Strategic Design Services

The Inside Story on slashing "order to ship" time to 1/10th of original schedule

The site manager for the German manufacturing facility of a Fortune 500 pharmaceutical company was faced with the closure of the plant if it did not improve profitability. Planned incremental cost savings from continuous improvement projects would not be sufficient. With the support of GLG's Strategic Design Services, a "postponement strategy" was created in which product is manufactured to a state where it is still customer-flexible, leaving the final finishing and customization as the very last step. Over a 10-month period, the company's management created an entirely new design for manufacturing and distribution, which was then implemented over the succeeding two years. Meeting on their objectives for the project, they are now routinely delivering product in 24-48 hours (vs. 4-6 weeks!).

This strategy was applied for the first time in the industry by this site, and has become a worldwide goal for the company's manufacturing reengineering effort.

In addition, the following results were produced:

• Cost reductions were achieved in freight and distribution exceeding $4.5 million per year.
  
• Markets served expanded from Europe to Eastern Europe and North Africa.
  
• The company is using the facility to create millions of dollars per year in incremental revenue and profits by producing product for other companies outside the parent organization.
  
• A new, patented system for on-line labeling and packaging was created, resulting in ongoing savings of approximately 50% of finishing costs. This system has been extended to other company operations, where it saves millions of dollars annually per line. Worldwide there are about 20 lines for which this is applicable.
  
• The site went from being an isolated minor facility to a worldwide leader for change. A team- based organizational structure was created that has been a model for reducing layers of management and pushing accountability and responsibility downward.

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