Back in 2013, Medline worked with Swisslog to become the first company in the United States to implement a robotic goods-to-person solution from AutoStore. The original site was a 600,000-square-foot distribution center north of Chicago in Libertyville, Ill. That first implementation, featured in the June 2015 issue of Modern, sported 43 bots in a relatively small area plus four goods-to-person workstations. The bots managed 27,570 totes across 37,750 storage locations with throughput of up to 12,500 lines per day.
It was a bold move at the time, but even then, Medline was embracing high levels of automation technologies across its network, including numerous sortation technologies.
Fast forward and one of the country’s largest manufacturers and distributors of medical and surgical supplies is using 1,463 AutoStore bots across 18 sites, including 135 bots in a new facility in nearby Grayslake on a grid that measures 233 x 82 feet. The bots, soon to expand with the addition of another 20, serve 12 workstations, a number that will soon expand to 13. The grid is at least four times the size of that original grid, and is fully temperature controlled.
The 1.4-million-square-foot, state-of-the-art DC was built as a replacement for the Libertyville facility to accommodate Medline’s continued, steady growth. In some respects, it is a cookie cutter building: Like Gap Inc. and IKEA, Medline uses successful building designs for its new facilities.
At the same time, each iteration builds on the lessons learned in those other facilities. That’s the case in Grayslake. A $140 million investment, it is referred to internally as the fourth-generation design and incorporates the lessons learned after nearly nine years working with AutoStore technology.
The LEED-certified facility was designed to be energy efficient and employee friendly to help meet goals around sustainability and employee retention.
“This is our flagship facility,” notes Steve Miller, the executive vice president of supply chain who joined Medline from Walmart in late spring 2022. “But it’s also part of our broader network.” He adds that since 2018, Medline has invested $2 billion across the network to provide superior customer service, with another $400 million in planned investments for the near future.
Much has been written about the labor shortage on the shop floor. That battle is not lost on Medline—it’s no accident that a recent tour of the facility began in the break room, which in appearance and comfort level rivaled the lunchroom in any corporate office. “We’ve invested heavily in the employee experience because we want to retain our team,” says Brian Bevers, senior vice president of operations. “Our break rooms are well lit. They feature gaming stations, a separate room with recliners where associates can relax and cafes if they forget their lunches.” To improve work-life balance, Medline is offering full- and part-time schedules, along with flex schedules that team members can sign up for on an app on their phones. The app lists the positions and times available, and if an associate is trained for that function, they can sign up for the shift that meets their needs. Finally, Medline is working with Veryable, an Uber-like platform for on-demand industrial labor. “We bring in and train a Veryable team member who can then use the app and sign up for work as well,” says Bevers. Gig labor is especially useful at busy periods, like the first of the month when orders are heaviest due to Medicare and Medicaid reimbursements. On a broader level, Medline has a deep commitment to inclusivity, says Steve Miller, the executive vice president of supply chain. “Team members have a lot of choices about where they want to work,” Miller says. “While we have a lot of interesting technology, we have to be sure that people feel valued and included.”
With 2021 sales of $20.2 billion, Medline Industries LP was ranked No. 16 on the Forbes list of largest privately held companies in America. A global manufacturer and distributor of medical supplies and clinical solutions, Medline was founded in 1966 by Jim and Jon Mills. At the time, they had one small warehouse with one loading dock to distribute gowns, scrubs and supplies to the healthcare industry. The company’s roots, however, date back to 1910 when A.L. Mills, the great grandfather of the current management team, began sewing surgeon gowns and nurse uniforms for Chicago-area hospitals.
In the multi-level pick area, full cases are picked from pallets to a belt conveyor. Individual items to complete orders are picked to totes from shelving (not shown).
Although it was acquired by private equity for $34 billion in October 2021, the company is still managed by the fourth generation of the Mills family. “We enjoy the benefit of being one of the largest medical suppliers in the country, but with the agility and speed of a family business,” says Miller.
With headquarters in Northfield, Ill., the company has operations in 125 countries and territories. Medline’s North American supply chain network includes a total of more than 40 distribution centers totaling more than 28 million square feet and a fleet of more than 1,500 trucks, including 200 parcel vans. Nearly 80% of Medline’s North American volume is delivered by its own fleet.
At least seven of the distribution centers have earned LEED certification. Along with order fulfillment centers, Medline also operates crossdock facilities near the ports to receive imported product and then redistribute it across the network. All told, a little more than 10,000 team members work in logistics, including 8,500 working in the DCs and 1,600 private fleet drivers.
In addition to distributing products from its DCs, Medline is using the network to launch new business models, such as offering third-party logistics (3PL) services to manage customer-owned inventory and then deliver it back to the customer. Currently, more than 70 customers are using Medline as a 3PL.
While supply shortages have been garnering headlines over the last two years, Medline recently invested an additional $500 million in buffer inventory, bringing the total in-stock inventory to $4 billion.
“When it looked as if there might be a rail strike, we were able to send out a communication to our customers that we had the inventory and the fleet to take care of them,” notes Brian Bevers, senior vice president of operations. That investment is spread across a portfolio of more than 300,000 unique medical products, 65,000 of which are manufactured by Medline.
As an early adopter of automation, Medline has in recent years been focused on technologies that maximize the cube of the building and therefore the sales dollars per square foot. “It’s not unrealistic that 10 years from now we’ll have doubled what we’re doing today,” says Bevers. AutoStore, as well as other types of automated storage and retrieval systems, fits that strategy.
According to Kate Slattery, vice president of real estate and construction, planning for the new facility began in 2018. “We had exceeded our ability to grow the business out of Libertyville,” Slattery says. In 2019, Medline closed on the purchase of a site in Grayslake. Construction continued through the pandemic in 2020. “We were deemed an essential business and were able to maintain our schedule,” Slattery notes.
Orders are closed and readied for shipment in the packing area (right). They are then delivered to the shipping area where they are palletized and stretchwrapped, or put on roller carts for customers.
After completion of construction, it took another nine months to install the racking, conveyor and automation. Medline began receiving product in April 2021 and by August 2021, it was shipping orders to customers.
When it came to the design of the building, Schwartz notes that Medline aims to create a common look and feel to the building design for team members. In part that’s because each center services the entire continuum of health care. Differences, such as whether a building is an AutoStore facility, are driven by the amount of throughput required from a facility.
In that sense, while the new building is more than twice the size of the Libertyville DC, and the AutoStore section is larger still, it’s the scale that’s different rather than the technologies. Schwartz notes that the innovations noted earlier are the result of so many years of working with the system.
“The most important learnings of each install continue to shape our designs; most importantly, we have developed a great, capable maintenance, engineering and operations staff,” Schwartz says. “Having that subject matter expertise from working with AutoStore for nearly nine years and across more than 1,400 bots has been important.” He adds that the Medline team is so comfortable with the system that they can estimate how many robots they’ll need before they ask for a proposal.
Schwartz and Bevers say that Medline continues to investigate new types of automation for the future. The embrace of automation is driven by two factors: The first is the goal of delivering the perfect order every time; the second is labor scarcity.
“We have great metrics, but to get to perfection, we have to invest in systems,” says Schwartz. “And, the combination of an already scarce labor market and an increase in our e-commerce business means that we have to do anything we can to make picking and packing easier, faster and better.”
As part of that $2 billion investment in network capabilities, the company continues to pilot and roll out new solutions. When and if they prove themselves, they become part of the overall solution available to the network of more than 40 facilities. Even if a technology is not quite ready for a full production environment, Medline is tailoring the solution to a best fit environment to be ready to put them to use as they improve.
For example, in one building, Medline worked with Swisslog to install a robotic piece-picking arm at an AutoStore workstation. AutoStore delivers the tote and the robotic arm picks from the donor tote to order totes. “The robotic arm is not yet as fast as a team member, but can support our team as we use it for the easier, more repetitive SKUs,” says Schwartz.
At another facility, order selectors are picking from Swisslog’s CarryPick, a robot that delivers a shelving unit of inventory to a pick station, into a Tompkins Robotics tSort, which sorts the items to packing locations.
Down the road, the Medline team has plans to explore automated packing technologies and unit load automated storage and retrieval technologies.
In addition to the innovations with AutoStore, the Grayslake facility is using two autonomous fork trucks from Vecna: One vehicle shuttles pallets from receiving to a drop zone for long distance pallet movements in the vast distribution center; the other is used to transport empty totes. As the technology improves, Medline expects to pilot autonomous reach trucks, especially for narrow aisle storage.
While it may be some time before those technologies are fully deployed across Medline’s network, they reflect Medline’s commitment to continuous improvement. “The challenges of the last two years have ultimately had a positive impact on our strategy,” says Slattery. “We are in the unique position of having incredible sustained growth, and that forces us to get ahead of the business needs in both our capacity and capabilities. Our supply chain is capable of serving customers better than ever.”
That is echoed by Miller. “Our No. 1 goal is taking care of our customers,” he says. “As we build our capabilities and grow, we’re positioned to do that.”