Warehousing Education and Research Council (WERC).
“WERC is a unifier among a vast, vast industry that knows no bounds across sectors,” said WERC CEO Michael Mikitka. “We compile reams of qualitative and quantitative research and translate them into meaningful baselines by which warehousing companies can measure their performance and define their success.”
In addition to its vastness, the warehousing industry is surprisingly dynamic. Warehouses themselves stay put, but everything they contain shifts in response to consumer trends and changes in how goods are moved around.
For example, the push toward online transactions has retailers large and small exploring different ways to distribute. The push also pressures retailers to occupy more warehouse space than ever before, and in some cases, rely more heavily on third-party providers. And as warehouses grow, so too does the need for additional employees and more sophisticated systems. WERC, the only national association that represents warehouse and logistics professionals, helps companies stay ahead of these market curves.
“The best tool in the kit of any warehouse operator is metrics,” says Mikitka. “One can only manage what they measure, so we provide evidence-based best practices and solutions that empower our members to make meaningful improvements.”
Back in Utah at Intermountain Healthcare, the team was challenged with improving the organization’s value by reducing operating costs. Director of supply chain logistics, Gordon Slade, set out to bring the supply chain up from hospital basements, which they did in 2012 with the opening of the Kem C. Gardner Supply Chain Center. Dedicated to logistics, distribution and almost all related functions, the company created a central standardized foundation — not to mention, many efficiencies.
What’s on the inside is what counts, though. With facility construction underway, the Intermountain team still had a lot of work to do in ensuring the operations were the best they could be to support better patient care.
Attending his first WERC Annual Conference and Solutions Center, Slade realized how valuable the organization could be in helping them achieve their goals.
“This was the group we needed to work with,” said Slade. “WERC’s resources enabled us to benchmark our performance against others outside the health sector. Our thinking was no longer boxed in. We had industry-wide knowledge from across the country pointing us to the best methodologies for warehousing and logistics.”
Two years after opening its central facility, Intermountain elected to participate in WERC’s Warehouse Certification Program. Through independent, third-party audits, WERC certification assesses a warehouse facility’s capabilities and performance against industry standard grading methodology. But as Slade will attest, it gives participants something much more than an unbiased review.
“The evaluation process tells us where we are today and what we need to work on tomorrow to continuously improve,” said Slade. “And in our world, improvements mean better health outcomes for patients.”
WERC certification audits are completed by Steve Murray, principal consultant and chief researcher at Supply Chain Visions and WERC’s senior research associate and lead warehouse process auditor. In addition to a deep understanding of supply chain processes, technology and data integration, Murray brings to the process extensive experience in supplier/customer relationship management and team training.
“Certification is very much an active and engaging process,” said Murray. “I make sure to connect directly and meaningfully with employees at all levels so that I can frame assessments with lived experience. Standards are only standard if they’re understood in the same way by everyone. Internal relations and communications are a significant factor in preventing disconnected processes.”
Since the inception of the WERC certification program, Murray has completed more than 60 facility audits. With each one, WERC is pushing warehousing and logistics companies to raise the bar. Furthermore, audits generate first-hand, qualitative experience to inform WERC’s benchmarking and best practice guides, professional development offerings and key learning events — keeping them fresh and relevant.
“We bring people outside their facilities to explore beyond the numbers and data, to examine what others are doing in the industry,” said Mikitka. “We’re constantly spurring new standards and innovations.”
Intermountain Healthcare's distribution center maintains more than 5,000 SKUs. To effectively manage the volume and keep costs in check, Intermountain works very closely with hospitals and clinicians to establish item standardization.
Slade says Intermountain didn't want to match other healthcare systems’ distribution methodology. Instead, with WERC's help, they were able to build unique strategic objectives for efficiency and value around best practices in supply chain and distribution in general.