Costs and lead times drastically reduced

The com­plex­i­ty of the entire sup­ply chain in the phar­ma­ceu­ti­cal indus­try con­tin­ues to increase. At one of the world’s lead­ing man­u­fac­tur­ers, this led to bot­tle­necks in pro­duc­tion — even the pro­cure­ment of the required sec­ondary pack­ag­ing was unnec­es­sar­i­ly cost­ly and time-con­sum­ing. Pack­ag­ing spe­cial­ist Fall­er Pack­ag­ing helped the com­pa­ny to make this process faster, more reli­able, more cost-effec­tive and more sustainable.

The phar­ma­ceu­ti­cal and health­care indus­try is one of the largest and most dynam­ic growth mar­kets in the world. There are var­i­ous rea­sons for this, such as a rapid­ly grow­ing world pop­u­la­tion and demo­graph­ic change towards increas­ing­ly old­er soci­eties. As a result, demand for med­i­cines and oth­er phar­ma­ceu­ti­cal prod­ucts is ris­ing. For most phar­ma­ceu­ti­cal man­u­fac­tur­ers, how­ev­er, the mar­ket envi­ron­ment has also become much more volatile — due to increas­ing inter­na­tion­al com­pe­ti­tion, new forms of ther­a­py and dosage forms, and the trend toward greater indi­vid­u­al­iza­tion. In addi­tion, the so-called time-to-mar­ket is falling, i.e. more and more prod­ucts are com­ing onto the mar­ket in ever short­er peri­ods of time.

This is hav­ing a seri­ous impact on pro­duc­tion behav­ior in the indus­try: The batch sizes of indi­vid­ual orders are decreas­ing sig­nif­i­cant­ly, while the order vol­ume is increas­ing. More fre­quent changes and chang­ing require­ments in the pro­duc­tion process are the result. Short­er lead times and high cost effi­cien­cy are also required to be suc­cess­ful in the mar­ket. All this means that the entire sup­ply chain for the man­u­fac­ture of phar­ma­ceu­ti­cal prod­ucts is becom­ing con­sid­er­ably more com­plex — also in terms of the pro­cure­ment of the asso­ci­at­ed packaging.

Increasing article variety, decreasing predictability

The increas­ing indi­vid­u­al­iza­tion of phar­ma­ceu­ti­cals is lead­ing to a grow­ing vari­ety of arti­cles. Sec­ondary pack­ag­ing, which is often designed dif­fer­ent­ly accord­ing to cus­tomer or coun­try, such as fold­ing car­tons, labels and pack­age inserts, is par­tic­u­lar­ly affect­ed by this. It is becom­ing more dif­fi­cult for phar­ma­ceu­ti­cal com­pa­nies to cor­rect­ly esti­mate their pack­ag­ing require­ments in advance and to clock times and pro­duc­tion and logis­tics process­es accord­ing­ly. The result is unnec­es­sary and avoid­able costs, for exam­ple for stor­age space, trans­port, machine down­time or the destruc­tion of super­flu­ous materials.

This chal­lenge was also addressed by a lead­ing glob­al phar­ma­ceu­ti­cal com­pa­ny that man­u­fac­tures wound care prod­ucts, among oth­er things, at one of its plants in south­ern Ger­many. The increas­ing demand for the prod­ucts also caused the pro­duc­tion vol­ume at the site to grow steadi­ly year after year — how­ev­er, with­out being able to expand the capac­i­ties on site. More and more orders with small batch sizes and short lead times led to bot­tle­necks in pro­duc­tion, caused unnec­es­sary costs and severe­ly restrict­ed the man­u­fac­tur­er’s abil­i­ty and reli­a­bil­i­ty to deliver.

Complex ordering and inspection processes simplified

The com­pa­ny had been rely­ing on Fall­er Pack­ag­ing for the pro­cure­ment of sec­ondary pack­ag­ing mate­ri­als for some time. The pack­ag­ing spe­cial­ist, head­quar­tered in Wald­kirch, Baden-Würt­tem­berg, sup­plied fold­ing car­tons, labels and pack­age inserts to the near­by pro­duc­tion site from a sin­gle source — but the cus­tomer always sub­mit­ted a sep­a­rate order for each prod­uct. A labor-inten­sive and unnec­es­sar­i­ly com­pli­cat­ed process.

In addi­tion, the phar­ma­ceu­ti­cal man­u­fac­tur­er had to sub­ject all incom­ing goods to a strict qual­i­ty inspec­tion — includ­ing the pack­ag­ing com­po­nents. How­ev­er, the area where the deliv­er­ies to be inspect­ed were tem­porar­i­ly stored was lim­it­ed and reg­u­lar­ly over­filled. Errors in allo­ca­tion and expen­sive delays due to over­load­ing of the inspec­tion depart­ment were the result.

Togeth­er with Fall­er Pack­ag­ing, the com­pa­ny set out to make the pro­cure­ment process sim­pler, more effi­cient and faster. In the first step, the orders for fold­ing car­tons, labels and pack­age inserts were bun­dled by prod­uct — instead of three orders, only one was received by the sup­pli­er. The sup­pli­er was able to opti­mal­ly dis­trib­ute the KIT orders to its inter­nal pro­duc­tion capac­i­ties in the var­i­ous plants, pro­duce them and then com­bine them on pal­lets before ship­ping them to the customer.

Full control over inventories

In addi­tion, the phar­ma­ceu­ti­cal man­u­fac­tur­er intro­duced a ven­dor-man­aged inven­to­ry (VMI) with its sup­pli­er. As a result, Fall­er Pack­ag­ing assumed com­plete respon­si­bil­i­ty for the cus­tomer’s prod­uct inven­to­ries. For this pur­pose, the cus­tomer shares the inven­to­ry and sales fig­ures for the respec­tive arti­cles. Instead of receiv­ing orders for indi­vid­ual items, Fall­er Pack­ag­ing uses this data to deter­mine when which prod­uct is need­ed and in what quan­ti­ty, and then ini­ti­ates the cor­re­spond­ing pro­duc­tion. This has enabled the spe­cial­ist to deliv­er the rel­e­vant orders to the cus­tomer at short notice and sig­nif­i­cant­ly relieve the pres­sure on on-site stor­age capac­i­ties. By being able to plan raw mate­ri­als and capac­i­ties at an ear­ly stage and use them effi­cient­ly, time and costs can also be saved. The phar­ma­ceu­ti­cal man­u­fac­tur­er was also able to out­source a sig­nif­i­cant part of the com­plex­i­ty involved in procur­ing sec­ondary pack­ag­ing mate­ri­als and thus focus more on its actu­al val­ue creation.

In order to also opti­mize the qual­i­ty assur­ance process, Fall­er Pack­ag­ing, as a Cer­ti­fied Sup­pli­er, took over the inspec­tion of the prod­ucts sup­plied. This meant that the phar­ma­ceu­ti­cal man­u­fac­tur­er no longer need­ed to have the prod­ucts test­ed again in-house. After a short incom­ing inspec­tion, the pack­ag­ing required for pro­duc­tion could be deliv­ered qua­si just-in-time to the pack­ag­ing line — an enor­mous time and cost sav­ing. Thanks to its sup­port, Fall­er Pack­ag­ing was able to reduce the lead times in the phar­ma­ceu­ti­cal com­pa­ny’s pro­duc­tion by an aver­age of 65 per­cent and cut its expens­es by around 400,000 euros.