Warehouse Operations Review

Client: Medical Products Manufacturer & Distributor
Background

Our client, an international manufacturer and distributor of pharmaceutical and medical products, supplies the Australian and New Zealand markets with approximately 700 products sourced from their factories in Europe and the USA. In order to support their growth plans, the client engaged GRA to review their current warehouse operations in order to understand whether they were capable of supporting their business for the next 3 years and beyond.

Challenge

A project was commissioned to determine the following:

  • Understand if strategic growth plans could be supported by current operations
  • Determine if current warehouse space could be more effectively utilised
  • Review operational workflows and identify potential improvements
  • Identify more effective ways of handling products
  • Determine compatibility of warehouse operations with potential ERP systems
  • Understand how ERP process models would suit future business & customer requirements
Approach

The following approach was undertaken to assess the effectiveness of the current warehouse, identify improvements and provide guidance on the capacity required to support growth plans.

Review Existing Operations, including:

  • Performing a detailed audit of the current warehouse
  • Identifying pros, cons and opportunities available within this facility

Perform an Analysis of Product Demand to:

  • Optimise Inventory Parameters based on current demand
  • Configure product slot and warehouse layout based on these inventory settings
  • Understand implications of growth projections

Assess Current Warehouse Layout to:

  • Identify gaps between current, recommended and future warehouse requirements and the changes required

Develop an Implementation Plan to:

  • Define the actions required to realise improvement opportunities identified and support future demand

Review WMS Capability to:

  • Understand potential and recommend configuration options based on the clients operating environment
Outcome

Review Results & Key Findings:

  • It was found that although current warehouse space could be more effectively used in the short-term, longer-term strategic plans could not be supported by the current facility
  • Solutions were proposed to: improve operational workflows and productivity (reducing labour costs by 17.5%), handle products more effectively and extend the life of the current facility to the medium-term. However, certain constraints would remain which could not be alleviated without increasing warehouse space
  • The analysis found that longer-term, the expansion of warehouse space would be essential for the client to support growth plans & projections
  • An ERP system was identified that was compatible with warehousing operations
  • The warehouse process utilised by the clients’ international operations would be suitable for, and could be aligned to, the Australian business

 

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Testimonials

We invited GRA to run a workshop to educate the broader business on S&OP, help us design a next level S&OP process and map out the requirements and next steps to implementation. We have made significant progress with S&OP since the workshop, the key aspect is that it has been accepted at all levels and there is commitment to the process which was the big hurdle.

– Lee Rawstron, Head of Operations ANZ, Sinochem Australia

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)