Quantifying the Financial Benefits of Chemical Inventory Management Using CISPro

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Αιθήρ Αλεξιάδης
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1 of Chemical Inventory Management Using CISPro by Darryl Braaksma Sr. Business and Financial Consultant, ChemSW, Inc.

2 of Chemical Inventory Management Using CISPro Table of Contents Introduction 3 About the Study 4 Survey Results 6 Lab Operations Findings 6 Inventory Support Findings 9 Financial Benefits Analysis 13 Executive Summary Case Study Conclusions Appendix: Financial Assumptions , ChemSW, Inc Mangels Blvd Fairfield, CA

3 of Chemical Inventory Management Using CISPro Introduction 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

4 of Chemical Inventory Management Using CISPro About The Study 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

5 of Chemical Inventory Management Using CISPro 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

6 of Chemical Inventory Management Using CISPro Survey Results Its great to see the inventory [in CISPro] and not double order chemicals. That was a huge problem for many years. Safety Manager, Bioindustrial Manufacturer Laboratory Operations Findings Laboratory User Efficiency Increases 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

7 of Chemical Inventory Management Using CISPro CISPro has benefited us in being better able to track expired chemicals, and overall chemical volumes, so we are disposing of materials in an attempt to get our chemical inventory stocks in line with actual usage. ES&H Specialist, Energy Technology Lab 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

8 of Chemical Inventory Management Using CISPro LABORATORY OPERATIONS Percent of Laboratory Staff Time 10.0% Pre CISPro CISPro 8.3% 7.7% 5.8% 4.8% 4.4% 3.0% 3.6% Searching Inventory Delays from Missing Inventory Researching Chemicals Inventory Order Request Figure 1. Lab operations man-hour percentages before and after CISPro implementation. LABORATORY OPERATIONS Man Hour Reduction as Percent of Original Pre CISPro CISPro 57% 62% 48% 36% Searching Inventory Delays from Missing Inventory Researching Chemicals Inventory Order Request Figure 2. Lab operations man-hour reductions as a percent of original after CISPro implementation. 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

9 of Chemical Inventory Management Using CISPro Inventory Support Findings Non-Labor Inventory Support Reductions NON-LABOR RELATED REDUCTIONS Reported Reductions as Percent of Original Pre CISPro CISPro 98% 96% 93% 93% 89% Chemical Container Count Inventory Space Use Purchase Order Count Chemical Purchasing Spend Waste Drum Reduction Figure 3. Non-labor related reductions for inventory support as a percent of original after CISPro implementation. 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

10 of Chemical Inventory Management Using CISPro With CISPro transaction logging, we have been able to determine which containers have not been used for a significant period and are disposing of legacy chemicals... We also use transaction logging to determine how much is actually used over a period of time allowing us to keep smaller quantities on hand and still meet our schedule needs. Lab Manager, University Laboratory Labor Efficiencies Related to Chemical Inventory Support 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

11 of Chemical Inventory Management Using CISPro SURVEY OF CISPro CHEMICAL INVENTORY REPORTS Figure 4. Percentage of chemical inventory report types generated by CISPro users. SURVEY OF CISPro REGULATORY INVENTORY REPORTS Figure 5. Percentage of Regulatory Report types generated by CISPro users. 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

12 of Chemical Inventory Management Using CISPro CHEMICAL INVENTORY SUPPORT Man Hour Reduction as Percent of Original Pre CISPro CISPro 24% 27% 25% 27% 31% Chemical Inventory Report Cost Regulatory Inventory Report Cost Physical Inventory Cost Inventory Management Cost MSDS Management Figure 6. Improved inventory reporting, inventory management, MSDS management efficiencies as a percent of original after CISPro implementation. 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

13 of Chemical Inventory Management Using CISPro Financial Benefits Analysis ESTIMATED ANNUAL LABORATORY OPERATIONS FINANCIAL BENEFIT USING CISPro $2.7 $1.8 $4.2 Total = $12.9K Annual Financial Benefit $4.2 Searching Inventory Delay from Missing Inventory Researching Chemicals Chemical Order Request Figure 7. Laboratory Operations Annual Financial Benefit per laboratory staff with CISPro. ESTIMATED ANNUAL INVENTORY SUPPORT FINANCIAL BENEFIT USING CISPro $0.91 $1.09 $1.47 $2.82 $0.73 $0.31 $1.49 $1.49 $2.22 Purchase Order Cost Reduction Chemical Purchase/Inventory Reduction Inventory Space Reduction Physical Inventory Process Total = $12.53 Annual Financial Benefit Inventory Management Processes Chemical Inventory Reporting Regulatory Inventory Reporting MSDS Management Reduction Waste Drum Management Reduction Figure 8. Inventory Support Annual Financial Benefit per container with CISPro. 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

14 of Chemical Inventory Management Using CISPro Prior to CISPro, professors would go from lab to lab searching for chemical stocks. Now the inventory books I create from CISPro are an easy way for professors to find chemical stocks. University Lab Safety Manager Lab Operations Financial Benefits Chemical Inventory Support Financial Benefits 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

15 of Chemical Inventory Management Using CISPro 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

16 of Chemical Inventory Management Using CISPro 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

17 of Chemical Inventory Management Using CISPro 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

18 of Chemical Inventory Management Using CISPro Case Study: Cost Savings ROI Analysis ESTIMATED ANNUAL COMBINED LAB OPERATIONS AND INVENTORY SUPPORT FINANCIAL BENEFIT USING CISPro Lab Operations $12,900 Average Annual Financial Benefit per Chemist + Inventory Support $12.50 Average Annual Financial Benefit per Container = FAVORABLE ROI $645, ,400 = $770,500 Site With 50 Chemists Site Having 10,000 Containers Potential Annual Savings Value Figure 9. Estimated annual financial benefit from combined laboratory operations and inventory support savings. 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

19 of Chemical Inventory Management Using CISPro Conclusions Recommendations 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

20 of Chemical Inventory Management Using CISPro About The Author About Calculating Chemical Inventory ROI About CISPro 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

21 of Chemical Inventory Management Using CISPro About ChemSW Appendix Table 1. Financial Assumptions Laboratory labor is assumed to average $39 per hour. This cost is based upon an estimated $25 per hour salary (assuming $50 per hour higher value labor less $25 per hour base salary), 35% burden, and 15% overhead costs per employee. Reporting labor is estimated at $62 per hour based upon an average $40 per hour salary, 35% burden, and 15% overhead costs. Inventory labor is assumed to average $39 per hour based upon an estimated $25 per hour salary, 35% burden, and 15% overhead costs per employee. MSDS labor is estimated at $54 per hour based upon $35 per hour salary, 35% burden, and 15% overhead costs per employee. Area cost is calculated at $18.75 per square foot based on an average $15 per square foot and 25% burden for property support, cleaning and maintenance. Purchase Order cost is calculated at $125/P.O. Waste drum costs is calculated at $600 per waste drum disposal. Container savings assumes a 5 year accumulation, 35% unavoidable waste. 2011, ChemSW, Inc Mangels Blvd Fairfield, CA

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