Supply Chain Case Study: Control

ipc can help you manage your resources more profitably by offering creative solutions that can increase your cash flow and better utilize your facility while minimizing shortages, excess inventory, operational processes and freight charges.

Summary

A growing metal fabricator and manufacturer wants to increase their facility's profitability. Their focus is on decreasing the costs associated with their overall safety program. They are averaging 2 recordable accidents per month and have an overall spend in excess of $400,000 per year for personal protective equipment, (PPE). Various department heads are responsible for purchasing PPE from whom ever they choose.

Problem Identification:

• Department heads are always busy and don't have the time to manage their inventory as effectively as they would like.
• Several different brands of the same types of PPE are being used throughout the plant.
• Many of the same items are being bought through different vendors.
• Purchasing department is overloaded writing over 12 purchase orders per month for PPE.
• When they run out of product, employees are forced to substitute PPE or simply work without it.
• At times, the departments are congested by large amounts of PPE inventory.

Implications:

• Excesses in inventory:

• Take up valuable production and warehouse space
• Use up Cash


• Shortages cause:

• Dangerous work environments
• Decreased employee morale


• Excessive Operational Processes:

• Too many PO's, (each PO costs $75 in processes)
• Too many receiving processes
• Too many invoices to process


• Excessive Expenses:

• Paying too high a price for PPE because of lost leverage from volume buying
• Paying too much for freight charges, (Averaged 7% of total PPE spend-$28,000 annually)
• Each recordable injury is costing company an average of $4,200, (from medical expenses, lost time due to accidents, increased worker's compensation rates, etc.)

ipc Supply Chain Solutions:

1. Perform a plant wide assessment to identify all hazards and suggest appropriate PPE to insure worker safety.
2. Once sampled and approved, reduce number of products used and leverage manufacturers of the PPE to negotiate the best possible pricing and terms.
3. Established one area where all supplies would be stored neatly and securely.
4. Establish Vendor Managed Inventory, (VMI), where an ipc representative performs inventory every 2 weeks and replenishes supplies accordingly.

ipc Results and Benefits Summary:

1. Customer saved over $150,000 annually in PPE spend.
2. Customer reached 1 million work hours without a recordable accident. Annual savings by not having as many accidents: $100,800.
3. Customer writes 2 PO's per month and receives 2 shipments per month. Annual savings due to reduction in the number of PO's processed: $9,000.
4. No shortages or excess inventory occur.
5. With more time for the department heads and space in the production area, productivity and the resulting output are at record highs.

Testimonial:

"I can't say enough great things about ipc and the changes they implemented at our plant. They allowed us huge savings on our annual safety spend, created a safer work environment and helped us to set record numbers for production. I would highly recommend them!"

-Safety and Risk Manager, 35 years industrial experience