Companies should seize opportunities to increase packaging efficiencies, improving profitability and sustainability

Since packaging is typically 10-40% of the retail price of products, there is no doubt it adds up to a relevant factor in product cost and waste. Packaging encompasses product design, prototypes and trials, materials, production, labor, shipping, and recycling and/or disposal. The most proactive companies pay close attention to opportunities to increase packaging efficiencies throughout the end-to-end supply chain to improve their profitability and sustainability.

Product Design Collaboration

Product design is at the heart of improving packaging efficiency. Our best clients take a collaborative approach to R&D and packaging design encompassing the end-to-end supply chain. For example, in a healthcare products manufacturer, the packaging engineer worked with R&D, manufacturing technicians, procurement resources, and logistics resources with a specialty in warehousing and transportation. In addition, customers, packaging materials suppliers, equipment specialists, and other resources took part in the collaborative design.

By involving these cross-functional resources, the full life cycle could be incorporated into the product design. In this case, they wanted to ensure the design encompassed the optimal packaging design to meet the customer’s visual, strength, and storage specifications while minimizing the materials, labor, and logistics costs. For example, the objective was to minimize the packaging materials while meeting product specifications. However, the team had to review potentially conflicting factors. For example, doubling the number of units of product per package would make the way the package fit in the box less efficient, the box might not be best designed to optimize the pallet, the pallets might not be optimized to fit on the truck, or the customer might not like the visual design or be able to fit the product in the storage area.

In addition, the product’s performance had to remain intact. Reducing the quantity of materials must not negatively impact the way the product worked for the customer. Compressing the product into the package must not negatively impact the absorbency of the product. Using redesigned materials in the manufacturing process must not impact product quality. This healthcare manufacturer successfully redesigned the product and reduced the total cost by more than 20% inclusive of materials, packaging, warehousing, and transportation costs.

Packaging Efficiencies in Bottling

There are vast opportunities to improve packaging efficiencies in the bottling industry. For example, Niagara has accomplished several key objectives in eliminating waste through packaging and innovation. They designed new packaging that eliminates the need for a cardboard tray in their cases and reduced the amount of plastic in their bottles by 60%. Thus, this packaging requires less materials and uses up less pallet space, allowing the company to reduce carbon emissions and ship more water per order.

Since 2009, Niagara improved its carbon footprint by 59% through innovations in design, lightweighting, and packaging. It has also increased its recycled content usage, which reduced greenhouse gas impact by bottle by 12%. Gaining these results requires a full lifecycle view of supply chain from product design through recycling.

Packaging Efficiencies at Amazon

According to Amazon, it continually works to reinvent and simplify packaging options. The company combines lab testing, machine learning, materials science, and manufacturing partnerships to accomplish this goal. Amazon notes that it avoided more than 2 million tons of packaging materials and reduced per-shipment packaging weight by 41% since 2015. The bottom line is that a significant reduction in packaging will reduce costs and improve sustainability.

Improving packaging efficiency can produce dramatic results. The healthcare products manufacturer, Niagara, and Amazon prove that by focusing on packaging design and innovation, tremendous savings in materials, labor, and freight will flow to the bottom line. In addition, carbon emissions are reduced and sustainability objectives are achieved.

Originally posted in Adhesives & Sealants, March 2024

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Status of the Medical / Healthcare Supply Chain

The supply chain has calmed down since the height of the pandemic; however, smart manufacturers are thinking ahead to changing conditions. Geopolitical risks are at an all-time high. The Russia-Ukraine war rages on and Israel and Hamas are at war which has spilled over to the Iran-backed Houthis rebels attacking container ships in the Suez Canal, disrupting a major shipping lane.

Additionally, China continues to threaten Taiwan which produces 90% of the advanced computer chips for the world and an important component in medical devices. China is also being very aggressive in the region which could impact shipping lanes through the South China Seas, manufacturing in China and manufacturing in countries in the region. Since China dominates the medical device supply chain, this is concerning. Thus, proactive manufacturers are moving towards regional manufacturing. This trend started following the pandemic (refer to our quote in a MPO Medical Products Outsourcing article) and has been picking up steam.

Reshoring & Expanding Manufacturing Capabilities

According to Xometry’s Medical Industry Survey, medical device manufacturers are rapidly reshoring operations to strengthen their domestic supply chains. In fact, 67% of medical device manufacturers are in the process of reshoring operations within the next 12 months. There is a focused effort in rethinking supply chain strategies.

Although many companies are reshoring, executives remain concerned about the cost impact of expanding production in the USA. The good news is that labor costs have decreased as a percentage of total cost dramatically since the offshoring craze while other costs have increased, making reshoring more attractive. For example, transportation costs were heightened during the pandemic and have been impacted by the Panama Canal drought, the diversions of the Suez Canal, and other supply chain disruptions. The cost of capital has increased significantly with the increase in interest rates which has made the cost of carrying inventory much higher. And there are many other costs to consider in the total cost to produce. In fact, the total cost of product can be equivalent or even less in the USA in some non-commodity situations.

Many advancements have been made in manufacturing and technology. Companies are automating and digitizing their manufacturing and supply chain. For example, they are using 3D printing/ additive manufacturing, robotics, artificial intelligence with IoT, and other advanced technologies to improve efficiencies and enhance visibility. As manufacturers expand their manufacturing footprint, source new regional suppliers and reshore production, these advanced technologies maximize operational performance and minimize cost while maintaining and improving customer service levels with lower inventory levels. Thus, margin concerns are mitigated depending on the upgrades and improvements to the manufacturing process.

In the medical device industry, companies are starting to expand regional manufacturing in the USA. For example, Ascential Medical & Life Sciences is reshoring to Minnesota. Their new state-of-the-art facility has highly innovative automation solutions, making reshoring financially viable. Certainly, they are not alone. Companies are expanding operations in the USA.

Manufacturers are also nearshoring to the region. Mexico has expertise in medical devices and the ability to scale. Since customer requirements are significant in North America, the ability to scale in the US and Mexico is a relevant factor. The availability of advanced manufacturing and technical skills is also an important factor. Medical grade material supply can be sourced nearby, and the USA is ramping up computer chip manufacturing capabilities. For high labor component products, Mexico provides an excellent option because their labor rates are lower than China, and they benefit from the USMCA agreement between the two countries.

Although the USA and Mexico are great options with scale, there are additional medical device manufacturing hubs in other nearby countries. For example, Costa Rica has advanced skills, computer chip manufacturing, and therefore a thriving medical device manufacturing concentration. The Dominican Republic has medical device manufacturing, and Puerto Rico is known for pharmaceutical manufacturing.

Manufacturing Resurgence

There is no doubt that the successful companies will mitigate risk and manufacture regionally. Thus, the USA, Mexico and business friendly countries will experience a resurgence in manufacturing in the next decade. It will require investments in manufacturing, tooling, and other resources although there are opportunities to keep costs intact or even reduce total product cost.

The most successful companies will upgrade their processes, ERP systems, utilize advanced technologies, maximize customer and product profitability and proactively manage these opportunities with a SIOP (Sales Inventory Operations Planning) process. Assess your supply chain to learn how you stack up. Take our complimentary supply chain assessment. Upgrade, innovative, get ahead of the competition, and thrive.

If you are interested in reading more on this topic:
Why Manufacturing Matters and Will Thrive in the Next Decade

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Lisa Anderson was quoted in the Snowflake blog about how data is critical to healthcare – especially in times of supply chain vulnerability as a result of natural and man-made disasters.

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The COVID-19 pandemic, coupled with increasingly common climate-based natural disasters, showed us how vulnerable global supply chains are. But while a broken supply chain in the automobile industry may mean a shortage of spark plugs at your local auto repair shop, the same situation in the healthcare industry can result in the inability to effectively treat illness or injury.

Many of us tend to be surprised when we realize healthcare is not immune to market forces. Medical logistics includes medical devices, from oxygen pumps to scalpels; prescription drugs and other medication; personal protective equipment (PPE); healthcare furniture; and disinfectants. These are channeled through almost 6,100 hospitals and 67,000 pharmacies handling about 6 billion prescriptions in the United States alone. Cast the definition of logistics a little wider and you have to account for the indispensable human equation: doctors, nurses, technologists, specialists, and administrators. 

By innovating data sharing and collaboration with partners and agencies, we may be able to better identify and more quickly analyze the most vulnerable links of the healthcare chain, predicting supply chain shortfalls and other issues before they happen

Data is critical to healthcare, said Lisa Anderson, President of the LMA Consulting Group. “Data can lead to figuring out better where your product is,” she said. “It allows you to track the demand for your product, to keep critical supplies in stock where they need to be. Everyone I’ve talked to believes data sharing is the future. The problem is, it is really quite hard to get competitors to agree to share data when you don’t know if you’re going to come out on the equal side of that situation.”

To read the full article, click here.

Originally published in Snowflake, April 11, 2023

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Does Production Scheduling Matter?

The best companies focus on production scheduling. Even though Production Schedulers aren’t typically highly paid positions, the function will make or break your ability to serve customers, improve operational performance and accelerate cash flow. Thus, it should be a key priority if you want to achieve profitable growth.

Are There Best Practices for Production Scheduling?

Yes, there are best practice concepts for production planning and production scheduling. No matter the client, industry, and people, these concepts “work”. On the other hand, each situation is unique, and so the key to success is to tailor to the different set of circumstances and priorities at each client. For example, there are different people, processes, ERP systems, data sets, customer requirements, and more. The best way to determine your best path forward is to relate to different examples and determine which tools and skills best apply to your situation.

Client Example: Succeeding in Process Manufacturing with Production Scheduling

In an absorbent healthcare products manufacturing company, product started as materials at one end of the production line, was converted into an absorbent healthcare product and was packaged at the end of the line. All things considered, it was a simple process with one step. And, so why was production scheduling important? Depending on the production schedule, downtime, waste, and inefficiencies increased – or decreased. To increase output, better serve customers, and reduce stock levels (of both raw materials and finished goods), we had to schedule the fewest significant changeovers, sequence items in the most efficient order, and ensure the appropriate resources and support were available at key junctures. This optimized production, but didn’t address customer orders. Thus, we also had to balance operational needs with the appropriate inventory levels and sequencing of customer orders to meet customer needs while also optimizing production. After rolling out best practice production scheduling practices, we won awards from customers, improved operational performance, and reduced inventory levels, freeing up cash flow to invest elsewhere.

Client Example: Succeeding in Job Shop Manufacturing with Production Scheduling

In an industrial manufacturing company of storage solutions, there were multiple steps in the production process from fabrication to weld to paint and assembly. Although it sounds obvious, you need to have product available from the step prior before you can start the next step; however, in these types of companies, marrying up parts that go together in the next step operation is often an issue. There is no point in having 1 piece ready if you need all parts for the next operation. Thus, production scheduling must focus on clarifying the customer requirements and backwards scheduling the operational steps. Once you have this base schedule, the key to success often relies on scheduling certain material types together and sizes together. In this client, labor scheduling is also a critical priority to understand which work centers are scheduled to run on which shifts (and days) so that backward scheduling can ensure the correct parts are available at the “right” time. Otherwise, you have too much WIP (work-in-process) inventory and are chasing your tail to keep product flowing. Once a clear schedule was achieved, the fabrication schedule became visible, and production output immediately increased. Next, items could be optimally sequenced to further increase efficiencies and provide visibility to sales of product availability, thereby improving service levels.

Client Example: Succeeding with Kanbans with Production Scheduling

In a building products (piping) manufacturer, there was a combination of process and job shop steps to the production scheduling process. In this situation, we utilized Kanbans to pull product through the operation steps. During the busy season, we’d add Kanban cards and pull product through the process steps quicker. In this situation, the key was to level load the shop and ensure we kept enough resources to support production on a quarterly basis. We developed a high and low number of employees required to support the quarterly volume, and so long as we maintained these employees and/or reliable temporary resources, our Kanban system would meet customer orders in the most efficient way possible. The ERP system was important in supporting the production scheduling process by driving the backend (Kanban sizes, number of cards and barcoding) as well as providing capacity reporting by work cell which translated back to the demand plan. Results followed. They were able to respond more quickly to spikes in demand with higher service levels and were able to minimize costs by level loading production and minimizing spikes/ troughs in operational resources.

What’s In Common No Matter the Consulting Client?

There are a few items in common across the board for every successful production schedule. A few supporting factors that pop to mind include:

• Production scheduler(s): You need a well-rounded resource who is excited about optimizing several conflicting priorities as balancing sales, inventory, and operations is not a good fit for the a person who likes black and white assignments.
• ERP system tools: Whether it is MRP (material requirements planning), advanced planning systems, MPS (master planning), or a report showing orders, inventory, changeover groups, and more, you will need to use your ERP system to create a solid schedule. In 90%+ of our consulting projects, we expand the use of ERP and utilize advanced functionality to improve the process.
• Operational data & information: It is impossible to schedule effectively if you don’t understand your capacity. How many people are required to run certain machines and support different work cells? Do certain products require additional support? Are your people flexible to run multiple machines? Can they go across work areas? How many people do you have in total? How many shifts run which lines? Are support resources in place?
• Customer orders / demand plan: If you don’t know what is needed to ensure high service levels, you cannot schedule effectively.
• Training & education: You will need to prioritize training (how to’s – click here, perform the job in this sequence, etc.) and education (why are you sequencing in this order, what are your order policies and why do they matter).

Don’t fret if these priorities are not in place. In 99% of our clients, they are not in place when we start. Yet most can be quickly put what’s needed in place at least to the degree required to start gaining results. They are not of equal priority in every client. In fact, half the battle is determining what needs to be done in what order, who has the capabilities to jump into scheduling and thrive, how to extract directionally correct data from Operations and your ERP system, etc. What is clear is that if you focus on this priority, your customer service, operational performance and cash flow will thank you!

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Since I was preparing for a meeting related to healthcare supply chains, I dug deep into the topic and thought it would be valuable to share the findings. In reviewing baby Tylenol /Motrin to adult diapers to medtech and pharmaceticals, supply chain disruptions have eased in some areas but continue in many others. As is typical in supply chains, the disruptions and issues move, but they have not disappeared.

Healthcare Supply Chain Examples

Several key points emerged from a review of of the the healthcare supply chain.

• Baby Tylenol & Motrin shortages: It has been blamed on a spike in fevers: however, uneven demand (for when illness will occur) is quite normal and will not ease. Inventory was simply not available in the “right” place at the “right” time, stemming from supply chains reliant on China which were negatively impacted with Zero-COVID policies with insufficient inventory and/or capabilities to compensate for these disruptions.
• Doctor’s offices & hospital systems: Although shortages have eased, sporadic shortages of critical items remain. From crutches to surgical supplies, items are not available in the “right” place at the “right” time. Again, manufacturing and inventory policies should be reviewed.
• Labor shortages abound: No matter which area of healthcare, everyone mentioned labor shortages. There simply aren’t the appropriate skills and resources in the “right” place at the “right” time to keep healthcare systems running smoothly. I have experienced this frustration as well!
• Taking control of manufacturing: It came up in medtech, but also in several other sectors. There is interest in reshoring, nearshoring, friendly shoring, expanding capacity, and sourcing new suppliers. In essence, there is a mantra of producing in “Asia for Asia”, “America for America”, etc. The bottom line: Reduce the risk in supplying customers.
• Regional/ local supply chain: In the same vein of taking control, companies are also focused on sourcing closer to supply hubs. For example, in a healthcare manufacturer, they have found a local supplier to fabricate and procure most parts needed for upgrades to machines. That has made a significant difference in mitigating long lead times and successfully serving customers.
• Pharmaceutical: There are definite concerns about the active pharmaceutical ingredients (APIs) risks concentrated in China and India. Beyond that issue, there are significant price increases in certain raw materials such as chemicals. Also, even though there is a high cost and long lead time to qualify new suppliers, companies are biting the bullet and pursuing alternatives. Additionally, to manage risk, supply chain professionals are looking further into their supply chain to mitigate risk. Otherwise, disruptions will continue.
• Reliability remains key: No matter the sector, there are concerns with reliability. Reliability is trumping cost. If air is more reliable than ocean containers, companies are sticking to air. If trucking is more reliable than rail, they will stick to trucking. If reliability cannot be attained, the source of supply is being evaluated.
• Capital equipment sector: is loosening up a bit.

Disruptions continue. Unfortunately, they simply continue to move. It seems a bit like that Whac-A-Mole game. What are the successful doing to resolve this issue?

Common Theme Emerges: Taking Control

The common theme is that those executives and companies taking control with proactive strategies are overcoming most of these challenges and are thriving in comparison with the competition. There isn’t just one way to take control. You could source additional suppliers, add capabilities, insource production, supplement internal resources, and there are many more options to pursue. Of course, the successful are not just taking control. They continue to prioritize service, manage margins and profitability (ie. pursuing cost reduction programs especially those that can achieve a win-win, adjusting pricing, etc.), and right-size inventory to manage cash flow. The “trick” is to achieve all three simultaneously.

Please keep us in the loop of your situation and how we can help your organization get in a position to thrive for years to come. Several of these types of topics are included in our eBooks. Download your complimentary copy.

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Partners are always prioritized over transactional suppliers during times of allocation and disruption.

Supply chain disruptions were up 88% in 2021, according to Resilinc, a leading supply chain risk monitoring and mapping solution. Lifesciences and healthcare were two of the industries most impacted by these record-breaking supply shortages. Companies across the board are experiencing vast raw material shortages and extended lead times, creating a never-ending cycle of disruptions.

Do you have suppliers or partners? Successful companies are stepping up their collaboration with partners.

During COVID, clients and colleagues realized there was far too much risk in their supply chain. For the most part, they realized the stark difference in requesting help from in-demand suppliers vs. collaborating jointly with supply chain partners. Given the robust demand for raw materials to successfully support key customer needs, suppliers have no choice but to prioritize. There is little doubt they are prioritizing strategic and profitable customers, as well as those with long-term agreements. In essence, they will fulfill customers that treat them as partners before those who see them as vendors. With the level of supply chain disruptions occurring, whether you have partners or suppliers is directly impacting revenue growth objectives.

Pertinent Examples

Although heightened during the pandemic, partners are always prioritized over transactional suppliers during times of allocation and disruption. For example, a mid-market adult incontinence manufacturer partnered with critical material suppliers. Since they considered adhesives a critical raw material, they collaborated jointly on developing and upgrading materials, finding cost reduction opportunities without negatively impacting product performance, and on maximizing operational performance (reducing scrap and increasing efficiencies without creating additional quality defects).

The manufacturer was fair and upfront in communications and treated the adhesives supplier as a partner. When adhesives went on allocation, even though the manufacturer was a small fish in the pond, the large adhesives supplier prioritized their partner, thereby enabling the eventual successful sale of the company since the manufacturer was able to grow the business during turbulent times.

Another area of significant risk that has been exposed during the pandemic is the lack of backup sources of supply. For example, a client in Europe thought they had a backup source of supply to their China supplier because they had a secondary source in India; however, when COVID hit, neither supplier could deliver the requested materials. Another client had identified a backup source, but they did not utilize that source on an ongoing basis. Thus, when COVID created disruption in the supply chain, the backup source prioritized current clients.

On the other hand, a healthcare products manufacturer proved that even an expensive backup source of supply would prove extremely desirable as supply chain disruptions increase. In this situation, the CEO, vice president of operations, and director of procurement had to constantly defend why they were paying 20% more for the same nonwoven material as they could purchase from their primary supplier. The board of directors was not happy since this move reduced the bottom line.

The leaders stayed the course and kept purchasing 20% of their raw material needs from the backup supplier, however, in order to ensure continuity of supply and to innovate with a regional supplier. Eventually, a supply chain disruption arose, and the primary supplier located in Brazil couldn’t deliver materials on time because of delays in the ports. As planned, the backup supplier increased volume to support their partner. Additionally, the joint innovations resulted in further margin improvement.

Partnering for Success

Resilient and successful organizations are reevaluating suppliers, carefully selecting which suppliers to upgrade to partners, and staying on top of key partner relationships. Relationships will not be maintained by default.

Instead, the most successful companies are focusing on becoming a customer of choice. They are proactively communicating changes to forecasts, supplying resources to support key initiatives, jointly innovating for win-win solutions, and providing suggestions and recommendations for success. For example, a customer decided to coordinate loads with multiple suppliers so that their suppliers would gain priority access to trucks while sharing in cost savings.

Are you thinking like a partner, or are you negotiating with suppliers? Partners will speed by the competition and thrive post pandemic.

Lisa Anderson

As originally published in ASI Adhesives & Sealants Industry on March 11, 2022

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Companies We’ve Worked With

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CLAREMONT, CA – October 22, 2018  APICS Inland Empire Chapter (APICS-IE), the leading association for supply chain and operations professionals, is proud to announce the Fall 2018 Symposium line up of Innovation and Global Trends Experts.  The Symposium is focusing on: “Advancing Innovation & Navigating Global Trends”. The event will be held on Saturday, November 3, 2018 from 8am – 11:30am at Harvey Mudd College in Claremont, California.

The panel features five key executives who have facilitated, experienced and observed innovation in global environments.   

“Innovation is so key to growth and remaining ahead of the competitive curve.  We are excited to have these experts share their experiences with us” commented Lisa Anderson, APICS-IE Chapter Leader and President of LMA Consulting Group. The experts come from diverse industries such as: Aerospace and Defense, HealthCare and Manufacturing to Transportation and a national Association.

The panel includes:

• Cindi Mullane – Senior Director, Supply Chain and Operations, Feit Electric
• Todd Boppell – Chief Operating Officer, National Association of Manufacturers
• David Libatique – Deputy Executive Director, Port of Los Angeles
• Kelly Ford – Aerospace/Defense Senior Executive
• Dr. Yuman Fong, Chairman, Department of Surgery, City of Hope National Media Center

“Each panelist brings a unique perspective to the innovation discussion and how they see a global economy affecting their supply chain and, ultimately, progress. To hear first-hand from experts in a range of industries is essentially, super-collaboration, which would otherwise be difficult to coalesce from a single industry perspective” Ms. Anderson concluded.

The symposium attracts industry professionals from throughout the Inland Empire and Southern California and welcomes students.  The APICS-IE Fall Symposium, “Advancing Innovation & Navigating Global Trends” will be held Saturday, November 3, 2018 from 8:00-11:30 AM at Harvey Mudd College in Claremont, California. Fees to attend are $15 for members, $25 for non-members and students are free. A breakfast buffet is included. Register online

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