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Schwabe North America banks on stock optimization

Stock optimization analysis helps pharmaceutical company customize its spare parts handling process after relocating from Utah to Wisconsin.
When pharmaceutical company Schwabe North America (NA) moved its manufacturing facility from Springville, UT to Green Bay, WI, the company had to entirely reorganize the spare parts stocking and ordering processes for its manufacturing machinery. Together with Bosch Packaging Services, Schwabe ran a stock optimization analysis, which has led to major improvements since beginning in August 2011. Schwabe is now able to anticipate future spare parts requirements, and has decreased lead by up to 90%.

Schwabe North America manufactures and distributes botanical brands, nutritional supplements, and vitamins under the labels Nature’s Way, Boericke & Tafel and Enzymatic Therapy all over the world. The privately held company headquartered in Karlsruhe, Germany, draws on more than 140 years of experience in pharmaceutical development.

Schwabe supplies its products either directly to online buyers or to health and whole food stores as well as large supermarkets in more than 50 countries. Over the last 10 years, the pharmaceutical company doubled its sales and production volume in the U.S., leading to a considerable increase of production capacity and machinery.

New spare parts strategy

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In 2010, Schwabe NA moved its manufacturing from the Nature’s Way facility in Springville to the newly acquired Enzymatic Therapy site in Green Bay. Apart from the logistic challenges such a move entails, it also meant rethinking the spare parts procurement.

Schwabe had 10 Bosch GKF capsule-filling machines at its Utah site and benefited from the close proximity to the Bosch spare parts warehouse in Lindon. Many parts were available the same day. However, infrequently used and specially manufactured parts had to be ordered directly from Germany, which sometimes took up to four weeks because of the delivery time.

“We faced the question of how to get our spare parts without losing valuable production time. The closest Bosch facility in Minneapolis was now more than 300 miles away,” says Dave Hoffman, Maintenance, Repairs and Operations Buyer at Schwabe NA.

To solve these supply problems, Schwabe North America contacted long-term partner Bosch to work on a new solution to optimize stocking and delivery processes at the new Wisconsin site. “Adopting previous stocking concepts after the relocation of production hardly ever works out,” says Dave Bethel, Aftermarket Sales Manager for Bosch Packaging Services. “Usually it is necessary to have a closer look at all influencing factors. This is exactly what we did for Schwabe.”

Individual stocking solution

Bosch suggested a stock optimization analysis, which quickly showed potential for improvement. “At the beginning of the project we analyzed Schwabe’s purchase history from March 2009 to July 2011,” explains Bethel. Together with the stock coverage information from Bosch and the details of regularly ordered parts and order frequency, Bosch generated Schwabe’s individual spare parts profile with specially developed software. All data was documented in a structured report and served as basis for further evaluations.

“The challenge not only consisted in defining the amount of permanent spare parts stock, but also in finding a solution for less frequently ordered parts,” says Bethel. “Based on our analysis, we then suggested which parts Schwabe will need to acquire regularly in the future.”

To avoid long delivery times from overseas, Schwabe and Bosch determined parts that could be stocked at the Bosch warehouse in Minnesota and parts that should be stocked at Schwabe’s own site. “Before, we did not anticipate which parts we would require in the near future. We simply ordered parts whenever we needed them. This sometimes resulted in long delivery times. Now we have a well-balanced system of our own stock and ordering from Bosch,” says Schwabe’s Hoffman.

Ordering at any time of the day

This new proactive stocking solution is backed by the E-Portal, an online ordering platform from Bosch Packaging Services. It contains customized as well as machine-specific spare parts data and provides a structured overview of most recent information and purchases.

Hoffman and his colleagues at Schwabe NA were already familiar with the platform and can now use it even more efficiently in combination with the company’s optimized stocking and ordering procedure. “The E-Portal complements our new spare parts strategy,” he says. “We can look into costs and availability of the spare parts at any time.”

For Hoffman, the main asset is the portal’s 24/7 availability. The ordering process takes less time to quote and required parts can be ordered whenever needed.

Reduced lead times

As a result of the cooperation, Schwabe and Bosch identified improvements on both sides. Bosch used the information of the stock optimization analysis to adapt the stock of its Minnesota facility to Schwabe’s needs. Bosch can now anticipate future spare parts requirements from Schwabe and reduce delivery times for these parts. In return, the analysis helped Schwabe to build up an individual and efficient stocking and ordering process at the new Wisconsin site.

“We can work with a spare parts stocking system that is matched to our requirements and helps us achieve highest availability with minimal stock,” Hoffman confirms. Consequently, lead times have decreased by 90 percent. We are particularly satisfied with the fast turnaround times that have improved from up to four weeks to one or two days.”

The process of improvement still continues at the Green Bay facility. The individually tailored balance between stocking onsite and ordering via the E-Portal helped to improve planning procedures and also reduced the risk of downtime.

“At the beginning, the reorganization required quite a learning curve. We had to define the most important spare parts and determine when we would need to place our orders. But now that we have internalized all the information, the work pays off,” says Hoffman. “Bosch’s stock optimization analysis helped us considerably in customizing our spare parts handling after the relocation.”

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