Australia's Best Magazine Features Exclusive Interview with Baxter Healthcare on Supply Chain Management

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Katherine Garbutt talks to Australia's Best about the company and the importance of their suppliers. This article appeared in Australia's Best Manufacturing, published in July 2008.

Baxter Healthcare appeared in Australia's Best Manufacturing, July 2008, with an in-depth interview with Katherine Garbutt, Here is a copy of the exclusive article that went to press with Bean Media Group.

Baxter is a global healthcare company focused on assisting healthcare professionals and their patients with treatment of complex medical conditions including hemophilia, immune disorders, kidney disease, cancer, trauma and other conditions. Katherine Garbutt, the Demand & Supply Manager for Baxter Heathcare shares with Australia's Best the mutual benefits of maintaining long-term relations with a small number of trusted suppliers.

A history of quality production of medical devices and therapies has seen Baxter develop many medical firsts as well as securing sales over US$11.3 billion. Established in the United States 75 years ago, Baxter began operating its Australian manufacturing facility over 40 years ago and recognises the unique needs of the Australian and New Zealand markets.

Baxter's vision is to be a leader in the Australian and New Zealand health sector, working with governments, hospitals and industry associations to provide speciality therapeutics that save and sustain lives. To support this vision in a globally competitive market, where there is significant cost pressure, it is vital to have an efficient supply chain. Local operations are just part of Baxter's strategy as a market leader in providing flexible service and quality products.

This high quality is the key driver when selecting suppliers of raw materials. It is not uncommon for Baxter to have a relationship with a supplier that spans over a decade. The longevity of the relationships reflects the ability for their supply partners to consistently meet not only Baxter's standards, but also service and cost, in a highly competitive market. It also allows their partners to fully understand how the raw material they supply is used in the process and actively contribute towards continuous improvement.

An example of this can be seen in how Baxter's cartons are supplied by Amcor Fibre Packaging. Amcor works with Baxter through all aspects of the supply chain. An attitude of continuous improvement is reflected in Amcor's proactive proposals on product development opportunities that address issues such as waste reduction, improved carton performance and changes in supply to ease cost pressures.

"The attitude of continually looking for improvement opportunities is a strong contributor to Amcor being a key supply partner. Beyond product development, there has been the ability to leverage the close proximity of Amcor and Baxter's facility as well as the strong supply relationship through taking daily delivery of cartons," says Katherine Garbutt. "This allows not only a high turn over of fresh stock, but also reduced storage requirements, which is of great benefit in an environment where space to store can be at a premium. To further reduce storage requirements, pallet configurations are maximised so that there is the maximum, safe usage of cartons per pallet - making pallet transfers as efficient as possible."

In terms of quality there are regular forums that allow Baxter's production staff to provide direct feedback on carton performance. This allows an opportunity to review all key performance indicators including on time delivery and product quality. An attitude towards improvement has encouraged the application by Amcor to apply statistical process control monitoring to their production process in order to maximise quality conforming product. This is in line with Baxter's commitment to the six sigma quality approach.

Another of Baxter's long term supplier relationships is with Milford Astor Foilmakers. A Victorian based company, Milford Astor Foilmakers, supplies hot stamping foil and magnesium hot stamp dies that are used to print on the IV and renal bags. "Print quality and consistency are crucial to our product quality and each one of the tens of millions of bags that are printed at our Toongabbie facility requires the same result. With variations in the size of bags, printer configurations to suit different production lines and foil colour to suit product requirements, consistency can only be achieved with a complete understanding of process and requirements. Again, Baxter is able to leverage the fact that Milford Astor Foilmakers are producing within Australia, which reduces lead times and allows rapid response to any changes," explains Garbutt.

There is also the critical advantage of immediate on site response to any production issues that involve the hot stamping process. Through audits and testing, Baxter has been able to utilise Milford Astor's foil quality assurance process, so that when stock arrives on site there is minimal Baxter quality assurance review required. Not only does this reduce cost, but increases flexibility to foil availability. In a product where global oil pricing is a key cost influencer, a supply partner that has a continuous improvement approach to business is key in long term supply chain cost effectiveness.

It is not only raw material suppliers that make an impact on the efficiency of Baxter's supply chain, but also providers of key services that are integral to the process. As Baxter continues to innovate and influence medical science via the development of vaccines and biopharmaceuticals, the ability to consistently supply product that has been maintained within very narrow temperature conditions, gains greater significance.

"Not only does the number of delivery locations become more diverse, but also it becomes a much greater proportion of cost within the supply chain," says Garbutt. " Baxter's experience has proven that it is of great benefit to be closely integrated with the members of the supply chain in order to minimise product losses, which can be substantial on even small shipments of these high value items, and to maintain maximum flexibility with speed and delivery locations."

According to Baxter maintaining relationships with a small number of suppliers has been most effective in best managing the specific needs of this part of the chain.

And what is Baxter's solution to an efficient supply chain in a competitive global market? "Our approach sums it up in one word - integration," states Katherine. Baxter aims to continue to blur the lines where the supply chain starts and where it ends by continually developing its position as an integrated member of the healthcare system at the fore of the supply chain. It also weights the importance in developing and maintaining supply partnerships for key materials from the input to the supply chain end. "It is only with the partnership of like-minded market leaders, with the attitude of continuous improvement that enable Baxter to achieve its mission of making a meaningful difference in patients lives."

Top suppliers to Baxter Healthcare include Milford Astor and Amcor


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