Lean Project Recommendation - PowerPoint

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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

Team Members: Cathy Stewart, Jim Champion, Rebecca Kennedy, Keith
         Savage, Dawn Newman, Flavio Asch, and John Kunz
               Situational Background
•    Dosage Business                             •  Active Pharmaceutical Ingredient (API) Business
    – Projected significant sales growth           – 100+ PTO (package-to-order) configurations
      through 2009                                   driven by historical customer “quotas”
    – Drug Enforcement Administration (DEA)        – Bulk-based packaging process involves
      regulated storage, handling, and reporting     “touches” by 6 functional groups
      requirements                                 – DEA regulated packaging, reporting, and
    – Regulated (vault) storage constrained          reconciliation requirements
    – Average 6 week wait on back-order            – Packaging worker safety issues
    – Packaging and Distribution Center in
      Home Town, XX
              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
                       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
  – Increased product availability and customer satisfaction through back order elimination
      • From average of 6 weeks to Zero
  – Increased inventory velocity
                                 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
                                SIPOC – API business process

 Supplier       Input                        Process                    Output            Customer

                                    Customer Places Order

US Government    Customer PO         Allocate Bulk Material to Order                         Drug
                                                                        Fulfilled Order
 Customers       Bulk Product                                                             Agency (DEA)
                  (produced)      Set Packaging Job in System            Completed
 Mallinckrodt                                                            Documenta-
Manufacturing     Packaged                                                  tion
                 Components      Allocate Resources for Packaging Ops                        Business
  Packaging                         (people to schedule room and do        Systems
  Suppliers     US Government                   scooping)                  Fulfilled/
                 Forms/Regs                                               Fulfillment
   “Quota                        Subdivide based on order (packaging                       Formulators
 Authorizers”      Quota                     operations)                 Completed
                Authorization                                              System
                                   Inventory Mgmt (barcode, serial      Transactions
                                          number, seal, etc)
                                    Package & hold in secure                Order

                                   Verify Ship Confirmation/Tender
                                          Shipment to Carrier
API Process Flow
                         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
                             Current Status of Recommendations
•   Dosage Business                               • API Business
•   Received approval for $500K in pre-           • Held preliminary meeting with Bulk
    engineering study                               Marketing Managers who concur with
•   Presented information to Manufacturing          process changes
    VP and VP of Logistics receiving                  – Additional meeting to be scheduled
    approval for the pre-engineering study               to develop plan to notify customers
•   Investigating temporary third party option;          of change
    contacts made and discussions on-going        • Held preliminary meeting with
•   Validating sales forecast through 2012.         Manufacturing representatives who also
    Original analysis conducted on forecast         concur
    through 2009                                  • 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
                                    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

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