RRD introduces solution that postponed final product configuration and kitting
The customer is a Fortune 500 medical company that designs, develops, and manufactures leading-edge glucose monitoring systems. A major acquisition strengthened the company’s position in the large and rapidly growing blood glucose testing sector, but also added the complexity of gaining efficiencies in an already cost-sensitive market place.
In a highly competitive sector, controlling supply chain costs is essential to profitability.
The customer wanted to unify and simplify its existing supply chain with that of the acquisition, but the two supply chains shared little commonality. After careful evaluation, the customer established these major goals:
- Improve customer satisfaction. It was essential that glucose meter kits be available on the shelf when the prospect is in the store making a decision.
- More demand driven, flexible and responsive. The customer wanted to package the product closer to end users, thereby adding more flexibility to respond to demand changes and enable inventory reductions.
- Reduce total supply chain costs. A unified supply chain and a single manufacturing process was required. The customer sought to manufacture products closer to customers in North America, Europe, and Asia with a goal of realizing annualized supply chain savings of $5 million.
- Minimize capital expenditures and resource requirements. The customer wanted to expand capacity without major capital expenditures and without overburdening the already scarce managerial resources.
RRD introduced a solution that postponed final product configuration and kitting. Basic glucose meters are shipped from Asia to RRD facilities in the United States, Poland, and Singapore. Here, they are kitted and shipped to distribution centers (DCs) or held for direct shipment to company affiliates and retailers. Other aspects of the solution include:
- Managing suppliers and assuming ownership of materials until product is fully kitted
- Ensuring cGMP/QSR and IVDD compliance
- 100% serialization of finished kits with full traceability
- Reducing the number of print suppliers from five to two
- Changing the locations of the supplying facilities to reduce freight costs
- Enabling end-to-end supply chain visibility through IViewXT
Exceeded goal of annualized supply chain savings of $5 million
70%+ reduction in freight costs per kit
Fulfillment time down from one month to one week
Today, the customer has a single supply chain and a uniform worldwide manufacturing process. The postponement model exceeded the goal of annualized supply chain savings of $5 million. The solution resulted in lower component and finished goods inventories, improved product availability, and greater production flexibility.
In addition to a simplification of the supply chain, other key results include:
- A reduction in freight costs of more than 70% per kit
- Virtual elimination of backorders
- Reducing fulfillment time for unplanned orders from one month to one week
- Minimizing capital expense
The customer wants to achieve even higher levels of demand-driven production and fulfillment by transitioning to a model that involves replenishment upon shipment to the DC.