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    Key Insights for Health System Leaders on CSC Automation

    Posted by: Jett Chitanand | June 4, 2024

    CSC Automation

    If you are a health system consolidated service center (CSC) leader, it should come as no surprise that warehouse labor is hard to get, hard to keep and growing increasingly expensive.  

    With the rise of CSC automation, competition from other industries for the limited pool of warehouse workers is hitting healthcare operationally and financially. This is straining already limited labor resources and providing workers greater bargaining power for wages, benefits and schedule flexibility.  

    Is automation the answer? 

    “In the quest for greater resilience, companies are now looking for ways to boost the speed, reliability, flexibility, and productivity of their warehouse and distribution operations. Automation has emerged as the answer.” – McKinsey & Company 

    Companies across many industries have deployed warehouse automation technologies, and the healthcare sector is no exception. We work with our automation technology partners to provide guidance, technical expertise and solutions to support automation across 40+ health system CSCs.  

    With the boom in warehouse automation comes many new players to the space, each with their own technologies and approaches. While it’s an exciting time for healthcare supply chain logistics and distribution, the multitude of offerings can be confusing. Supply chain leaders run the risk of investments that don’t yield the anticipated ROI.  

    “A warehouse automation revolution is underway, but too many projects are not delivering the results.” – McKinsey & Company 

    5 key questions to answer when evaluating CSC automation  

    1. Where are your pain points? 

    Identify high-value areas for automation. Given the current labor challenges, one key focus for CSC automation is the outbound picking area, where manual labor is most common. 

    2. What is your operational scope and volume?

    When assessing technologies, think about the scale of your operations and volume. This ensures you choose automation that fits your requirements. With so many options available, it’s easy to be lured by the latest innovations but be cautious of unnecessary complexity and costs.  

    For CSC operations picking between 4,000-15,000 lines per day, an autonomous mobile robot (AMR) solution can help increase throughput and yield a positive ROI as well as a shorter payback period. In our work with health system CSCs, we have partnered with AMR solution vendors including Locus Robotics, Onward Robotics, Zebra and Six River Systems. 

    CSCs with broader operations and very high throughput requirements could consider more heavily automated solutions, such as automated storage and retrieval systems (ASRS). There are several different options available in this technology category as well. A word of caution – jumping from fully manual operations to heavily automated solutions can be quite an undertaking from an implementation and change management perspective. 

    3. Do you have the necessary SCM foundation? 

    CSC automation technology is only as good as the software running it. Evaluate your supply chain management (SCM) solution, including your warehouse management solution (WMS), to decide if it can support the integration of your chosen automation technology.  

    Because the WMS manages inventory for warehouses and distribution centers, ensuring solid integration between the WMS and automation solutions is critical when evaluating automated technology vendors.  

    Furthermore, as health systems seek to automate item level tracking from receipt of goods in the CSCs through to the point of use (POU), ensure your SCM software can bridge the gap between the warehouse and clinical departments. A holistic and robust SCM solution will facilitate end-to-end item level tracking from the time an item is delivered to the CSC through to when it is used at the patient’s bedside.   

    4. Are your systems and solutions interoperable? 

    In most cases, a single automated technology won’t solve all the challenges that occur in a CSC. As supply chain leaders look at the long-term integration of automated technologies to accommodate operational and volume expansion over time, a significant consideration is the interoperability of their SCM and WMS software with the chosen automation solutions.  

    The key to setting up a flexible and expandable automated technology foundation is to ensure your SCM and WMS software is easily integrated with leading automated technology vendors. Look for companies that have successfully integrated with each other in the healthcare CSC space to pave the way for a smooth transition.  

    5. Can you share data across systems and tech solutions?  

    Transitioning from manual to automated processes in the CSC improves efficiency and provides access to valuable data and insights. Credible insights are reliant on clean and timely data. We have seen good systems fail because of lack of data discipline. 

    Seamless integration between the SCM, WMS and automated technology systems is crucial for efficient data interchange and the generation of actionable insights on CSC performance. 

    Streamlining integration for seamless CSC automation  

    When evaluating warehouse automation technology vendors, it is best practice to connect them with your SCM and WMS solution provider to determine whether these systems can communicate intuitively or if you need technical intervention to ease interoperability and data sharing.

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