Applying Lean Thinking to Company X Packaging Strategies

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Applying Lean Thinking to Company X Packaging
Strategies
Team Y Advanced Supply Chain Management
Certificate Program, St. Louis University
Consortium for Supply Chain Management Studies
(CSCMS) Team Members Cathy Stewart, Jim
Champion, Rebecca Kennedy, Keith Savage, Dawn
Newman, Flavio Asch, and John Kunz
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Situational Background

• Active Pharmaceutical Ingredient (API) Business
• 100 PTO (package-to-order) configurations
  driven by historical customer quotas
• Bulk-based packaging process involves touches
  by 6 functional groups
• DEA regulated packaging, reporting, and
  reconciliation requirements
• Packaging worker safety issues

• Dosage Business
• Projected significant sales growth through 2009
• Drug Enforcement Administration (DEA) regulated
  storage, handling, and reporting requirements
• Regulated (vault) storage constrained
• Average 6 week wait on back-order fulfillment
• Packaging and Distribution Center in Home Town,
  XX

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Dosage Project Objective and Analysis

• Objective Recommend lean-focused packaging
  strategy
• Analysis
• Conducted Pareto analysis
• Sales forecast to pallet storage requirements
• Storage forecast to storage requirements
• Developed alternatives
• Evaluated against future business forecasts
• Reviewed practicality of required footage
• Provided benefit-supported recommendation

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Dosage Recommendation and Benefits

• Recommendation Implement customer demand-based
  packaging postponement with incremental
  distribution center expansion
• Benefits
• Warehouse utilization reduced 2,500 3,000
  pallet positions (50) (does not include
  expansion)
• Increased product availability and customer
  satisfaction through back order elimination
• From average of 6 weeks to Zero
• Increased inventory velocity

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API Project Objective and Analysis

• Objective Recommend lean-focused packaging
  strategy
• Analysis
• Developed high-level value stream map (charts
  follow)
• Focused on value added versus non-value added
  activities
• Conducted Pareto analysis
• Looked at customer order history
• Number of transactions volume of product
• Developed alternatives to impact business
• Improve response time to customers
• Reduce employee exposure to products (safety)
• Positively impact cash flow
• Provided benefit-supported recommendation

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API Process Flow
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API Recommendation and Benefits

• Recommendation Change to a prepackaging
  configuration
• Benefits
• Reduced packaging cost/labor
• Reduced product loss
• Reduced time spent in reconciliation process
• Reduced need for intermediate storage drums
• Improved customer delivery cycle time from 10
  days to 2
• Reduced Non Value Added process steps

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Current Status of Recommendations

• API Business
• Held preliminary meeting with Bulk Marketing
  Managers who concur with process changes
• Additional meeting to be scheduled to develop
  plan to notify customers of change
• Held preliminary meeting with Manufacturing
  representatives who also concur
• Held meeting with Finance prior to beginning of
  project analysis to validate proposal and savings
  verification
• Will develop mutual timeline with both Marketing
  and Manufacturing for implementation goal for
  implementation is beginning of FY08

• Dosage Business
• Received approval for 500K in pre-engineering
  study
• Presented information to Manufacturing VP and VP
  of Logistics receiving approval for the
  pre-engineering study
• Investigating temporary third party option
  contacts made and discussions on-going
• Validating sales forecast through 2012. Original
  analysis conducted on forecast through 2009

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Next Steps

• Company X colleagues review with appropriate
  upper management
• Establish project team to develop appropriate
  processes and supporting documentation
• Implement appropriate system changes
• Execute change management to achieve results