The Next Frontier of Automation

So many links of the supply chain are invisible to each other: The distributor may never see the raw material in a factory, the manufacturer never sees a truck leaving a distributor’s warehouse, and the nurse never sees either.

But if you walk into one of Medline’s distribution centers with an AutoStore installation, there is no missing it. From above, the system resembles a giant chessboard in motion, with robots moving continuously across a grid of stacked inventory bins, retrieving bins of products and delivering them directly to employee workstations. It’s a striking visual, but the real value is in the way automation helps customers.

A story of service

It’s easy to see automation as a logistics or warehouse story, but really it’s a story of service. The healthcare supply chain is continually evolving, and getting products in the right unit of measure to healthcare providers is critical to their care of patients. Warehouse automation, therefore, has stopped being a differentiator and started being an expectation.

McKinsey estimates companies are on track to devote roughly a quarter of capital spending to automation, with logistics and fulfillment leading every other sector. Gartner projects that by 2030, half of all new warehouses in developed markets will be designed as robot-centric facilities.

Medline, in a quest to be a supply chain leader across industries, has been investing in automation for years. Medline’s first AutoStore installation came in 2013, and earlier this year, the company announced the 24th installation going into a distribution center in Aurora, Colorado.

For healthcare providers, the stakes sit one link further down the chain. Supply chain costs represent roughly 30% of a hospital’s total operating expenses, and supply expenses per calendar day rose 9% year over year in Kaufman Hall’s national sample of more than 1,300 hospitals. Labor remains the single largest category of hospital spending, at 56% of total costs. Every hour a materials manager spends reconciling a mis-picked order or breaking down corrugate is an hour that doesn’t come back.

Which raises a question worth asking of any distribution partner: what is all that automation actually for?

A philosophy of resilience

At Medline, the person responsible for answering that question is Vice President of Engineering Daniel Schwartz, who oversees automation across the operations organization. His framing is less about technology than it is about keeping up with the pace of healthcare.

“Our AutoStore investments are largely about keeping up with the growth we continue to see, so we can maintain our ability to deliver next-day to the majority of customers,” Schwartz says. “We’re pushing more and more volume through our distribution. Getting all of that done inside the same service windows means getting the customers what they need when they need it.”

AutoStore is a goods-to-person system: the product travels to the picker rather than the other way around. “Instead of a person walking miles a day, they’re at a station with an ergonomic mat and a design that’s built around them,” Schwartz says. “That helps with their safety, and also with helping the picking be as efficient as possible.”

Within a single distribution center, automation is horsepower in reserve. “If we experience technical downtime in our WMS or ERP, we have the capacity to move a great deal of volume in a short period of time,” Schwartz says.

Built around the way healthcare actually orders

As the needs of healthcare providers have changed, automation has stepped in to help deliver. One statistic explains Medline’s automation strategy better than any spec sheet: roughly 80% of Medline’s order lines are less than a full case.

That’s why AutoStore became the largest investment area. “Our AutoStore deployments are designed around our LUM delivery,” Schwartz says. Providers moving from bulk to low unit of measure are asking for supplies to arrive in the quantities their clinical areas actually consume. High-density goods-to-person picking is what makes that sustainable at scale.

The system ties directly into print-and-apply technology.

“The label goes on the front of the tote and the container contents insert goes in, which makes it much easier to process on the receiving end,” Schwartz says. That means put-away-ready product arriving at the dock.

Bolted onto that backbone is Ranpak’s right-sizing technology, which measures contents and cuts the carton to fit. It may not be the most glamorous benefit, but a customer not having to break down piles of corrugate and packaging is both a time- and cost-saving measure.

“Beyond a right-sized box, there are no air pillows—so customers aren’t dealing with recycling them or throwing them away,” Schwartz says. Network-wide, the deployment let Medline cut its carton assortment from 18 SKUs to four while handling more than 10,000 cartons a day.

Where an ordering pattern doesn’t fit the standard model, Medline builds something that does. Pick Pack Pro™ combines Tompkins Robotics tSort units, Ranpak packing, Trew conveyance and Medline-developed batching software into a system purpose-built for health plan benefit orders, which arrive in enormous quarterly surges across a narrow band of SKUs.

“We brought together technologies we had in other places and built a genuinely healthcare-focused automation solution,” Schwartz says. The first deployment, in Montgomery, New York, batches more than 1,000 orders at a time.

What’s next: automating the pallet

The next frontier in automation is full cases, pallets and the dock itself. Medline has announced an agreement with Symbotic to deploy AI-enabled robotics that depalletize inbound pallets, store and retrieve items, and build outbound pallets mapped to the receiving site’s layout—making Medline the first healthcare company to deploy the technology, with a 2027 pilot planned at one of its 45 U.S. distribution centers. Pallets are built to precise rules, heavier items on the bottom and stacks under six feet, which makes them safer to load and safer to unload.

“It’s automating the case operation and the dock at the same time,” Schwartz says. “It’s a significant project, and one the team is genuinely excited about.”

Ask Schwartz what excites him and he doesn’t reach for the technology. He reaches for the receiving dock. “It’s rewarding to stand on a customer’s receiving dock and see how it’s actually used — the totes, the labels, all of it doing what it was designed to do,” he says. “Seeing it end to end is the best part.”

Simplicity is the mechanism that connects the grid to the patient.

“Anything we can do to simplify operations pays off in multiple ways,” he says. “Simplifying lets us hold a higher standard of quality and take on more customization—and both of those go straight to taking care of our customers.”