MU CELDi helps company save more than $2 million
Proprietors of any household budget would rejoice in the discovery of a way to save a few dollars. However, when the budget is for a multi-billion dollar company, and the savings are in the millions of dollars, a little more than a celebration may be in order.
Such is the case for Bayer CropScience’s Kansas City facility after receiving the results of a yearlong project from the University of Missouri’s National Science Foundation-supported Center for Excellence in Logistics and Distribution (CELDi).
CELDi is a university-based enterprise established nearly 10 years ago that conducts applied research, resulting in innovative logistics and distribution solutions. Industry member organizations like the Kansas City Bayer Crop Science facility, which specializes in herbicide, pesticide and fungicide production, pay an annual membership, and in return, they get a company-specific project, with shared fundamental research and collaborative research results from the consortium, and access to top, logistics-trained students.
“The value that CELDi gave to this particular project was significant,” said Bill Abernathy, head of Bayer CropScience’s North America product supply project management office.
“Significant,” as in a potential $2.8 million gained from restructuring how the facility stores, transports and maintains materials throughout its production plants and warehouses.
MU’s work with Bayer investigated how the company could better operate its material flow system.
“The Bayer facility is a huge site with only one entrance,” said Mustafa Sir, an assistant professor of industrial and manufacturing systems engineering. “From a logistics, materials handling point of view, they had a lot of inefficiencies.”
Sir said Bayer had acquired the facility, and had since added buildings on-site, as well as renting off-site storage space. These multiple locations, as well as the multiple production plants, raw materials, packing materials, finished goods and equipment used for transport on- and off-site, factor into the complex logistics system that had evolved.
“There are three on-site warehouses, and they use two off-site warehouses,” Sir said. “Combine this with a huge production volume, and it results in a huge amount of raw materials coming into their site daily.”
Because the facility wasn’t planned with the flow of materials in mind, Sir said, there wasn’t an efficient pattern for how materials were stored and transported.
“It’s really hard to know where items should go, and the flow is not optimal,” said Phichet “Kim” Wutthisirisart, an industrial engineering doctoral student, one of two students who worked on the project.
Over the last year, Wutthisirisart and Sir, along with senior industrial engineering student Tyler Keel and James Noble, industrial engineering professor and MU site director for CELDi, visited the Kansas City facility multiple times to evaluate the situation firsthand.
“We have to come in and quickly have an understanding of a problem that they’ve been working on a long time, so it takes a lot of upfront time,” Noble said.
While this evaluation process varies depending on the project, Noble and Sir agreed the logistic project for Bayer was very interactive.
Wutthisirsart’s main role was to analyze the data — which includes movement patterns, the number of times materials are handled, days they are stored and related costs — and then develop computer tools to analyze it in order to find inefficiencies in the system. After that, the group came up with multiple recommendations on how Bayer could improve its logistics system.
“We spent quite some time looking at that data, and we developed a lot of visualization and data analysis tools to make sense of the data, to understand where the inefficiencies are,” Sir said.
With the CELDi crew’s information, Bayer’s projected savings total nearly $2.8 million over the next three to four years, and the company has proposed a three-phase system to implement the suggestions.
“We’re actually using the CELDi analysis extensively to start the first phase of the project,” Abernathy said. “It will yield about $750,000 in savings in the first year.”
Savings were found mostly by cutting spending. For example, the discovery of underutilized space on-site made a significant impact on the amount of money that could be saved.
“Our data analysis revealed that additional capacity was available,” Sir said.
“What we did was to look at it completely from a different perspective,” he said. “Can we actually utilize this already available space on-site and use less space off-site so we can cut transportation costs?”
The group also investigated the benefits of building a new on-site warehouse. Sir said his team looked at justifying a new building by calculating the cost savings from reduced storage, transportation, handling and labor costs.
Each time materials are stored, transported or handled in any way counts as a “touch.”
“There are so many touches, when you cut the need for an off-site warehouse, those extra touches are eliminated,” Sir said.
Companies like Bayer CropScience find their membership with MU CELDi offer them valuable resources they sometimes wouldn’t normally have. In Bayer’s case, Abernathy said, its logistics system was very complex, and the resources from CELDi helped it to understand and find the keys to unlock how to rethink the system.
“We engaged MU CELDi, and they dealt with tremendous amounts of data, providing quality, as is, analysis, as well as creating multiple scenarios for improving and optimizing a very complex logistics model,” Abernathy said.
“Bayer employs many brilliant engineers,” Sir said. “But it needed someone like us who could look at things objectively, out of the box.”
Mizzou Engineering also benefits from the rapport built from working with companies like Bayer, and students benefit from working in real-world scenarios.
“Students get to work on real problems,” Noble said. “In this case, Kim’s Ph.D. will build upon the research area we discovered at Bayer.”
And the benefits last years beyond the project.
“As we do this for large companies, like Bayer, in Missouri and around the Midwest, that’s going to have long-term effects in terms of student hiring. We are definitely increasing our visibility,” Sir said.
Noble said this is the mission of CELDi: engage industry to solve real problems, get students involved and achieve a bottom-line impact.
MU is one of nine major research university’s in the NSF-sponsored Industry/University Collaborative Research Center (I/UCRC). Others include, the University of Arkansas, Arizona State University, Clemson University, Virginia Polytechnic Institute and State University, University of California-Berkley, Texas Tech University, University of Oklahoma and Oklahoma State University.
MU engineering’s other partners have included Boeing, Bayer, Leggett & Platt, Hallmark and Ameren, among others.
About Bayer CropScience
Bayer CropScience United States is engaged in research and development for sustainable crop solutions. The company strives to help farmers provide a quality harvest to fill the needs to affordable food, animal feed, fiber and energy crops around the world.
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