H.D. Smith Pioneers RFID Implementation in DC

Pharma wholesaler seeks product logistics, supply chain integrity gains from deployment of EPC-compliant system from Matrics in distribution center

Pharma wholesaler seeks product logistics, supply chain integrity gains from deployment of EPC-compliant system from Matrics in distribution center

Springfield, IL — June 18, 2004 — Pharmaceutical wholesaler H.D. Smith Wholesale Drug Company has become the first wholesaler to install an electronic product code (EPC)-compliant radio frequency identification (RFID) system from solution provider Matrics to track controlled substance pharmaceuticals in the company's distribution center.

Founded in 1954, H.D. Smith remains a privately owned and operated company offering a line of branded and generic pharmaceuticals and other health care products. The company's annual revenues are in excess of $1.5 billion.

H.D. Smith has worked with RFID solutions provider Matrics to deploy the RFID system in the company's DC. Matrics teamed with Franwell as the equipment integrator. Franwell not only installed the Matrics RFID system, but also utilized the Edgeware platform from GlobeRanger to accelerate application development.

The application deployed includes shipping and receiving processes, reporting functionality and an initial user interface that enabled H. D. Smith to focus on the internal system data integration and operating procedures, according to Matrics.

Pharmaceuticals are tagged with EPC tags as they move into the vault (caged area in the distribution center). Currently, when an order is shipped, each item's bar code is scanned to assure accuracy. Using RFID technology, the pharmaceuticals are placed in a tote and passed through an RFID portal. All items are identified from their EPC tag, simplifying the shipping process. This is the first step in enabling electronic pedigrees, a history of where the drug has been, throughout the pharmaceutical supply chain.

Robert Kashmer, vice president of information technology for H.D. Smith, said that his company sees benefits in two areas from deploying the solution, namely, product handling/logistics and product/supply chain integrity.

Product handling and logistics includes inventory at a specific bottle serial number level. "We will be able to track a specific bottle of product throughout the building and then to the account," Kashmer explained. "This includes a physical inventory within the distribution center of the products with RFID tags. We are one of the only national pharmaceutical wholesalers that currently do 100 percent outbound scanning in all distribution centers."

Kashmer added that RFID would improve the company's efficiencies by allowing it to RFID scan an entire tote instead of the individual product. And in the product and supply chain integrity area, Kashmer said, "RFID will allow us to access an electronic pedigree for the specific product. This is currently done manually."

According to Liz Churchill, director of life sciences solutions at Matrics, Matrics' one-inch, square tag design is small enough to fit on pharmaceutical bottles and packages, which enables the pharmaceutical market to take full advantage of Matrics' RFID system.

In the second phase of H.D. Smith's implementation, a retail unit in the Springfield, Ill., area will receive the tagged items, adding another point to the electronic pedigree. EPC tagged items are bulk units for pharmacy use only, with the pharmacist filling orders from these units, so no EPC tags will be on consumer products.

Lisa Clowers, vice president of supply chain processes and technology at the Healthcare Distribution Management Association (HDMA), said that the rapid adoption of RFID technology in the healthcare market is a major strategic initiative for HDMA and its members. "By becoming an early adopter of this technology, H.D. Smith has taken a real leadership role in their service area," Clowers said.

For more information on trends relating to RFID, see the following SDCExec.com articles:

For more information on the use of RFID solutions in the supply chain, see "Needle in a Supply Chain Haystack," the Net Best Thing column in the January 2002 issue of iSource Business (now Supply & Demand Chain Executive) magazine.