What does a manufacturing firm that has only one piece of equipment and makes it products primarily from liquids and biological reagents need with an enterprise resources planning (ERP) system? The answer is: a lack of shop floor controls, poor inventory management and difficulty in measuring costs. In other words, the same issues that manufacturers everywhere struggle with on a daily basis.
The manufacturing firm referenced here is IVD Research, a family-owned business founded in 1996 that makes about 50 different diagnostic kits and also manufactures and distributes a line of external controls for use with different laboratory platforms. All its products follow current good manufacturing practices (cGMP) as outlined by the FDA and all assays are CE marked—a mandatory conformity marking for products sold within the European Economic Area.
“Before, we managed the business by hand with paper logs and Excel spreadsheets,” said Chief Operations Officer Kathy Hildebrand. “If a raw material got recalled, it took days to find every place we used it. If a customer called to order a certain diagnostic kit, we had to manually track it down to see if we had any in stock. We knew that in order to keep growing, we needed a more efficient system. We looked at all the big ERP products, but they were way out of our price range. Then we came across Global Shop Solutions ERP software and discovered it could do everything those bigger products could do at a price that fit our budget.”
25% Reduction in Inventory
All of IVD Research’s raw materials have expiration dates, which means the company can’t hold them in inventory until they run out. And because they’re made with biological reagents, the diagnostic kits in finished goods inventory have expiration dates as well. According to Director of Operations Christopher Lambillotte, this presents several inventory management challenges.
“Before Global Shop Solutions, having raw materials go out of date was a big issue for us,” he recalled. “We constantly had to expedite the ordering of raw materials because we had no real system in place, which inflated our inventory costs. And we often didn’t know how much usable inventory we had on hand.
“With Global Shop Solutions, we know exactly what we have in inventory and how long we can keep it there,” said Lambillotte. “And having visibility of the dollar amount enables us to manage inventory levels up or down as needed. We’ve reduced our raw materials inventory by 25% as well as our purchasing costs in large part because we no longer order materials the day before we need them.”
More efficient purchasing
In addition to lowering inventory costs, Global Shop Solutions ERP software also saves money by simplifying the purchasing process. Previously, all raw materials were manually ordered, which often led to duplicate ordering of materials already in inventory. Using the Auto Purchasing feature, IVD Research can now see the history of every raw material, when it was ordered and how much it cost. Combined with the ability to see the entire production schedule for three months out, IVD Research can also make larger, more economic purchases of raw materials. Meanwhile, the use of automatic reorder points further simplifies the purchasing process.
“We’re striving to lean our raw material inventory as much as possible,” said Lambillotte, “so I use the reorder points to purchase all materials used in the manufacturing process. Auto purchasing monitors what we have on hand and compares it to the work orders in the system. This ensures that we have what we need when we need it, without ordering it too soon.”
As a biotech company, IVD Research must have complete traceability of all raw materials and finished goods, which requires precise lot-to-lot tracking capabilities. This includes following numerous written documents when making its diagnostic kits, as required by the FDA and USDA.
IVD Research also builds finished goods stock up to an unlabeled level, so its customers can choose their own labeling. This requires assigning and tracking two different levels to the same lot number as it moves through the production process. Further complicating matters, finished products can have multiple configurations based on who ordered them.
All of which leads to a complex and highly detailed traceability process that combines manual paperwork with in-system tracking.
“It would be nice to automate the entire traceability process in Global Shop Solutions,” said Lambillotte. “However, we’re required to keep paper documents as well, so we find it easier to do the paperwork first and then go back and do the lot tracking and issuing of materials in the system later. That’s not the way Global Shop Solutions is designed, and probably not the way most companies use it, but it works for us. The software is so flexible that it still manages to simplify the process, even with our combination of manual tracking, pre-assigned lot numbers and different levels.”
According to Lambillotte, Global Shop Solutions ERP software has produced a steady stream of improvements throughout the shop floor.
He can now issue work orders with due dates. Instead of waiting for instructions, shop floor personnel look at the work orders to see what to do next. Lambillotte can look in the system to see the status of every job, including where each job is in the production process and who’s working on it. He can also compare work in progress to finished goods, as well as open versus closed work orders.
“As a result, manufacturing at IVD is now continuous,” noted Lambillotte, “and we’ve improved shop floor efficiencies by more than 40%.”
Hildebrand, who works at home more than half the time, points to Global Shop Solutions ERP software’s remote capabilities as an important benefit.
“I can see everything that’s going on in the business from my home office,” she said. “I can track which bills have been paid, which customers are behind, and make sure we’re paying the right vendors at the right time. I can do the production scheduling and generate the master schedule. I can see what’s happening on the shop floor in real time.”