International Healthcare Distributor*

 

Patent Expiration Demands Savings

Client said: Our Kentucky distribution center needs help operating more efficiently. We’ve trimmed labor costs maximally but suffer from underutilized automation at that facility. Can you help us identify other ways to realize savings?

The engineers at Scott Sheldon said: We can do that.

Project background:

We conducted this project for a healthcare customer with whom we have a longstanding partnership. They are a global firm that manufactures medical devices, pharmaceutical and consumer packaged goods. This effort was for their pharmaceutical division.

Efficiency in their Louisville distribution center had eroded following the loss of a patented product when the generic equivalent became available. The distribution center had been built with a great deal of automation and was extremely efficient when operating at full capacity. Since the patent loss however, it was operating much under capacity. The company had already trimmed labor costs and was searching for other ways to realize savings.

The “Ah Ha” moment:

Our customer had made smart decisions about the Louisville distribution center but had reached a limit on the efficiencies to be achieved there. The Scott Sheldon team suggested looking beyond the single center to others where there might be redundancies and then identify ways to reduce those to improve costs.

The Action:

The Scott Sheldon engineers were able to find additional savings with a few more staffing adjustments in the Louisville center. Following that, and working within the original time frame and budget, they evaluated the company’s other distribution centers looking for opportunities to streamline operations. They found redundancies between the Louisville and Franklin, NJ distribution centers that they knew could be eliminated with some proven supply chain solutions. For example, both centers had “cold chain” capabilities which were an obvious place for consolidation.

And, in the Franklin center itself, the team found areas for improvement in both operations and labor. Labor costs in the region were relatively expensive so our team suggested offering some members of the Franklin staff early retirement packages. As it turned out, these moves improved morale and motivation at the center, as well as reducing costs.

Result:

Our customer was thrilled with the ROI of the project, a combined savings from both centers of more than $650,000. When the evaluation of the first DC didn’t reveal significant opportunities for savings, the Scott Sheldon team dug deeper until they found supply chain solutions sure to benefit the customer.

We Get It.

*Due to confidentiality, we do not disclose the names of healthcare companies

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