P+F trend report: custom manufacturer in a balancing act between full capacity and flexibility

BALANCING ACT

07.12.2006 Custom manufacturers are only able to take on as many orders as can be produced within their capacity levels. But supposing an unexpected order comes along? Which strategies are in place to optimise capacity? The editorial staff of P+F have investigated this subject within the industry.

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Every service provider will have had such customer responses: “Can’t you squeeze my order in somehow? I do need the product really urgently.” Normally, everyone is glad to receive lots of orders, even if they may have arrived unexpectedly; and manufacturers do aim at accommodating potential customers. On the other hand the producer is endeavouring right from the start to operate at full capacity to avoid idle machines. How can this situation be tackled?

‘Pushing in’ is often quite possible

An unanimous response, as was quickly demonstrated in several interviews: We must help the customer! Provided – of course – that both the technical equipment and the required know-how are in place. In such a case, it could happen that the order of an existing customer might be pushed down the line by a few days. This would of course only happen after prior consultation. “Within our operations, we try to be as flexible as possible, and quite often a slight delay in the delivery date does not cause the customer any problems”, according to Christoph Krone, head of Business Development and Sales at Lomapharm. This company in Emmerthal has recently initiated a process of rethinking entitled “How can we make our production process more flexible?“

Dr. Ulrich Nütz, sector head Pharmaceuticals at the vaccine plant at Dessau-Tornau (Impfstoffwerk Dessau-Tornau – IDT) is grateful for the horizontal hierarchy with short paths of communication within the organization. “Here at this location, we are able to take decisions fast and initiate changes in production quickly.” IDT has established a separate working group of approximately twenty employees from project management and the laboratory who are responsible for the flexible handling of new products and projects. In case of uncertainty, every effort is being made in direct and frank communication with the customer to explore possibilities and alternative solutions.
In addition, the size of the operation has an effect on flexibility. If technical equipment has to be installed, Lomapharm is consciously mindful of not only choosing highest performance machinery. The various pill presses for example generate different outputs, enabling a smaller order to run alongside the high performance press without any problems. Uelzena demonstrates a similar scenario. The company specialises in spray drying/agglomeration, and the flexibility of the spray towers comes in handy with unexpected orders. “To satisfy short-notice orders, we try to move capacities of the towers around”, explains Wolf-Dieter Borawitz, sales manager Custom Production at Uelzena. That is of course not practical in every case, as the existing eight spray towers differ considerably from one another. “In some instances it is quite difficult to exchange the towers. Here we are assisted by our considerable know-how over several decades”, confirms Gerhard Kühn, sales manager Drying. “With some products it works, with others it won’t.”
It is advantageous not to be reliant merely on being a service provider. Production equipment at Schwarz Pharma is employed to near 85 percent capacity with in-house products, only the remainder serves to satisfy custom orders. The company is not dependent on that side of the business. Yet should a product fit into the equation, the order is gratefully received – provided the relevant technology is in place and no expensive equipment purchases are essential. In the medium term, this manufacturer is not averse to further expanding its custom manufacturing sector. “If we were able to form an alliance with a customer over a number of years, we would certainly make the investment”, assumes Hans-Dieter de Jager, head of Business Development Packaging at Schwarz Pharma.

Calculating limiting factors

Not only technology and capacity can create limiting factors, frequently it is rather the delivery of the required materials such as active ingredients or packaging materials. As is often the case, things move along smoothly with good connections; otherwise the queue has to be joined at the supplier. Also, beyond that, the essential human resources have to be in place. No highly skilled personnel is required in the highly automated sector packaging. At Lomapharm it is an ongoing process to continually train the workforce so that they can be employed more flexibly. Beyond that, the company cooperates with subcontractors – predominantly in the finishing sector – supplying the same people so that they can attain a certain level of training as well. But this imposes limits, particularly in the coating process. “This procedure involves a certain level of manual expertise; effectively, these workers are not really exchangeable”, informs Krone.

What happens when an order simply can not be taken on at all? If that happens, an attempt will be made to recommend an alternative service provider. Limiting factors then might include the relevant equipment and the required know-how. “We medium-size producers have a good working relationship, we support each other”, Krone hits the nail on the head. In addition, de Jager has frequently been asked for his opinion and advice over the years. In the sector spray drying for example, passing the order on is not easily possible, as the pre-production trials are very time-consuming and the niche market producers mastering this technology are not particularly widespread.

Order placing via the Internet gains significance

As in the past, the personal contact between customer and service provider is still of the utmost importance, yet over the last few years order placing via the Internet has gained in importance. At least Lomapharm maintains that with these tools, alongside the traditional approach, the prospective customer is given the opportunity to contact all possible custom manufacturers quickly and straightforwardly. Just as the practice has now been adopted to give the customer initial feedback concerning principle feasibility within 48 hours, to then enter into detailed discussions. The handling of a written order normally takes up a great deal more time. In addition, for Lomapharm the export business is presently considerably more profitable than that with the homeland. According to Krone, the reason may be found in the health reform.

With IDT, the order placing via the Internet is somewhat more of an exception. The direct contact with prospects is still considered to bring more success, as are direct recommendations and attending exhibitions. “Despite this, IDT is represented on several significant Internet platforms and maintains these diligently”, emphasises Nütz. Otherwise, as with many other service providers, the preferred strategy remains the personal contact with customers, particularly when issues need to be resolved. The enter into discussions around the table or on site on how to proceed is still the basis for lasting success.

Keep an eye on flexibility – right at equipment purchase; training of personal so that they can be employed flexibly
“We focus on flexibility right from the start when purchasing technical equipment”
Christoph Krone, manager Business Development and Sales at Lomapharm
“The personal contact with our customers is the best strategy”
Dr. Ulrich Nütz, manager Pharmaceuticals at Impfstoffwerk Dessau-Tornau
“As soon as we have an enquiry, we are able to react rapidly“
Hans-Dieter de Jager, head of Business Development Packaging at Schwarz Pharma
“To be able to work to full capacity, we take advantage of the flexibility of our towers”
Wolf-Dieter Borawitz, department manager Sales Custom Manufacture at Uelzena
“We adopt the mix of commodities and revenue income to gauge capacity utilisation of the towers”
Gerhard Kühn, sales manager Drying at Uelzena

Heftausgabe: Compendium Customer Manufacturing 2006

Über den Autor

Birgit Lind , editor
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