Positive benefits accrue from a 'pull' replenishment approach - Bausch case study

Bausch & Lomb, the global eye-care business, supplies its European contact lens solutions out of a single plant in Milan, Italy. These are distributed through logistics centres in Italy, Spain, the Netherlands and Scandinavia. Its supply chain faces all the typical problems of variety and complexity found in the pharmaceutical industry.

A limited range of base product is packed into a large range of container sizes and types, on top of which there are then all the local language variants, own-label products and promotional packages. In addition, there are regulatory requirements and a two-week quarantine period.

The company's European operations director is responsible for the Milan plant. Despite well-developed forecasting techniques, his sales and marketing colleagues kept telling him that they were not achieving the high levels of stock availability required to maintain and increase their leading position in the market. When he looked around the regions he could see warehouses full of inventory - bulky bottles of solution tend to stand out from small contact lenses.

How had this state of affairs arisen and what could be done about it?The change programme started with a brief period of analysis. This identified the opportunities and defined a 'pull' replenishment supply chain model that would release them.

Benefits were quantified and the actions needed to bridge the gap were prioritised. An implementation plan with clear deliverables and timescales was put in place.

The implementation was mobilised through two teams. A shop floor programme focused on packaging and label changes over all four lines. The plant had performed well under the 'build-to-forecast' model but, now demand called for smaller more frequent batch sizes, its flexibility became a key issue. Working directly with the operators, and with minimal capital investment, machine set-up times were reduced by between 35% and 50%.In parallel, a cross-functional team, covering sales and marketing in the key countries plus logistics and operations, was mobilised to implement changes to the forecasting, planning and stock management processes.

This was the first time the group had gathered together at the plant to understand each other's issues and work on practical joint solutions. In addition, key suppliers were brought into the change process and many batch and lead-time constraints (some real, some perceived) eliminated.Four months later, and with a world-class supply chain in place, problems with back orders have been eliminated.

The excess inventory is being bled-off to realise cash and holding cost benefits. Now it has the time to look forward, the plant management is moving to a continuous improvement environment, which will consolidate and develop rather than continually fire-fight the latest back order complaints from the marketing divisions.