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Reveal Hidden Revenue in Your Supply Chain
By: Cindy Lieberman
Posted: November 10, 2008, from the November 2008 issue of GCI Magazine.
In today’s competitive marketplace, best-in-class global cosmetics manufacturers rely on lean manufacturing practices to achieve operational excellence. But there remains a frequently overlooked opportunity. By embracing next-generation rapid microbiological testing methods (RMM), these manufacturing companies can uncover harder cost savings throughout the supply chain that lead directly to measurable financial performance. At the same time, global manufacturers of beauty and personal care products can satisfy their global regulatory requirements to meet or exceed standards for product quality. How can this opportunity be realized and achieved? Before implementing RMM, global cosmetic manufacturing companies need to understand the common challenges that can hinder production performance and increase costs.
For example, manufacturers of cosmetic products are conflicted by the need to be more responsive to their customers while improving overall profitability. Most recognize that in order to increase customer satisfaction, they must reduce manufacturing lead times, shorten cycle times, decrease defects and accelerate order fulfillment. At the same time, these manufacturing companies are also faced with internal priorities. They’re under pressure to reduce costs associated with excess inventory levels and safety stock; to continuously keep working capital requirements to a bare minimum—in essence, use less to create more. This means cutting excess waste anywhere it can be found.
The Last Great Frontier: The Micro Hold Area
In manufacturing, one of the biggest culprits of waste is delay based on inefficient processes or movement of goods. Manufacturers of beauty products have invested millions of dollars on supply chain software and other costly initiatives. But they can literally cut days out of their cycle times by moving to rapid methods, because RMM enables manufacturers to quickly screen for microbiological contamination in raw materials, in-process and finished goods.
Reducing waste and streamlining efficiencies requires a closer look at the supply chain and, in particular, one of the key areas—the micro department. The micro hold area is really the last great frontier for process time reduction. Beauty product manufacturers often put their inventory in quarantine for three, five, or even seven days. Many typically run micro tests using less expensive, slower agar plates to save costs. But the delays caused by lengthy micro hold times can cost a fortune in supply chain efficiency.
Holding inventory for several days stymies customer responsiveness. It creates waste on the production floor and ties up valuable resources that could otherwise be contributing to profitability. When inventory isn’t getting off the floor and out the door fast enough, revenue is lost.