Korea’s largest pharmaceutical company, Hanmi Pharmaceutical, is testing a radio frequency identification system at five of its wholesalers, as well as at five retailer locations throughout the nation. Since the company’s Hanmi IT division installed the technology two years ago at two factories, the drug manufacturer has tracked 60 million product units annually, from packaging to picking and shipping, thereby enabling an automated process from an order’s receipt to the shipment of a packed carton to a wholesaler.
This year, however, the system provided an additional benefit, the firm reports. When the Korean government identified several products requiring a 30 percent price reduction, Hanmi was able to quickly deploy staff members equipped with handheld RFID readers, who located the unsold goods within all of the stores and warehouses, and then addressed price changes accordingly.
Every year, Hanmi manufactures 60 million product units (such as individual bottles or boxes of pills) within 500 different product categories, at its two factories in Korea. The company established its Hanmi IT division in 2005, and began investigating RFID technology around the same time, undertaking its first pilot in 2006. With government funding, the firm began installing RFID on its production line in 2009. A growing number of Korean pharmaceutical companies are implementing RFID systems in order to address pending government mandates regarding the need to employ RFID tags or bar codes to track all drugs by 2013. The mandate is intended to provide visibility into the movements of medications through what is a complex supply chain with multiple distribution models and pricing policies. However, says Jay Jun, Hanmi IT’s strategy and planning manager, Hanmi was ahead of that mandate, having put in place an RFID system in 2010 so that it could track every item shipped from either of its factories.
In conjunction with RFID, Hanmi was able to implement an automated picking system (APS), using EPC Gen 2 passive ultrahigh-frequency (UHF) RFID tags and readers to identify products, and to then collect, box and ship those items without a need for human intervention. The only manual portion of the process, in fact, is an inspection carried out by Hanmi’s staff as each box is packed for an order.
After testing various tags, the company opted to deploy LS Industrial Systems‘ (LSIS) Satellite and Linear tags, made with Impinj Monza chips. Each tag is encoded with a serial number, the first three digits of which indicate the country (Korea); the following four digits identify the company (Hanmi), while the remaining digits signify the product code. A corresponding bar-coded label is also printed with the same serial number. Hanmi installed 50 fixed readers along the conveyors at both manufacturing facilities, covering a total of 35 factory lines.
Hanmi developed its own middleware (which it dubbed Edge Plus) to receive data read from the tags, as well as software (known as UniA Plus) to manage that data and provide historical information and functions, such as alerts for expiration data management or other issues. Data is first collected using the company’s local Edge Plus middleware, and is then batch-transferred to the UniA Plus software. The information is stored and managed by On-site Applicable Smart Information Service (OASIS) software, where it could, in the future, be shared with other members of the supply chain; that function, however, is not yet in place.
The LSIS Gen 2 passive UHF tags are mechanically attached directly to bottles, or inside cardboard cartons, as each product is packaged. They then pass down a conveyor through an LSIS RFID tunnel reader containing an Impinj Guardrail antenna. If the system fails to read a product’s tag, that item is mechanically knocked or blown out of the assembly line. The items with unread tags are then collected and rerouted through the tunnel reader once more; in the event that a tag is found not to be reading properly, that item is set aside for retagging.
When a wholesaler places an order through the company’s automated central order system network, that request is routed to one of Hanmi’s factories. The automated picking system then selects the items required, dropping them onto a conveyor.
The selected goods pass through a tunnel reader, known as the Item Verifier (the tunnel incorporates LSIS’ Xcode UHF High Performance Reader, made with Impinj’s Speedway reader chip), which interrogates the tags at a rate of up to 150 to 200 tags per minute, and forwards the collected data to the software in order to confirm that the order is being properly filled. The system automatically drops the items into a plastic tote, which also has an RFID tag attached to it, the ID number of which is read and stored in the system for that specific order. The loaded container then passes through a second RFID reader verification station on the conveyor. In the event that an error is identified during the previous step—for example, a missing or incorrect item—the conveyor will route the tote to an inspection line. If the Item Verifier determines that the container is packed correctly, the tote is moved directly to the shipping line destined for a particular wholesaler.
Hanmi’s inspection staff manually removes the goods from the tote and places them into a shipping box, visually inspecting the order simultaneously in order to insure that there are no damaged packages or erroneous items; any missing or broken products are then replaced. The box continues down a conveyor, where an RFID tag is automatically applied. The tag’s ID number is read and linked to the products’ ID numbers, as well as the shipping order, after which the box is then loaded onto a truck destined for the wholesaler.
At five wholesale locations, Hanmi is testing RFID readers to capture ID numbers from tags as they arrive and are shipped out. In this case, desktop LSIS readers are utilized. Wholesaler employees, upon receiving a box filled with a shipment of tagged pharmaceuticals, place it on the interrogator, select an option for receiving or shipping on a touch screen, and confirm the product information based on the reads of each item’s tag. When the box is shipped to a pharmacy, the same reader is used.
At five pharmacies, Hanmi intends to provide smart shelves to test how the tags can be employed to track on-shelf inventory prior to sale. That installation is still underway, the company reports, but the retailers are already equipped with LSIS handheld readers that use Impinj Indy reader chips to periodically conduct inventory counts of their stock. The read data is then received by Hanmi’s software via a Wi-Fi connection.
Occasionally, the Korean government institutes mandatory price reductions on pharmaceuticals. For most companies, this presents a daunting challenge, requiring that they immediately change the pricing for any goods unsold anywhere within the supply chain, or at retail locations, and adjust invoicing accordingly. “The majority of pharmaceutical companies now face adversity to figure out how many products are marketed in the nation,” Jun states. Without an RFID system in place, a drug supplier must manually locate and count each item at thousands of pharmacies and wholesale locations. For Hanmi, this process was made much simpler due to the use of RFID. The company assigned approximately 400 staff members earlier this year throughout the pharmacies, as well as to any wholesale locations not equipped with RFID readers, who used handhelds to perform an inventory count to determine how many of each specific product facing price reduction were on the shelves. The firm could then use that data to adjust invoicing for those particular goods. “It took us less than five days to get a total count at more than 20,000 pharmacies,” he says.
What’s more, the system has reduced the rate of shipment errors at Hanmi’s two factories, while the use of RFID at retailers has decreased the incidence of out-of-stocks.
The next step for Hanmi, Jun says, is to share the RFID read data with members of its supply chain. As more supply chain members express an interest in deploying radio frequency identification, or data related to RFID reads, he says, “it has become necessary to introduce an intermediate entity for information sharing among the related players.” Hanmi intends to provide a common standard platform and user interface enabling end users to communicate with the service.