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Case History: Medical Diagnostics
Client: Manufacturer of Multiple-Assay Clinical Diagnostic Machines and Consumables
50% reduction in inflation-adjusted costs over seven years; increased market share; perfect on-time and quality record
Challenge
Our client was attempting to increase its market share in the highly competitive, mature multiple-assay diagnostics market, by reducing costs while adding functionality. This required Web Industries, which manufactures the consumable component for this client, to raise quality standards, add production capacity, and embark on a gain-sharing program with the client to squeeze costs out of the supply chain.
Web's services for this client include: managing several outside vendors while procuring a dozen materials, slitting two kinds of film to narrow widths and tight tolerances, assembling the component, shipping to multiple client destinations, and maintaining all required records and traceability.
A number of supply-chain and production bottlenecks were identified, particularly a material handling challenge because each component contains two rolls of different kinds of films.
Solution
Web Industries' engineers, working in tandem with equipment manufacturers, designed a triple-unwind slitter with a triple-splicing station that slits both kinds of films in alternating sets, reducing the material handling in our plant by 90%.
In parallel, Web engineers designed and commissioned a semi-automated packaging line, offline testing apparatus, and related equipment, all housed in a dedicated, Class 100,000 controlled manufacturing environment. These investments, totaling nearly $750,000, were co-financed by our client. Each process change required its own Failure Modes Effects Analysis (FMEA), control-and-limit testing, along with installation, operating and process qualifications.
Each year, Web Industries and its customer hold a supply-chain brainstorming session to identify and choose several projects to work on during the year. Over seven years, about 20 projects have been completed with cost savings and increased margins shared by both parties.
Results
a. The customer's inflation-adjusted costs have fallen by 50% over seven years; about half in nominal dollars and half in cost increases avoided. Material waste has fallen by about four percentage points
b. Web Industries has provided a perfect on-time shipping record (weekly shipments) and has received no significant quality complaints at all.
c. The customer's market share increased beyond expectations and they have won several quality and service awards in the clinical diagnostics industry.
d. Inventories at all points in the pipeline have decreased by almost half while volume has more than doubled.
e. Both parties have enjoyed a significant return on their investments and further investments are anticipated.