Manufacturing Pharmaceuticals
Eliminating constraints to meet customer demand
This pharmaceuticals site based in NSW produces a range of high demand consumer healthcare products. Consequently a significant number of customer orders are from grocery traders, an area where the company was not keeping pace with demand. With an ingrained culture of outstanding customer service, there was an urgent need to address the escalating back orders which were at $2 million worth and climbing.
A variety of traditional approaches were implemented in-house to address the problem, including incorporating extra shifts and producing higher volumes of product. However, this did not equate to the required amounts of each product being produced, resulting in excess stock and climbing inventory levels in some areas and a persistent inability to meet demand in others. Further exacerbating the situation was the practice of fixed three month production schedules, which were inflexible and did not allow for adjustments according to demand or other variables.
With back orders climbing and no clear way to address the problem, SMT were bought in to assess the situation.
The Solution – Theory of Constraints.
SMT undertook a pilot study using the Theory of Constraints which involved reviewing the various areas of operations, identifying any significant constraints and then revisiting the relevant business management polices that applied to the problem areas.
The key areas the action plan covered included:
- Operation policies
- Enabling software
- KPIs and workplace practices
“Finite capacity modelling provides a very powerful tool that highlights any problems and demonstrates the measurable benefits of addressing the main constraint,”said Greg Bywater, Director, SMT Consulting.
Key Benefits
At the completion of the SMT implementation, the pharmaceutical manufacturing site experienced wide-ranging benefits including:
- 100 percent reduction in backlog orders
- 30 percent increase in capacity
- Consistently producing to schedule
- Close to 100 percent customer service levels
- Introduction of safety stock levels to cover fluctuations
- No out of stocks
- Trained staff to sustain changes
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