AAH Pharmaceuticals is one of the big three medicines warehouse companies. It’s one of the “independent” business units in the Hallo Healthcare Group, the holding company created by the Aurelius Group, its private equity owners.
C+D was invited on a tour of its Ruislip warehouse in west London last week (May 8). We were guided by AAH’s chief operating officer John Clark and its head of operations (South) Riadh Aouichaoui and accompanied by Healthcare Distribution Association (HDA) executive director Martin Sawer and the sector lobby group’s regulatory and development director John Preston.
AAH’s Ruislip warehouse serves the western half of London, extending north to Luton, south to Guildford, and west to Oxford - a population of roughly five million people.
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The warehouse sits in between manufacturers and the sites where medicine is dispensed. The good running of the UK’s medicines warehouses is vital for community pharmacies, hospitals, and dispensing doctors and the patients they serve.
For such a large operation, its warehouse is deceptively small - just 6,000 square metres. But with its intricate arrangement of hundreds of metres of conveyor belts that traverse two floors, all served by automated A-Frames, it manages to fill 11,500 orders every day.
Ruislip employs over 200 people as drivers and warehouse pickers, among other roles. Orders leave the warehouse in AAH’s 110 vans across two delivery shifts, in the morning and the afternoon.
'Sweat the space’
AAH currently operates 13 warehouses across the UK, having closed three sites in recent years. Its Stoke operation is also set to close as part of its new owner’s “rationalisation” process.
The warehouse division used to service Lloydspharmacy, but since the closure of what was once the second largest community pharmacy chain in the UK, its volumes have dropped by roughly 20%.
But with Clark’s operational nous, developed in a 25-year-long career at the likes of Sainsbury’s, Argos, DHL and Evri, has allowed the company to see 10% increased efficiency.
Not each of its country-wide warehouses will carry all the required stock. Just Warrington and Birmingham’s warehouses carry the full range of medicines. Elsewhere, stocks are distributed across its warehouses.
All the warehouses will have the top 10% of medicines, but the slower moving lines will be distributed across warehouses and transferred as required. Ruislip itself holds 8,900 items at a time.
Of all AAH’s warehouses, Ruislip distributes the most items by value. Until the closure of Lloydspharmacy, it also distributed the most by volume.
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The cost of London land means that every metre is more precious than elsewhere in the UK, and so Clark said that AAH must “sweat the space”. This means the warehouse relies on sophisticated software and automation.
Each day the warehouse will process huge numbers of orders from intermediaries, email, online portals, and, still, from hospital fax machines.
'Efficiency is the route to profitability’
Medicines are received from manufacturers or from other storage facilities at the warehouse. Trucks containing boxes of medicine back into ports, where pallet trucks drive in and unload the medicines.
These boxes are moved from the receiving area to a checking area, where workers inspect the contents of the boxes. These workers, armed with a digital device on their wrist, will confirm a variety of things; counting the contents, checking for damage and assessing whether the medicines are authentic.
Once checked, each box is assigned a “licence plate”, which is logged on the warehouse’s system. This will allow workers to identify where the medicine should be placed in the high shelves and long corridors of the warehouse. If a medicine requires cold storage, it will be fast-tracked from here.
The guiding mantra is that stock should go to the last place it needs to go, the first time it is handled.
The warehouse’s two A-Frames are stocked full of medicine boxes along both sides of the machine. These two automation devices run fifty-odd metres down the factory floor, one side higher than the other, more “h” than “a”.
Thousands of items line each side of the frame, arranged for efficiency. The absolute most popular items occupy the slots nearest the outlet - forxiga, omeprazole and the like.
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Elsewhere on the frame, higher turnover medicines are interspersed with relatively slower movers so as not to crowd the belt, and a padlocked portion of an A-Frame is reserved for the “lifestyle” drugs, like viagra or cialis.
The A-Frames are rearranged in the evening and will change its stock and the order medicines are placed according to emerging demand or seasonality. This reordering is informed by huge swathes of data. For the warehouse, efficiency is the route to profitability.
As an order comes in, items are pulled onto the central conveyor belt, and land in a blue plastic box waiting on the conveyor belt, called a tote.
Each tote will collect one order, travelling around the warehouse gathering the medicines that have been requested. The tote is assigned a printed invoice and weighed at the start and the end of its journey, to check for discrepancies.
Around 65% of the medicines in the warehouse are processed using the A-frames, and the remainder are picked from the shelves by the warehouse workers. A tote will travel along the conveyor belt network until it arrives in the region where the medicine is stored, where it will be directed off to have the next part of the order added to its load.
Once a worker transfers the ordered stock into the tote, they will push the box back onto the running belt, and it will resume its journey.
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Once every item has been gathered, the box will have a final check, before its order slip is added, a lid placed on top by a machine, and a zip tie wrapped around it to seal its contents.
The finished order moves to a staging area, where it is placed in metal racks, arranged by delivery route, to be collected by a member of AAH’s driving team.
The drivers traverse their routes in unmarked white vans, moving from pharmacy to hospital dropping off vital medicines. Their routes are optimised for the heavy London traffic, their vans closely monitored for changes in temperature. Soon, AAH will test ten electric vehicles.
Control
Not every medicine will land in a tote.
The warehouse boasts a huge fridge room, where the temperature-sensitive medicines are held. In its cold storage room, workers wear fleeces and gloves, wrapped up against the 4C degree cold. From here, drivers will collect the medicines and transfer them to the mini fridge in their delivery van.
The warehouse also has a large strong room to hold controlled drugs. Entry to this room is strictly limited, with employees that work in the room registered with the Home Office.
Here, drivers collect the controlled drugs from a small window, and take the order to their van’s safe, which sits on top of its fridge. The process is very secure.
The way automation combines with humans is seamless. It’s a dynamic and impressive operation that embraces the future. It’s a modern marvel. Yet old fashioned operational priorities remain. The warehouse is driven by volume. Thin margins are bolstered by small gains in efficiency.
It also remains vulnerable to supply shocks. And demand maintains a relentless pace. But the ordered frenzy inside AA Ruislip is making an essential contribution to the massive achievements of community pharmacy. It might be deceptively small. But it’s a powerhouse.
