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Saving Time and Reducing Costs Through Cost-Efficient Inventory Management

Challenge

Keeping track of lab supplies emerged as a complicated problem for a global leader in household products manufacturing. Frequent delays and difficulty locating necessary supplies had become such a hassle that researchers were driven to stock more than they needed, causing inventory to pile up.

The company’s procurement team estimated that its laboratories were stocking three to four times the necessary volume. Managing this stock was a grossly inefficient use of researchers’ time, and the expense of accommodating this inventory could not justifiably be passed onto the end user. How could the company optimize the efficiency of its inventory in order to increase valuable research time for its scientists?

Solution

The company asked Avantor Services to analyze its inventory, study its current ordering process, and recommend a solution that would reduce costs while allowing scientists to stay focused at the bench. Avantor Services studied the situation and created a plan that included:

  • Establishing buying patterns for all stocking locations
  • Consolidating suppliers to reduce ordering and invoice complexity, as well as operational costs
  • Implementing an automated inventory management system to prevent repetitive ordering, optimize inventory levels, and reduce scientist involvement in procurement
  • Labor justification to manage the process after implementation

The Avantor Services Site Services Team implemented the 5S system in the stocking locations: Sort, Set (in order), Shine, Standardize, and Sustain Forward. This system emphasizes standardizing methods of organizing and cleaning the stockroom, and continuous use of these methods to reduce the time spent on future reorganization efforts.

Result

Avantor Services introduced technology, process innovation, and metrics to drive greater efficiency. Through this, the company has saved:

  • $30,450 through inventory reduction over the first six months of the program
  • $442,000 in process cost savings resulting from new desktop delivery system, which frees up researcher time
  • $7,850 through transferring management of stockrooms to VWR

The automated inventory management system also recovered more than 4,300 hours that scientists had previously been using on searching for supplies instead of research activities. The first phase of the project has recovered 130 square feet of storage space, which created a savings of almost $12,000. Additional plans for the future will potentially reclaim as much as 5,000 square feet.