FlowVision helps NAS Medical Reduce Both Labor and Material Costs

Highlights:

  • 40% savings in material cost
  • 70% reduction in product lead time
  • 10% reduction in scrap
  • 15% improvement in employee productivity
  • 5% improvement in fulfillment rate
  • 80% reduction in overtime costs

Business Objectives:

NAS Medical began in 1990 as a manufacturer of industrial radioactive sources under the name of North American Scientific (NAS). Their expertise in radiation standards formed the basis of its expansion into therapeutic radiation applications, and in 1998, NASM commercialized its first brachytherapy seed. Just 4 years later, NASM became the first company to manufacture both I-125 and Pd-103 seeds, the two FDA-approved isotopes most widely used in low-dose-rate brachytherapy treatment for prostate cancer. Since then NASM has steadily expanded its prostate brachytherapy business to include a broader suite of radiation oncology products.

The business provides radioactive seeds that are implanted in prostate cancer patients. Doctors determine the pattern, number of seeds to be implanted, and the radioactive strength required for their patient. NAS determines when to produce the seeds and what level of radiation to apply to the seeds, based upon the doctors requested in-plant date, the amount of radiation per the doctor required to treat the patient’s prostate cancer. The raw radioactive material and the radiated seeds have a half-life of 17 days for palladium (Pd-103) to 60 days for iodine (I-125). Therefore, the shelf life of the raw radioactive isotopes to radiate the seeds and the seeds themselves must be well managed to avoid loss of the effectiveness of the raw material and the seeds.

The Business Challenges:

There were two separate facilities to produce the two different types of seeds: Pd-103 & I-125. The business wanted to combine these two facilities into one and eliminate the cost of one building lease. This meant reducing the current floor space required for all manufacturing processes and finding a design to keep the two different seed manufacturing areas isolated from each other.

The processes, facilities, and protections required to produce radioactive seeds is a unique environment. It is a clean room environment, to contain the radioactive materials, the two different types of radioactive isotopes and the equipment are separated so the wrong type of radiation never has a chance to be implanted in a patient. The facility is a grouping of small rooms, some designed for handling the isotopes, some for making the seeds, another to clean, inspect and package the seeds. All of these areas lead to a single entrance and exit to ensure that a person leaving is not contaminated before exiting the facility.

NAS had gone through several rounds of capital infusions, and the investors were looking for a return on their investments. This would require dramatic reductions in cost, the ability to better serve their customers, and some substantial growth in market share.

To accomplish the financial goals of the investors, the business decided to hire a consulting firm with expertise in Lean Flow manufacturing. FlowVision had proven its ability to meet these challenges for the plant manager at previous medical device manufacturing companies. The goal was to implement Lean Flow as rapidly as possible, to demonstrate to the investors the ability to produce the products profitably.

The FlowVision Solution:

FlowVision uses a mathematical approach to create a factory design that flows product, develops discipline for WIP inventory and therefore lead time, and incorporates the unique processes for prostate seed production using a Rapid Lean Flow implementation. The Lean Flow training, data collection, factory design and initial factory rearrangement occurred in 2 ½ months. The initial benefits were beginning to be realized within a week of the completion of the factory design.

The design took the seed manufacturing processes that were large and batch oriented, separated in different rooms, and brought them together into a flow process. This allowed the implementation team to create smaller batch quantities, reducing lead time, and the confusion of lot traceability to orders that were occurring, and adding disciplined material handling methods. There was a kanban system setup to replenish the small pieces of tubing requiring welding before adding the resin balls inside of tubes for radiation.

The use of kanban was extended back to the supply base to pull in the radioactive isotopes (or nuclide) that were 80% of the cost of a prostate seed. There was more nuclide being ordered from the suppliers than necessary, causing extra seeds to be produced above actual customer demand, to use the isotope before it decayed into unusable material.

This was done because the nuclide has a half-life and is constantly decaying. The seeds that were made in anticipation of order demand often became unusable before an order was received. The waste of seeds annually was $450,000. The kanban system put the nuclide on a pull from the supplier, only asking for more isotope raw material when the current supply was consumed.

Implementation:

The implementation was originally planned to be just for the Pd-103 seeds, but as the implementation proceeded the team decided to expand the scope to include the I-125 site at a different facility, as well as a repackaging of radiated seeds into pre-plugged needles for a niche market area of the business. The design of the Pd-103, the I-125, and the pre-plugged needle processes were all completed in the 2 ½ months.

The Pd-103 facility rearrangement into a flow was also concluded within the 2 ½ months. The move of the processes for I-125 seed production from another location required some extensive building changes (walls moved and rooms reconfigured) which took an additional 3-4 months to complete.

In addition to the design work, for the facility, there were extensive changes to business processes for planning demand, sending product to suppliers for sterilization, and the creation of inventory of I-125 seeds for use in the pre-plugged needle products.

The planning methods were changed from making Pd-103 seeds to stock to fulfill customer orders, to producing seeds to demand. This dramatically reduced the number of seeds without orders to potentially decay and be scrapped. I-125 seeds had always been made to stock in variable quantities, and the quantities produced and stored were excessively large. The stock quantities were resized/reduced based upon the Lean Flow calculations, and the stock amounts made to be fixed quantities.

Because the I-125 manufacturing was across town from the pre-plugged needle facility which used some of the I-125 seeds, the communication and availability of I-125 seeds was not meeting the needs of the pre-plugged needle manufacturing. In the short term, changes to the planning of the I-125 production area made seeds available when required, and priorities were placed on seeds requiring repackaging. This made the entire pre-plugged needle process much more efficient.

In the past the sterilization costs per unit were extremely high because orders often were not completed on time, and small quantities of units were sent to the sterilization supplier. The supplier charged the same cost to sterilize whether the container was full or had only one order inside. By smoothing the flow, making sure I-125 seeds were ready to be plugged into needles when planned, larger batches of pre-plugged needles were shipped to the sterilization supplier reducing costs per unit dramatically.

Results:

The results of the Lean Flow implementation at this one medical device facility in the CA were phenomenal. The results were

In addition, the bottom line:

  • Lead time of Pd-103 seeds through manufacturing was reduced 70%
  • Scrap of unused seeds was reduced 75% or $330,000
  • Wasted nuclide raw material from long lead times with the supplier was reduced 15% or $470,000
  • Labor costs were reduced 15% or $140,000
  • Overtime costs were reduced 80%
  • On-time delivery improved 5% points
  • Inventory was reduced 19%, with a resulting savings of $70,000 in inventory carrying costs

The result was nearly a $1 million savings during the first year of the implementation of Lean Flow in the facility. This is a phenomenal improvement for a company whose sales that year were $14 million.