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RFID Makes Order Out of Chaotic Distribution Chain

Hanmi Pharmaceutical developed an automated picking and shipping system, to ensure hospitals and pharmacies get the medical products they need.
By John Edwards
Jul 14, 2013

For Hanmi Pharmaceutical, South Korea's largest pharmaceutical producer, achieving a high level of shipping precision and accuracy is more than a goal—it's essential. Lives literally depend on Hanmi's ability to continuously maintain an impeccable delivery chain.

Established in 1973, Hanmi has based its reputation on developing and supplying a wide range of high-quality pharmaceutical products. "The firm currently produces more than 500 different types of medical products, including solid formulation, tablet, liquid formulation and parenteral injection, among others," says Jay Jun, manager of strategy and planning at the company's Hanmi IT division.

RFID-tagged items are placed in totes that move along a conveyor through a shipment verifier—an RFID tunnel reader. Hanmi Pharmaceutical’s ordering and shipment process accuracy has reached 99.9 percent. (Photo: Hanmi Pharmaceutical)

But distributing all those products has been a challenge. Unlike the U.S. pharmaceutical market, which is dominated by three major distributors, the South Korean pharmaceutical market is splintered among hundreds of small-scale wholesalers. Many of these firms lack the ability to fully track and manage inventory shipped to local hospitals and pharmacies. In addition, local customers often bypass distributors and purchase their drugs directly from the manufacturer. Hanmi ships 60 percent of its pharmaceuticals directly to hospitals and pharmacies.

Hanmi wanted to lower its erroneous shipment rate, as well as raise the accuracy and speed of its production processes. The firm also wanted to gain greater insight into a fragmented and sometimes chaotic distribution environment. In 2011, Hanmi deployed a sophisticated RFID-based automated picking and shipping system, to help the company keep pace with customer demand.

Today, Hanmi's 1,000 regional sales representatives conduct weekly onsite inventory checks with RFID ATiD 870 handheld readers. The inventory data from each customer site is transmitted to Hanmi headquarters, so the drugmaker can assess inventory levels of specific products and detect any expired pharmaceuticals. The system also enables Hanmi to create reliable production forecasts, keep customers adequately supplied, develop a more efficient return and recall process, and detect any abnormal or malicious distribution activities by drug wholesalers.

Getting Started
Before Hanmi's representatives could begin using handheld readers to inventory customers' stockrooms, the company had to develop an effective and affordable way to RFID-tag its entire product line at the item level. Hanmi's first step toward creating a comprehensive RFID environment was to evaluate the practicality and cost of building such a system and then integrating the technology into its existing production and distribution chain operations. "We started exploring the feasibility and benefit of RFID in 2005," Jun says.

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