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Medical
Device and Life Sciences Industry:
Manufacturing Performance: Facilities
Consolidation and Inventory Reduction
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| | Client: |
| A
division of a leading Pharmaceutical Company producing needles, sutures, and other
products for the healthcare industry.
| | | Problem: | | The
division’s facilities were at five locations in two states with high labor, land
and building costs. To be more competitive, the division needed to consolidate
operations, relocate to an area in the northeastern U.S., and lower labor, land
and building costs. Also, there was pressure from corporate to use land and buildings
the company owned in a very expensive location.
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| | Approach: | | Tunnell
Consulting assisted the division in locating areas that met their specific requirements
and then did a comparative analysis among the sites. The analysis indicated that
the site in Massachusetts was the most cost effective. Tunnell developed the block
plans, layouts and detailed move plans.
During the planning phase, Tunnell’s
analysis revealed that needles were being produced in a way that optimized work
center performance but sub-optimized the whole production operation by building
unnecessary inventory which was increasing costs, creating bottlenecks, and ineffectively
using equipment. Tunnell was also asked to develop a “pay-for-knowledge” compensation
system for the division as a strategy to manage cost, quality and productivity.
| | | Results:
| | Production
costs were significantly reduced due to lower labor costs, less inventory, increased
workforce flexibility, and more efficient use of equipment. Parts were produced
on a JIT basis and cycle times were reduced. Layouts using work cells improved
work flows and material handling was reduced. Because jobs needed to be clearly
defined to satisfy the pay-for-knowledge system, some jobs were eliminated and
the overall documentation of work instructions was improved.
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