09/26/2016 : 0 Comments
[Author’s Note: This is the first in a series of blog posts that will describe the journey of one company as they grappled with the issue of inventory. These blog posts will roughly follow the journey as defined by the LEAN DMAIC process]
Whether you are an aficionado of the Theory of Constraints, LEAN, some other formal process improvement methodology, or just based on your own practical experience, you know that properly dealing with inventory is one of the keys to improving effectiveness.
When we think of inventory, we often focus on the raw materials and supplies needed to support a manufacturing process or the service we provide. While these are certainly a type of inventory that needs to be addressed, there is another type of inventory that must also be considered.
This other inventory is the inventory of facilities, equipment, and tools we use to produce the product or service we offer. This second inventory, due to not being seen as a process consumable, is often overlooked when dealing with the inventory issue. Ironically however, this second category of inventory may have as big if not a bigger impact on operational effectiveness.
The reason is two fold: First, if not maintained in sufficient quantities it can directly impact the ability to produce a product or service. Second, this type inventory represents not only the “inventory” waste as defined by LEAN it also can also involve the “over production” waste. There is not only the challenge with managing the cost and stock level of this type of inventory, but this second type of inventory often requires daily care and feeding. If there is excess inventory it means you are expending production resources to maintain this unnecessary inventory. A simple illustration is machines on a production line. If you do not have enough of those machines you may not be able to meet your production goals. However, if you have an excess of those machines, you are not only incurring the acquisition cost but also the on-going maintenance cost for a piece of equipment that is not being used.
This particular story is about this second type of inventory. It involves measuring and test equipment (M&TE) that is used to support the production of electricity via nuclear power plants. While in the nuclear industry the control of M&TE is specifically mandated by Title10, Part 50, Appendix B of the Code of Federal Regulation, other industries have similar regulatory requirements, or just a recognized commercial need to have accurate M&TE to ensure quality standards. Whatever the basis for the M&TE program, it involves inventory costs.
As the nuclear power industry faces competition from solar, wind, and low cost gas production facilities, the need to reduce cost in all areas has become a necessity. The cost of it’s mandated M&TE program is just one area that has to be examined.
As with all inventory issues, the question is, how much M&TE inventory do we need to have on hand to ensure we can safely and reliably maintain the nuclear facilities without incurring excess cost? For M&TE this cost is not only the cost of buying and storing the equipment, but also with supporting the required periodic calibration of that equipment.
The problem definition thus became, “How do we determine the right level of M&TE to maintain and support?” As all M&TE used to support nuclear power plants is required to be uniquely identified and calibrated as specified at intervals, answering the question of how much current inventory was on hand was fairly easy. We quickly determine we had just shy of 17,000 total items in inventory. This inventory represented over 2,000 difference models of equipment that was being maintained in support of 6 operating nuclear facilities.
The hard part was determining the correct inventory levels for each of the 2,000 models needed to support both normal operations and peak demand during periodic maintenance and refueling outages at each of the 6 facilities. After unsuccessfully trying to “mine” and manipulate the data from our database we realized we were going to need additional resources.
Part II of this blog will share how we went about defining the resources needed to assist us, and the process of selecting the right vendor to support our needs.
Note about the author: Dean Williams is a graduated of the United States Merchant Marine Academy at Kings Point with 40+ years of experience in a variety of industries and positions. Dean’s passion is process improvement, which he brings to all of his activities, whether as the manager of a large electric utility calibration lab, industry representative on various committees and boards, or as a process improvement consultant.
07/28/2016 : 0 Comments
This week, Tom Knight, Invistics CEO and Founder, was invited to co-present at the annual National Conference of Standards Laboratories International (NCSLI) Annual Conference, held in St. Paul Minnesota. Tom presented a workshop called “Applying LEAN in a Laboratory Environment”, along with Dean Williams, the manager of the Duke Energy Standards Laboratory. Participants included representatives from laboratories in a wide variety of industries, including Pharmaceuticals, Aerospace, Utilities, Manufacturing, and Medical Devices.
This diverse group’s common interest included: how to use LEAN methods to improve efficiencies and reduce waste in laboratories, particularly in “high-mix” laboratories that handle a wide variety of complex testing methods. The workshop included many best practices and examples from labs that Tom and Dean have worked with, as well as hands-on exercises to reinforce these LEAN tools and techniques.
Of particular interest were software solutions Invistics has developed to help laboratories in two areas:
- 1.) Improving visibility of operations within a laboratory or testing facility, to improve flow and provide clear oversight of the “heath” and efficiencies of the lab’s operations. For example, pharmaceutical laboratories often struggle with lengthy sample testing times, or with disconnected computer systems that lack the ability to flag when operations are not efficient or if tests are not completing on time. The Invistics software provides visibility by consolidating data from a variety of sources, such as Laboratory Information Management Systems (LIMS), Asset Management Systems (AMS), and Enterprise Resource Planning (ERP) system such as SAP or Oracle. The software can even be used to replace paper-based records or home-grown tools built in Excel or Access.
- 2.) Advanced analytics to optimize inventory levels. During the workshop, numerous calibration labs stated their workload can explode and their lab operations suffer when excessive inventories of instruments or tooling require calibration. They expressed a common interest in mathematical tools to optimize inventory levels to avoid these problems. The Invistics software provides those analytics, allowing them to use math and analytics to prove where tools and other testing equipment can be eliminated.
Invistics specializes in these two areas: inventory visibility and analytics. (In fact, our name means inventory visibility and analytics.) We were delighted to have led this workshop, and to bring all these labs together to discuss their common needs and LEAN best practices to address them.
If you are interested in learning more about these software solutions, please contact us.
07/12/2016 : 0 Comments
In an effort to stay up-to-date on new strategies, ideas, and solutions in the industries that we serve, we will be attending the following upcoming conferences. Feel free to introduce yourself and say “hi” to our team, and we’ll be happy to answer any questions you may have regarding our company and solutions.
Tom Knight, CEO of Invistics, will be presenting on the topic of “Applying LEAN in a Calibration Laboratory Environment” at the NCLSI conference this year.
Date: 7/25/2016 @ 8:00 AM
Website: NCLSI Website
IHFDA Annual Conference
Date: 9/13/2016 – 9/14/2016
Website: IHFDA Website
NADDI National Conference
Date: 10/11/2016 – 10/14/2016
Website: NADDI Website
2016 Fall Hospital Pharmacy Conference
Date: 10/17/2016 – 10/19/2016
Date: 10/18/2016 – 10/21/2016
Website: NASCSA Website
05/31/2016 : 0 Comments
Every month, Invistics offers educational Webinars in a variety of supply chain topics. Typically, these Webinars include best practices, case studies, and lessons learned from our experience working with a industry leaders. We’re proud to now be able to offer our Webinar recordings to be viewed at anytime:
04/14/2016 : 0 Comments
Invistics Controlled Substance Blog Series:
- Invistics Joins the Fight Against Controlled Substance Diversion
- Silent Victims of Opioid Addiction: The Children
- When Opioid Addiction Hits Home: Atlanta
In our Controlled Substance blog series so far, we’ve detailed the epidemic of opioid abuse that has ravaged our nation, leading to annual death counts as high as 27,000 per year, which is more than car accident fatalities and rivals the damage done by the AIDS epidemic in the 1990’s.
Invistics’ background is in helping complex supply chains with advanced inventory analytics and visibility tools. In 2012, one our pharmaceutical customers asked us to develop software specifically designed to improve Controlled Substance Inventory Management; it needed to have real-time inventory accuracy and verification to pass Drug Enforcement Agency (DEA) inspections, electronic data entry for Research& Development and Analytical Lab environments who are still mostly using paper-based inventory tracking, smart reporting features to consolidate controlled substance inventory data and make Year-End reporting less burdensome, and the capability to track and manage quota for schedule II controlled substances.
We were surprised to learn, given the urgency of the national drug diversion problem, that there wasn’t another software on the market that provided these capabilities. Over the course of the next four years, we have learned all we could about our nation’s current controlled substance crisis. And we have made significant investments building out our software’s capabilities to help prevent controlled substance diversion.
So now we can offer our experience and our software solution to fight diversion:
- FlowPath Health: Real-time visibility showing the location of all controlled substance inventory, with alerts to flag if any material is not properly secured in the appropriate vault, cage, or restricted access location:
- DataVault: Electronic data entry screens that allow employees in analytical laboratories, product development, and research departments to convert paper-based log books into electronic, real-time tracking information:
- Report Manager: Electronic reports that provide cradle-to-grave lot lineage, with audit trails for every movement of every gram or tablet or sample of controlled substances, and accurately compile the reports required by the DEA to prevent diversion or theft of controlled substances:
- Quota Calculator: And assistance with requesting annual quota from the DEA for Schedule II controlled substances, the most additive and most dangerous controlled substances:
To see if our software solutions can help your company, please call us at 1-800-601-3456 for a free consultation, or download our Executive Brief for more information. Together we can turn the tide in the fight against Controlled Substance diversio
03/30/2016 : 0 Comments
In first blog entry of our Controlled Substance Abuse series, we reviewed the widespread abuse of pharmaceutical opioids in America, and our second entry detailed how controlled substance abuse devastates families, and children in particular. Today we’re going to discuss the alarming trend of opioid abuse that really hits home for us because it’s occurring right in Invistics’ backyard: the greater Atlanta area. According to 11 Alive, the Atlanta News Channel:
“In the past six years, the number of heroin-related deaths has gone up by 3844% in Fulton, DeKalb, Cobb, and Gwinnett counties. The Georgia Bureau of Investigation (GBI) confirms the fastest growing rate of heroin-related deaths is in a cluster of Atlanta’s northern wealthy suburbs. That fact is hiding in state and county records.(For more information regarding this story, 11 Alive conducted a chilling 4 episode investigation “Inside the Triangle”.)”
Young people, in Atlanta suburbs, are dying from heroin overdose at an alarming rate. The problem has even captured the White House’s attention, and President Obama visited Atlanta last week as part his efforts to escalate the fight against the prescription opioid abuse and heroin epidemic in the area.
There is a direct correlation between opioid painkiller abuse and its much deadlier cousin, heroin. As government and health services continue to crack down on controlled substance diversion, people who abuse non-prescribed painkillers are turning to heroine due to increased accessibility, lower market price and high purity of heroin to achieve a stronger “high”. The National Institute of Drug Abuse estimates that 1 in 15 people who take non-medical prescription pain killers will try heroin in the next 10 years, and that heroin is almost 3x as addictive as pain killers, while being much more dangerous. The U.S. National Library of Medicine stated that “Painkillers [are] often gateway to Heroin for U.S. Teens.”
On March 10 2016, The Atlanta Journal Constitution reported that a criminal scheme that burglarized close to 2 million doses of addictive prescription drugs ($40 million worth of narcotics) from Emory University Hospital Midtown, including 1.2 million doses of hydrocodone and 110 gallons of promethazine with codeine, has been shut down after running for 5 years.
“Emory Midtown’s case is yet another example of how prescription drugs can be put to illegal uses at top brand-name hospitals, even when administrators think they’re following the rules. There are no statistics on how often these kinds of cases happen, in part because the hospitals hush them up, said Kimberly New, founder of Diversion Specialists, which advises hospitals on how to prevent prescription drug theft, which is often called drug diversion.”
The article states the problem stemmed from a “lack of control” by hospital administrators that let the criminal operation run for over 5 years before discovery. “By the time Emory Midtown reported its suspicions to law enforcement in 2013, some 2 million doses of opiates and other addictive drugs had gone missing. The suspects — all hourly employees — were driving Mercedes Benz and BMW cars.”
We believe at Invistics the best way to prevent drug diversion is to stop it before it starts. The technology exists to provide accurate visibility and accountability in the form of diversion alerts for any institution that handles controlled substances— hospitals, drug manufacturers, R&D labs—to monitor and shut down diversion before it can occur. For every diversion scheme uncovered, there are many more that go undetected due to the lack of visibility and control of controlled substances along the supply chain. By spreading awareness of problem, as well as the technology advancements that can monitor and curb diversion, we hope to Invistics can make a difference starting with our own backyard.
03/09/2016 : 0 Comments
One of the devastating backdrops of America’s opioid epidemic is the impact it has on the children whose guardians are victims of the powerful addiction to opioids that renders them unfit to function as parents. Last week, we reviewed the widespread abuse of pharmaceutical opioids in America, and now we will turn our lens to the silent victims of the opioid addiction, the ones that won’t appear on any statistics but will have nevertheless had their life’s unrevokably altered by chemical addiction: the children.
The Wall Street Journal states in “Parents’ Drug Abuse Strains Child-Welfare Agencies”: “Abuse of opioids like heroin and prescription painkillers is straining child-welfare agencies across the U.S. and sending more children into foster care, officials say. Addiction treatment for opioids only occasionally succeeds, relapse is common and children often languish for years in the system. The number of children in foster care nationwide as of September 2014 rose 3.5% from a year earlier to 415,129, according to the latest data collected by the Administration for Children and Families, part of the U.S. Department of Health and Human Services.”
The epidemic’s reach is pervasive. The Wall Street Journal continues, “In Vermont, opioid use was a factor in 80% of cases in which a child under the age of 3 was taken into custody…The number of children under the custody of the Department for Children and Families as of last September grew 40% from two years earlier to 1,373, driven mainly by parental opioid addiction, according to Gov. Peter Shumlin.[…]
The Indiana Department of Child Services added 459 family case managers in the past two years to help handle a rising tide of cases. The agency estimates 2,600 children had to be removed from homes due to parental drug abuse in a six-month period that ended last March, a 71% jump from two years earlier.
It’s a double-edge sword for parents who are afflicted: on one hand, if they ignore the issue, they risk their children growing up in unfit environment where their needs come second; on the other hand, if they seek out treatment and admit to their problem, they risk losing their kids to the state anyways. Dr. Sarah Wakeman, a specialist in substance abuse treatment at Massachusetts General Hospital, states for the Boston Globe: “Right now, there’s an incentive not to talk about the fact that you have an addiction because you’re worried you’ll be punished and lose your kids.”
An even more disturbing trend: doctors are confronting the challenge of newborns being born with a dependency to painkillers, due to their parents abusing the drugs during pregnancy. According to The New York Times: “Infants […] may cry excessively and have stiff limbs, tremors, diarrhea and other problems that make their first days of life excruciating. Many have to stay in the hospital for weeks while they are weaned off the drugs, taxing neonatal units and driving the cost of their medical care into the tens of thousands of dollars.
Like the cocaine-exposed babies of the 1980s, those born dependent on prescription opiates — narcotics that contain opium or its derivatives — are entering a world in which little is known about the long-term effects on their development. Few doctors are even willing to treat pregnant opiate addicts, and there is no universally accepted standard of care for their babies, partly because of the difficulty of conducting research on pregnant women and newborns.
There is already some relief on the way. Just Last month, President Obama proposed $1.1 billion in new funding to address the prescription opioid abuse and heroin use epidemic. Additionally, many states are proposing new legislation to help the children of addicted parents by sponsoring programs where the state will temporarily remove the children out of their parents care, but rather than settle them into a state home, they will approach close family as a temporary asylum for the children as their parents seek treatment.
One reason the epidemic has spread to its current state is due to the ease-of-access of getting these drugs from a prescription or from an illegal source which allow addiction to fester. At Invistics, we believe the best response is to prevent diversion before it happens. By spreading awareness and assisting pharmaceutical manufactures and developers with tracking and alerts for their controlled substances, we can hope to curb addiction & abuse before it occurs. Join us in the fight against opioid addiction and ensure that our nation’s children are afforded the opportunity to grow up in healthy homes, free from suffering.
02/11/2016 : 0 Comments
Prescription painkillers are abused by more than two million Americans every year. Each day, 7000 people are treated in emergency rooms across the country for abusing opioids such as Hydrocodone, Oxycodone, and Methadone, and the number of fatalities in the US alone has reached 44 people a day, higher than the number of car collision fatalities. Most of these are people are unaware of the addictive nature of these drugs, and have too-easy access to them via a prescription or from illegal sources. Recently, the New England Journal of Medicine has established a direct link between nonmedical prescription-opioid use and their more potent street counterpart, heroine. The statistics have looked bad for years, and recent overdoses continue to grow.
The rates of overdose deaths are rising particularly for women (up 400% from 1999 to 2010) and middle-aged Caucasian Americans. The New York Times, states in “Drug Overdoses Propel Rise in Mortality Rates of Young Whites”:
The drug overdose numbers were stark. In 2014, the overdose death rate for whites ages 25 to 34 was five times its level in 1999, and the rate for 35- to 44-year-old whites tripled during that period. The numbers cover both illegal and prescription drugs.
“That is startling,” said Dr. Wilson Compton, the deputy director of the National Institute on Drug Abuse. “Those are tremendous increases.”
Rising rates of overdose deaths and suicide appear to have erased the benefits from advances in medical treatment for most age groups of whites. Death rates for drug overdoses and suicides “are running counter to those of chronic diseases,” like heart disease, said Ian Rockett, an epidemiologist at West Virginia University.
Just last week, President Obama has proposed $1.1 billion in new funding to address the prescription opioid abuse and heroin use epidemic. So we at Invistics have decided to join our nation’s fight against the diversion of Controlled Substances. What is diversion? “Any criminal act involving a prescription drug.”
Our initial exposure to Controlled Substance compliance came in 2012, when one of our pharmaceutical customers approached us to modify our supply chain software to have specific capabilities to manage Controlled Substance inventory across their supply chain. Specifically, we built software for them with the following capabilities:
- Real-time visibility showing the location of all their controlled substance inventories, with alerts to flag if any material is not properly secured in the appropriate vault, cage, or restricted access location
- Electronic data entry screens that allow their employees in their analytical laboratories, product development, and research departments to convert paper-based log books into electronic, real-time tracking information
- Electronic reports that provide cradle-to-grave lot lineage, with audit trails for every movement of every gram or tablet or sample of controlled substances, and accurately compile the reports required by the DEA to prevent diversion or theft of controlled substances
- And assistance with requesting annual quota from the DEA for Schedule II controlled substances, the most additive and most dangerous controlled substances.
Since then, Invistics has spoken with hundreds of individuals who manufacture, distribute, prescribe, or administer Controlled Substances. We have talked with, and learned from, people working in every link of our nation’s Controlled Substance supply chain: drug manufacturing companies, wholesalers and distributors, hospitals and their doctors & nurses, retail pharmacists, and law enforcement agencies to learn the role we can play in helping prevent Controlled Substance diversion and accidental overdoses. This blog entry is the first in a series of five, detailing what we have learned, and why we are joining the fight to prevent Controlled Substance diversion. We will be posting four more articles on this topic over the coming weeks, with additional details about the problem, and the new approach we are taking to join our nation’s fight against this epidemic.
12/14/2015 : 0 Comments
Lora Cecerce, founder of Supply Chain Insights, posted a very insightful article in Forbes called “Does Better Forecasting Improve Inventory? Why I Don’t Think so Anymore”.
Inventory has always been necessary in supply chain management to buffer against supply and demand variability. With the advent of high-mix manufacturing and the need to produce a longer tail of SKUs with more equipment changeover, this is more true than ever before. Lora, in her recent analysis of planning benchmarking for large mult-nationals, states:
“A mistake that I see companies making over and over again is improving forecasting, but not improving inventory levels because of the lack of a holistic focus. After the implementation of a forecasting system, and getting basic functionality in place and providing a reliable forecast with minimal bias and accuracy, there is only minimal value in continuing to refine the forecast. Most companies do not have a forecasting problem. Instead, they do not know how to use the forecast to drive inventory strategies.
Why do I state this so boldly? The forecast is always wrong. This is true by definition. Improving it by a few percentage points on forecast accuracy is not going to drive the improvements in inventory that most people think. While most companies focus on the numbers, it is understanding the probability of demand and translating it to supply strategies that makes a difference.”
Lora counted four trends that lead her to rethink how inventory should be managed.
Cycle Stock is the Opportunity for Most Manufacturers
“Cycle stock is most effectively managed through the successful implementation of production planning. (Cycle stock is the management of stock required to cycle through production runs and procurement buys effectively. It involves complex logic on batch size, change-overs and production sequencing.) With the rise of item complexity, improving production planning becomes more important. This planning technology is tricky to implement and many of the technologies are not up to the task; but doing it well is essential.”
One of the cornerstone of Invistics’ solution is to view Inventory holistically as a combination of Cycle Stock and Safety Stock. It’s very common for companies to order materials in large quantities, often to meet a bulk discount, but then to skip the next step of figuring out bulk discount savings vs cycle stock inventory management costs. Even if you save 20% by ordering a years worth of product X in bulk, you must account for the holding, movement, and obsolescence risk of that left over inventory as it sits in your warehouse for the next year.
Download our Whitepaper to Learn More: Optimizing Cycle Stock, Lot Sizes, and Rhythm Wheels in High-Mix Manufacturing
Inventory is the Most Important Supply Chain Buffer, but Requires Design
“The most important buffers–shock absorber for volatility– in the supply chain is inventory and manufacturing capacity. The reduction of cost and improving asset utilization is usually the charter of the supply chain team. As assets become more and more utilized, manufacturing loses the ability to buffer volatility through manufacturing capacity optimization. In parallel, with more and more manufacturing outsourcing, companies lose the capability to buffer through the use of manufacturing capacity. As a result, inventory becomes the critical buffer to absorb demand and supply volatility. Designing the supply chain and making conscious choice about push-pull decoupling points, cycles, and late-stage postponement helps.”
At Invistics, we also stress the design before the implementation for three reasons. 1.) It builds consensus. 2.) It develops a relevant business case to get stakeholders invested, and 3.) it identifies processes and tools that are require to support the new approach. Our workshops begins with sketching out the “As-Is” value streams vs the future “Should-be” value streams, and discusses many of the items Lora mentions such as when to use Push vs Pull.
Technology can Help
“More and more companies are purchasing inventory technologies, but failing to give planners time to plan. This is a mistake. With the rise of the global multi-national. There is more and more need for an inventory planning role to manage the form and function of inventory and develop inventory strategies. Buying the technology and not having clear processes and accountability does not help. We are still in our infancy in the use of multi-tier inventory optimization technologies, but as shown in Figure 2, there is a strong impact when implemented correctly.”
Most high-mix environments will require technology due to sheer numbers. Traditional “rule of thumbs” approaches to inventory management such as “let’s hold 4 weeks of supply for product X” are becoming more and more outdated in a world where demand and supply rates fluctuate quickly. Often times you need a tool that can drill down into the just the items you are managing, to pull data from multiple computer systems, and can give you an accurate solution without tying up IT resources to sustain. If interested, here is a demo of a multi-tier inventory optimization technology called the Inventory Advsior: http://www.invistics.com/inventory-optimization-software/
“One of the surprises for me in the benchmark data is the gap in understanding of inventory strategies by the supply chain executive team. The concepts of planning and the management of form and function of inventory are not well understood. Most executives believe that the answer lies in having a better forecast. They are not able to have a discussion on the form and function of inventory. It takes training. The strategy requires careful definition with finance. However, it is worth it. Inventory turns correlate to market capitalization, and who can argue with improving market capitalization?”
Leadership is the key to sustainability. All the planning and software tools in the world aren’t enough to effect change if your companies management isn’t on board with visible metrics and staff training to ensure the new processes are being implemented with care.
To share with you an example from Invistics past, we completed a new inventory management workshop at a large company where we “capped” inventory using Pull-driven methods. Later on, when we came back to audit the shop floor, planners were still relegating to their old habits and focused only on maximizing machine utilization even when there was no demand for more of the product. In the planner’s eyes, the waste was due to letting a machine sit “unused”, instead of the storage and handling cost of the piles of unnecessary inventory. Leadership is key to bridge such communication gaps.
We hope this blog article was educational. If you have any questions or would like a consultant with Invistics please contact us using the contact button at the top of the page. And oh, a Happy Holidays to all.
12/03/2015 : 0 Comments
High-mix companies are manufacturing and distributing a wider variety of products every year, with increased variability in both supply and demand.
These companies have a choice for inventory optimization:
- Continue to struggle with homegrown, spreadsheet approaches,
- Invest significant time and money building and maintaining tools from ERP vendors
- Quickly optimize inventory using cloud-based tools, such as the Inventory Advisor from Invistics
Our Invetory Advisor software uses advanced analytics to optimize inventory levels & safety stocks. Implementation is quick and requires a minimal amount of inputs and resources from IT. You can configure the software to optimizes all inventory: raw materials, WIP, and finished goods, across the supply chain, while slicing and dicing the dataset in whichever way makes sense for your business so that you can manage your “A” SKUs (also known as high runners) differently than your “B” and “C” SKUs
Below is a video demonstration of the Inventory Advisor in action: