A $250m network transformation

Nearly five years into its distribution network optimisation program, Sigma Healthcare has invested more than $230 million in state-of-the-art distribution centres around the country. MHD finds out more.

Sigma Healthcare plays a critical role in the timely supply of medicines throughout Australia. As a signatory to the Federal Government’s Community Service Obligation, Sigma ensures availability and delivery to its network of pharmacy partners, usually within a 24-hour window across the nation.

In addition, the leading healthcare supplier also services hospitals, a thriving 3PL and 4PL division, provides medication dose administration services to patients, and has a rapidly expanding medical consumable and equipment distribution business.

Five years ago, the ASX-listed company embarked on a network optimisation program to drive significant efficiency improvement, enhance customer service levels, create capacity for growth, improve sustainability and provide employees with a better working environment. The new distribution network has been designed to enable a future of significant growth for Sigma.

To lead the project, experienced industry professional Peter Petito joined Sigma as Senior Program Manager in August 2016. The project saw a major investment in automated solutions, including the introduction of automated storage and retrieval systems and sophisticated Goods to Person picking and assembly for despatch.

Tasked with rolling out the entire network optimisation program, which included building new distribution centres in all major capital cities, Peter was quick to engage his peer and previous colleague Bas Schilders, Principal Consultant and Owner of warehouse automation expert consultancy Fuzzy LogX to help with this project.

“On day one I reached out to Bas and his team to ensure we had the right expertise to help guide us through this major project. In the early days, we started by analysing the raw data to identify and justify the solutions that we were potentially investing in. Bas and his team could then break down each component and bring it back down to data and analysis, so for all elements we could establish a cost benefit analysis,” Peter says.

A major priority for Sigma was to not only improve speed to market, but also accuracy. “Ensuring the right product goes to the right customer is absolutely key for us. We have a licence to serve community pharmacies – they are reliant on our ability to equitably, efficiently and accurately deliver so they can better service their patients,” Peter says.

No stranger to the pharmaceutical industry, Bas says that in many ways this industry is one of the most efficient in the world. “It’s probably the only industry where you can sell one unit, and the very next day have that single unit replenished,” he says.

To be able to offer this service, Sigma requires a distribution centre in every major city and according to Bas, it also means that the type of automation required is different to a regular distribution centre.

“This industry operates quite differently to many other automated facilities in that you have an influx of orders all come in at once, so it’s high speed automation. For this reason, every single part of the puzzle needs to operate in unison,” Bas explains.

In such a critical industry, Sigma cannot risk any downtime or breakdowns. “We just simply cannot afford to have the system go down. Because of this we have contingency plans on contingency plans,” Peter says. So accuracy and reliability were two of the most important factors for this project.

A collaborative effort

According to Peter, Bas and his team have been critical to this mammoth network transformation project.

“Bas and his team give me the confidence to know that our systems are performing as they should be. They help do extensive testing to ensure that we know that the solutions we have invested in are performing as they should be,” Peter says.

A project as large as this one is a collaborative effort between multiple parties, Bas says. “The team extends beyond the Fuzzy LogX or Sigma team, it’s the solution vendors, the builders, the developers and more,” he says.

A driving philosophy for Fuzzy Logx is to empower the companies they work with, so that eventually they are less involved and can pass on their expertise to the inhouse time.

“For us, it’s about transferring knowledge and helping Sigma take learnings from one project to the next,” Bas says. Sigma is already reaping the benefits of its investment.

“Despite this year’s challenges, our team have ‘not missed a beat’, delivering near double planned volumes to customers in the early weeks of pandemic panic buying. Throughout the year, everyone has really gone the extra mile to support community pharmacy, hospitals, and aged care customers,” Sigma Healthcare’s Executive General Manager of Operations, Richard Church says.

“Our new DC network has significant benefits; For customers, our automation solution simply delivers a better and more robust service, with improved and more consistent delivery on time (DOT) and delivery in full (DIF), plus improved order accuracy. For our suppliers, it delivers increased distribution network capacity and capabilities, along with improved delivery turnarounds,” Richard concludes.

©2019 All Rights Reserved. MHD Magazine is a registered trademark of Prime Creative Media.