Reducing Transportation Cost and Increasing Labor Productivity through Pharmacy & Warehouse Operations

The Challenge:

Calea Ltd. has experienced significant industry growth and increasing competition over the past several years putting pressure on the organization to drive cost out of the business while concurrently working to enhance their service offering. The overall landscape of the healthcare industry in Canada is putting pressure on organizations to become more operationally efficient in order to drive profitability.
The challenge at Calea was to reduce expenses with a focus on third party transportation cost, as well as improving the overall efficiency within the Pharmacy and Warehouse. The scope of work focused on the following elements:

  • Analyze the front end Pharmacy operation to determine areas for workload balancing.
  • Review warehouse operations and establish changes to the overall process that would help save cost.
  • Develop a system to provide better overall coordination and prioritization of orders from front to back allowing dispatch to establish and consolidate routes.
  • Develop a Management Operating System to assist area leaders with better overall planning, execution, and performance measurement.
  • Train members of the leadership team on the key principles of Carpedia’s continuous improvement methodology to ensure sustainability.

The Results:

The following key changes and results were achieved:

  • An 8.4% improvement in pharmacy expense by realigning schedules to be better balanced with varying volume demand.
  • A 21.1% improvement in warehouse expense by implementing method changes to improve pick rate productivity in conjunction with better overall management of temporary labor resources.
  • An 11.6% reduction in transportation accomplished by scheduling orders and routes earlier in the process along with developing route standards for drivers.
  • Developed resource planning tools and implemented operational reporting to measure cost, service, and quality.
  • Developed a meeting structure to align with the organizational hierarchy helping to better define roles and responsibilities.
  • Developed sustainability requirements and transitioned to an internal manager to perpetuate results on-going.

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