Safety stock positioning LIFT
|Company Name / Department||Bayer Consumer Health|
Ernico van Halm
|Location||Grenzach production site (south Germany close to Basel) for the first couple of months|
Operations Management and Logistics
|Housing arranged by company||No|
1000 EUR per month
Bayer company employs approximately 100.000 people, divided over more than 80 countries. Its products are sold in over 150 countries and its combined revenue exceeded $40 billion in 2020. Bayer has three divisions:
- The healthcare division focuses on development, manufacturing and commercialization of prescriptive health products.
- The agriculture division focuses on seeds, crop protection and non-agriculture pest control.
- Consumer Health division focuses on non-prescriptive healthcare products, which you will find in any supermarket or pharmacist around the world.
Bayer Consumer Health (BCH) supply chains is built from sales affiliates with one or more distribution centres, Many Contract Manufacturers and 10 own production sites. The Grenzach production is one of them and produces cremes and ointments for the global market.
The LIFT project transforms BCH towards a more Agile supply chain. In which the sales affiliates can be delivered from the plants in 1-2 months instead of 3-7 months currently. One important step to achieve this is to decouple as much as possible all
components from the packaging process. Due to the shorter lead time less safety stock of finished product will be needed, and a part needs to be relocated upstream at the component level to guarantee the short lead time.
Goals of the Project
Last year Lauran Kloosterman did his master thesis last year at BCH on multi-echelon safety stock management. This research triggered us about the safety stock impact of the revised lead times we get out of LIFT.
In addition to that, his research was about fixed safety stock quantities on components, whereas we are looking into safety time to create the offset. Therefore, we like to continue to survey in that sense that we are capable to determine the right level on safety stock on pack components in time rather than quantity. The reason why we are interested in safety time instead of safety stock is that:
- We do not like to get remainder stocks on packaging materials due to the artwork changes that play a roll. Leftovers may be scrapped because we are not allowed to ship these into the countries.
- Due to seasonality, we assume that safety stock time will perform better than a fixed safety stock
During the assessment other lines of inquiry could be:
- Can we improve the guaranteed service approach now that we work with fixed packaging lot sizes?
- Can we improve the guaranteed service approach to deal with unreliable vendors lead time?
How is the guaranteed service approach fit to seasonal demand? Can we make improvements to deal with seasonal products?
Determine safety stock proposal model that can be used to determine the safety stock level at the sales affiliates in combination with the required safety stock time on the component level.
Essential Student Knowledge
Modelling Python or similar
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