Built for Speed

AmerisourceBergen is a vital link in the healthcare delivery system, connecting global manufacturers with hospitals, drugstores and neighborhood pharmacies. In a just-in-time world, that means nearly every AmerisourceBergen customer can place an order on Tuesday night and have the product on the shelf by Wednesday afternoon.

So, when AmerisourceBergen embarked on an ambitious expansion plan to keep up with demand, they turned to FM Global. A trusted partner for more than 15 years, FM Global has helped to ensure the products not only keep moving, but are safe from fires, earthquakes and hurricanes.

The infrastructure needed to make that happen is truly remarkable. AmerisourceBergen never has more than a few days' supply of any one product and its customers operate with similar amounts of inventory. Every day, thousands of products move from manufacturer, through the distribution center, to the customer. And it's all nearly invisible to the consumer.

AmerisourceBergen has invested millions of U.S. dollars in state-of-the-art distribution centers and high-tech retrieval systems to keep the product flowing. Its latest investment included an aggressive plan to build seven new distribution centers in just 24 months.

When AmerisourceBergen put its team together, it not only included fire protection and construction consultants, but FM Global as well.

"We've been heavily involved from the beginning," explains Bob Lee, FM Global assistant vice president and account manager. "The company is very loss prevention minded and with any new construction, we are involved from the very early stages."

Resiliency a necessity
AmerisourceBergen's commitment to loss prevention is tied to its importance to patients around the world. AmerisourceBergen supplies more than 15,000 retail locations and 50,000 healthcare facilities in more than 50 countries. It supports 1.5 million product lines and is the largest supplier of oncology products, specialty pharmaceuticals and vaccines.

As a result, AmerisourceBergen puts a high priority on minimizing exposure and mitigating physical risk at all its facilities.

"When we build our distribution centers, we try to build them so they never go offline and if something does happen, we have the right partners in place to get them operational as soon as possible," explains Sharon Van Sant, AmerisourceBergen director of risk management. "That's why we partner with FM Global."

Protecting AmerisourceBergen's distribution centers isn't simple. Its facilities contain high-value and often delicate products that need to be stored under specific conditions. The company uses complex automation, is in almost continuous operation, and interacts with a host of inbound and outbound transportation partners.

Ignitable liquids, aerosols—fire, wind, flood
The facilities hold tens of thousands of individual products, including ignitable liquids, aerosols and heavily regulated pharmaceuticals. Add to that an array of conveyor belts, plastic totes, trash conveyors, cold storage, manual pick areas and automatic retrieval systems and you get a potpourri of hazards in each facility.

"Ninety percent of this we've dealt with before. Vaults, cages, refrigerators. And over the years, we've followed the guidance from FM Global," says John Shook, AmerisourceBergen vice president, engineering. "We just want to make sure we are doing what is necessary to protect the commodity."

The mix of hazards is only part of the challenge. Depending on the location, the distribution centers also had to be engineered to protect against tornadoes, hurricanes, floods and in some cases, earth-
quakes. AmerisourceBergen's aggressive construction schedule also meant that everything had to be reviewed quickly. FM Global joined the project team in March 2015, and AmerisourceBergen broke ground on the first facility in Olive Branch, Mississippi, USA, later that year.

"FM Global brings a lot of 'street knowledge' about how to manage risk," says Jon Szekely, AmerisourceBergen's project director. "The earlier they are involved, the better. They really help us understand what our exposure is."

Consistency across the company
FM Global worked closely with the AmerisourceBergen engineers, the construction consultant and the entire team to develop standards for Olive Branch, which then served as a model for all the other distribution centers. While there were small changes at each location to comply with local standards, the layout and design are almost identical.

"Consistency was very important to them," says Greg Novatnack, FM Global account engineer. "The challenge was to get everyone to agree. For example, our ignitable liquids standard is not short and can be complex. So once we developed a set of specifications for Olive Branch, which included all our recommendations, we used those throughout the process."

The benefits of consistency across all facilities was twofold. By adopting one set of plans, AmerisourceBergen could move quickly, building out several facilities simultaneously. It also meant a universal set of maintenance, safety and operational procedures, which further reduced costs and risk.

"I want things done right the first time, so we don't have to go back and dramatically change things later," says Jim Adkins, AmerisourceBergen senior director, engineering. "You can't eliminate errors, but you can greatly reduce them. We like having FM Global involved because they give us a second set of eyes and maybe we catch something before it's too late."

"Having FM Global is really beneficial with local officials," he continues. "They might not have a lot of experience with our industry, but if they see we're using FM Global's standards, it helps us get through the process a lot quicker."

Following FM Global standards also has a tangible financial benefit. The inventory at the facilities is insured separately and AmerisourceBergen receives a credit from their other carrier for following FM Global guidelines.

"We are very mindful of costs and we want to minimize our insurance expense by being the best engineered risk," Hope adds. "We want to do all the things FM Global recommends and do it as cost effectively and efficiently as possible. I think the better companies align their entire business this way and don't see insurance as something off to the side. Risk management is integrated into our entire business."

"We want to minimize our insurance expense by being the best engineered risk."

Woody Hope, Vice President of Risk Management, AmerisourceBergen

State-of-the-art facilities
In Whitestown, Indiana, USA, about 20 miles (32 kilometers) outside of Indianapolis, the 5 o'clock shift is about to start. AmerisourceBergen's warehouse staff get their instructions, and gray plastic totes line up for "tote induction." The bar code on each tote is matched with a customer order, and the tote begins its journey through the 375,000-square-foot (34,800-square-meter) warehouse.

"We've only been open a few months, so we're filling a few thousand orders," explains Matt Barthuly, director of operations in Whitestown. "When we're at capacity, we can handle 10 times that in a night."

Each tote is routed to where the product is housed. High-volume items are dropped onto a conveyor and pushed into the totes using a proprietary picking system, while other totes visit the manual picking area or the locked-down room, known as the bunker. Eventually, they all end up at the loading docks, where they are packed into trucks and shipped as far as 400 miles (644 kilometers) away. Individual orders are then transferred to end-mile delivery drivers, who complete the delivery to hospitals, pharmacies and drugstores.

"There are a lot of little things to consider," Novatnack says. "There's Styrofoam, ignitable liquids and aerosols. In the automated retrieval system, everything is densely packed and you have these totes running all around the structure, which are basically open-top boxes that can collect water. There are holes in them, but the fear is that in the event of a fire, the water won't be able to get to where it needs to go. So the placement of the sprinklers is key."

"At the end of the day, we're all trying to do the right thing," adds Adkins. "And if FM Global has a recommendation that is really not feasible for us, they'll give us some options. They'll show us Option B or maybe even Option C. They are very willing to work with us."

AmerisourceBergen's commitment to safety is evident everywhere. Overhead sprinklers crisscross their way across the massive ceiling. Per FM Global standards, sprinklers are also under the trash conveyors and even under the stairs. Ignitable liquids, which surprisingly includes things like hand sanitizer and nail polish remover, are stored separate from the other commodities. Yellow bumpers surround the building columns to cushion any bumps from passing forklifts, and forklift operators are all wearing mandatory safety harnesses.

"From the executive team on down, we want to make sure our associates have a comfortable, safe place to work," says Shook. "We want to make sure the value of the inventory is maintained. There is definitely a pride of ownership. You can see the investments we've made to protect the facilities."