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9 31293 02080 4534
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This is to certify that the

thesis entitled

A Returnabie Container System For Medical Device
Components

presented by
Christine 5. Block

has been accepted towards fulﬁllment
of the requirements for

Master of Science degree“) Packaging

M5 1W

Major professor
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0-7639 MS U is an Afﬁrmative Action/Equal Opportunity Institution

 

PLACE IN RETURN BOX to remove this checkout from your record.
TO AVOID FINES return on or before date due.
MAY BE RECALLED with earlier due date if requested.

 

DATE DUE DATE DUE DATE DUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11100 wCIRG/DaDuuS-nu

A RETURNABLE CONTAINER SYSTEM FOR MEDICAL DEVICE
COMPONENTS

By

Christine S. Block

A THESIS

Submitted to
Michigan State University
in partial fulﬁllment of the requirements
for the degree of

MASTER OF SCIENCE

The School of Packaging

1999

ABSTRACT

A RETURNABLE CONTAINER SYSTEM FOR MEDICAL DEVICE
COMPONENTS

BY

Christine S. Block

Returnable containers are widely used in logistical packaging. It was found that
there is currently no returnable container system available for the medical device
industry. A case study analysis was initiated during an Internship with Medrad, Inc., a
medical device company in Pennsylvania.

A feasibility study including a ﬁnancial analysis was performed to identify cost
drivers and to ﬁnd a cost efﬁcient solution for shipping injection molded syringe barrels.

The research goal is to develop a returnable container system for syringe barrels
that exceeds industry standards of product protection, utility, communication, and low
cost. The returnable system can yield a reduction in material and labor cost by
facilitating automation during barrel assembly, increasing product quality due to reduced
particulate, and an efﬁcient inventory management system by using bar codes. The
implementation of a returnable system requires a large initial investment that needs to

be integrated in the total system costs.

Copyright by
Christine S. Block
1999

 

DEDICATION

I dedicate this research to my family in Germany, especially my parents, for their

patience and great support for which I will always be thankful.

ACKNOWLEDGMENTS

Almost two years ago, I came to the United States as a Fulbright scholar from
Berlin, Germany. My adventures at Michigan State University began in Packaging. My
family and friends always asked me “What is Packaging?”. At the beginning, I thought it
is just boxing, but after all these great packaging courses, I am amazed to what extent
packaging affects everyday life and ﬁnds its place across all industries.

My studies and living in the US had a tremendous impact on my life. I received
ovenivhelming support from people I wanted to acknowledge and thank.

First, I thank all members of my graduate committee, Diana Twede, Paul Singh,
Ted Stank, and especially Hugh Lockhart and Eugene Gelblum. I sincerely appreciate
your support during my entire research at Michigan State University and Medrad, Inc.
This research would not have been possible without the contributions of Medrad, Inc.
and its supplier K&W who participated in this case study. I thank Ralph Wolstenholme
for his time and insight, as well as Carl Ciampoli and Denis Olson who always pioneered
and envisioned new advanced packaging development projects at Medrad.

Second, my deepest appreciation and thank to my parents (Erika and Klaus-
Peter Block), my three brothers (Martin, Stephan, and Matthias), my sister Gabriele, and
“old” friends in Germany, especially Gabi, Eddy, Peter, Franke, and Uwe, my new
friends in the US, Dr. Jack and Linda Allen, Dr. Robert LaMoreaux, Emmy and Scott
Marshall, DeLynne and Torben Siggaard, Charles Frangis, Donald Wolf, Joseph Szaley,
and Gerald Eckman, and to the German Fulbright-Kommission in Bonn. Without your
belief in my strengths and capabilities, this great experience would not have happened! I
will always carry the Fulbright spirit, being a German ambassador for peace, friendship,

networking for Women in Packaging and human rights.

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

LIST OF TABLES ........................... - ......... - ....... VIII
LIST OF FIGURES ......................................................................................................................... IX
LIST OF ABBREVIATIONS ............. .................................. X
1. INTRODUCTION ................................................................................................... 1
2. LITERATURE REVIEW ........................................................................................................... 4
2.1 MEDICAL DEVICE REGULATIONS .......................................................................................................... 4
2.2 MEDICAL DEVICE CHARACTERISTICS AND PACKAGING DESIGN ......................................................... IO
2.3 PROJECT MANAGEMENT FOR THE CONVERSION FROM EXPENDABLE TO REUSABLE ........................... 14
2.4 MATERIAL HANDLING AND OPERATIONAL REQUIREMENTS ................................................................ 14
2.5 INVENTORY AND WAREHOUSE MANAGEMENT .................................................................................... 18
2.6 TRANSPORTATION SYSTEM ................................................................................................................. 19
2.7 DISTRIBUTION ENVIRONMENT, PRODUCT PROTECTION AND EFFICIENCY ........................................... 22
2.8 THIRD PARTY CONTAINER MANAGEMENT VS OWNERSHIP ................................................................. 23
2.9 SUPPLIER EVALUATION ....................................................................................................................... 25
2.10 QUALITY FUNCTION DEPLOYMENT (QFD) ........................................................................................ 27
2.1 1 CAPITAL BUDGETING AND COST EVALUATION ................................................................................. 29

3. RESEARCH METHOD .......................................................................................................... 32
4. CASE STUDY RESULTS- _ .............................................. .. 36
4.1 MEDICAL DEVICE PACKAGING AND REGULATIONS ............................................................................. 36
4.2 MEDICAL DEVICE CHARACTERISTICS AND PACKAGING DESIGN ......................................................... 37
4.3 MATERIAL HANDLING AND OPERATIONAL REQUIREMENTS ................................................................ 40
4.4 INVENTORY AND WAREHOUSE MANAGEMENT .................................................................................... 43
4.5 TRANSPORTATION SYSTEM ................................................................................................................. 43
4.6 DISTRIBUTION ENVIRONMENT, PRODUCT PROTECTION, AND EFFICIENCY .......................................... 44
4.7 THIRD-PARTY CONTAINER MANAGEMENT VS OWNERSHIP ................................................................. 45
4.8 SUPPLIER EVALUATION ....................................................................................................................... 47
4.9 QUALITY FUNCTION DEPLOYMENT (QFD) .......................................................................................... 50
4.10 FINANCIAL ANALYSIS ....................................................................................................................... 52

5. CONCLUSIONS ................ .. ........................................ ...... 74
5.1 RESEARCH SUMMARY ......................................................................................................................... 74
5.2 FINAL DECISION AND PROFITABILITY .................................................................................................. 75
5.3 STRENGTH AND OPPORTUNITIES OF RETURNABLE PACKAGING FOR MEDICAL DEVICES .................... 76
5.4 RECOMMENDATIONS ........................................................................................................................... 77
APPENDICES ................................................................................................................................. 78
APPENDIX A ........................................................................................................................................... 79
Packaging Evaluation Criteria ............................................................................................................ 79
APPENDIX B ........................................................................................................................................... 80
Packaging Development Guideline ...................................................................................................... 80
APPENDIX C ........................................................................................................................................... 83
Project Plan ......................................................................................................................................... 83
Project Schedule .................................................................................................................................. 84

vi

APPENDIX D ........................................................................................................................................... 85

Supplier Performance Assessment - ROPAK ....................................................................................... 85
Supplier Performance Assessment - TriEna’a ....................................................................................... 86
Supplier Performance Assessment - Buck/10m .................................................................................... 8 7
APPENDIX E ........................................................................................................................................... 88
Packaging Specification ...................................................................................................................... 88
BIBLIOGRAPHY .................................................................................................... 96

 

vii

LIST OF TABLES

Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
Table 12
Table 13

Table 14

Table 15
Table 16
Table 17
Table 18
Table 19
Table 20
Table 21
Table 22
Table 23
Table 24
Table 25
Table 26
Table 27
Table 28
Table 29
Table 30
Table 31
Table 32
Table 33
Table 34
Table 35
Table 36
Table 37
Table 38
Table 39
Table 40
Table 41
Table 42
Table 43
Table 44
Table 45
Table 46

Framework for Reusable/Returnable Device Packaging Development .............................. 5
Device Good Manufacturing Practices (FDA 1998) .......................................................... 10
Checklist for Conversion Planning .................................................................................... 15
Material Handling and Operational Requirements ............................................................ 16
Criteria for Supplier Evaluation (Stevenson 1993) ............................................................ 26
QFD Elements .................................................................................................................. 28
Life Time Cost Comparison Reusable Plastic vs Corrugated Container .......................... 29
Returnable Container Evaluation (Supplier Information) .................................................. 48
Thermoformed Trays Evaluation (Supplier Information) ................................................... 48
Polymer Bag Evaluation (Supplier Information) .............................................................. 49
Cleaning Equipment Evaluation (Supplier Information) .................................................. 49
Cost Analysis - Returnable Container System ................................................................ 53
Cost Comparison Current System (Expendable) and Proposed System (Returnables)
for Float 4 Days .............................................................................................................. 54
Cost Comparison Current System (Expendable) and Proposed System (Returnables)
for Float 2 Days .............................................................................................................. 55
Wrapping Cost ................................................................................................................ 55
Development Cost .......................................................................................................... 56
Labeling Cost .................................................................................................................. 56
Freight Cost .................................................................................................................... 56
Quality Improvement (Reduced Particulate) ................................................................... 56
Disposal Cost .................................................................................................................. 56
Labor Cost (Medrad) ....................................................................................................... 57
Labor Cost (K&W) ........................................................................................................... 57
NPV (100% Inventory, Float 4 days, Savings in Year 0) ................................................ 58
Payback ( 100% Inventory, Float 4 days, Savings in Year 0) .......................................... 58
NPV (100% Inventory, Float 2 days, Savings in Year 0) ................................................ 59
Payback (100% Inventory, Float 2 days, Savings in Year 0) .......................................... 59
NPV (60% Inventory, Float 4 days, Savings in Year 0) .................................................. 60
Payback (60% Inventory, Float 4 days, Savings in Year 0) ............................................ 60
NPV (60% Inventory, Float 2 days, Savings in Year 0) .................................................. 61
Payback (60% Inventory, Float 2 days, Savings in Year 0) ............................................ 61
NPV (40% Inventory, Float 4 days, Savings in Year 0) .................................................. 62
Payback (40% Inventory, Float 4 days, Savings in Year 0) ............................................ 62
NPV (40% Inventory, Float 2 days, Savings in Year 0) .................................................. 63
Payback (40% Inventory, Float 2 days, Savings in Year 0) ............................................ 63
NPV (100% Inventory, Float 4 days, Savings in Year 1) ................................................ 64
Payback (100% Inventory, Float 4 days, Savings in Year 1) .......................................... 64
NPV (100% Inventory, Float 2 days, Savings in Year 1) ................................................ 65
Payback (100% Inventory, Float 2 days, Savings in Year 1) .......................................... 65
NPV (60% Inventory, Float 4 days, Savings in Year 1) .................................................. 66
Payback (60% Inventory, Float 4 days, Savings in Year 1) ............................................ 66
NPV (60% Inventory, Float 2 days, Savings in Year 1) .................................................. 67
Payback (60% Inventory, Float 2 days, Savings in Year 1) ............................................ 67
NPV (40% Inventory, Float 4 days, Savings in Year 1) .................................................. 68
Payback (40% Inventory, Float 4 days, Savings in Year 1) ............................................ 68
NPV (40% Inventory, Float 2 days, Savings in Year 1) .................................................. 69
Payback (40% Inventory, Float 2 days, Savings in Year 1) ............................................ 69

viii

LIST OF FIGURES

Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
Figure 7
Figure 8
Figure 9
Figure 10
Figure 11
Figure 12

Figure 13
Figure 14
Figure 15

Returnable Packaging Development Model ...................................................................... 3
Generic Environment Matrix (Lockhart 1997) .................................................................. 13
Material Logistics Planning .............................................................................................. 20
Project Outline ................................................................................................................. 35
Returnable Tray and Crate (Prototypes) ......................................................................... 37
Environment Matrix for Returnable Packaging Development .......................................... 4O
Flowchart Returnable Crate Handling ............................................................................. 44
Container Management ................................................................................................... 46
QFD Matrix ...................................................................................................................... 51
Cash Flow vs Payback (Float 4 Days) .......................................................................... 70
Cash Flow vs Payback (Float 2 Days) .......................................................................... 71
Strengths, Opportunities, Weaknesses, and Threats of Returnable Packaging for
Medical Devices ............................................................................................................ 77
Returnable Crate with Drop Door from TriEnda ............................................................ 95
Returnable Tray with Syringes designed by UFP Technologies ................................... 95
Returnable Trays packaged in Bags and Stacked in Returnable Crate ........................ 95

LIST OF ABBREVIATIONS

ABC .............. Activity-Based Costing

AIAG ............. Automotive Industry Action Group

ANGIO .......... Angiology - study of lymph and blood vessels
ASTM ............ American Society for Testing and Materials
CFR .............. Code of Federal Regulations

CIP ................ Cost Improvement Project

Ctn ................ Carton

EDI ................ Electronic Data Interchange

EPS ............... Extended Polystyrene

FDA ............... Food and Drug Administration

FDC .............. Food, Drug, and Cosmetic Act

F LS ............... Front Load Syringe

FR ................. Federal Register

GMP .............. Good Manufacturing Practices

HDPE ............ High Density Polyethylene

HIPS ............. High Impact Polystyrene

ISTA .............. International Safe Transit Association

JIT ................. Just-ln-Time

LTL ................ Less than Truck Load

MHIA ............. Material Handling Institute of America

MRI ............... Magnetic Resonance Imaging

MSU .............. Michigan State University

NIOSH .......... National Institute for Occupational Safety and Health
NPV .............. Net Present Value

PIRA ............. Packaging, Printing and Publishing Institute and Research Association
Plt ................. Pallet

PS ................. Polystyrene

QA ................. Quality Assurance

QFD .............. Quality Function Deployment

QM ................ Quality Management

SAP AG ......... Systeme Anwendungen Produkte Aktiengesellschaft
TL ................. Truck Load
WMS ............. Warehouse Management System

1. INTRODUCTION

The idea for this thesis was developed during an internship with a medical device
manufacturer, Medrad, lnc., Indianola, PA in 1998. The task was to propose a
packaging strategy to improve the company’s Packaging Performance Excellence of the
Sterile Disposable Enterprise. A situation analysis was performed investigating internal
and external packaging requirements to establish a basis for the implementation of a
returnable container system.

Medrad produces medical diagnostic equipment and related disposable
products. It is organized in four business units: Vascular Injection (injectors), Magnetic
Resonance (MR image coils), Sterile Disposables (syringes and accessories), and
Services (maintenance for Medrad medical equipment). The company’s organization is
following the Quality for Life philosophy (QFL). It has established ﬁve corporate goals
that guide each research & development project: 1. Exceed ﬁnancial objectives; 2. Grow
the company; 3. Improve quality and productivity; 4. Improve customer satisfaction; and,
5. Employee growth and satisfaction.

The main objectives of the investigations prior to this thesis research were to
identify improvements related to packaging processes, equipment, materials, testing
and inspection methods, to recommend new or modiﬁed designs for a universal syringe
package, and to interface with equipment manufacturers, material suppliers and external
customers (hospitals). Several areas were identiﬁed as potential projects and integrated
as 3 Packaging Strategy for cost improvement projects (CIP). The strategy provided the
company with technical and organizational recommendations for future packaging
process changes. Short and long term projects were summarized in an evaluation

matrix (APPENDIX A). After evaluating all packaging issues, seven projects were

introduced to Medrad’s Manufacturing Quality Council. The decision making criteria
were: 1. Project necessity; 2. Time; 3. Cost/savings; 4. Quality/marketing benefits; and,
5. Testing opportunities at The School of Packaging (Block and Castro 1998).

The development of a returnable container system for medical device
components was chosen since it offered the most areas for cost, quality, and
productivity improvements. It was seen as a challenge to switch from an expendable to
a returnable packaging system. In a long term perspective, a returnable container
system can contribute to Medrad's leading market position in the medical device
industry.

This project is a pilot project in the medical device industry and of value for
similar case studies. The ﬁnancial analysis is a critical part to adjust packaging and
other investments and must be always included in the early stage of a project. This case
study approach involves Medrad and several returnable packaging supplier participants.
It strives to provide answers to the following key issues:

1. What are the requirements of a returnable container system for medical devices?

2. What kind of returnable package should be used?

3. What are the manufacturing, logistical and material handling requirements?

4. What cost-drivers should be considered when choosing between alternative
returnable container systems?

5. How are the returnable packaging investments evaluated and integrated in the overall

system cost?

The second chapter includes a literature review and provides background
information to answer these questions. A model was developed to guide this project. It

includes the situation analysis, a research of medical device and returnable container

characteristics, the transportation system, distribution and material handling
requirements, inventory and warehouse management issues, ownership vs third-party
container management, a supplier evaluation analysis of container conﬁgurations,
quality function deployment for supplier selection, and a cost analysis (Figure 1). The

conclusions are presented as a summary and recommendations for future research.

Figure 1 Returnable Packaging Development Model

Situation Analysis

 

 

Medical Device DeviceIProduct
Regulations Characteristics
lTransportation System ‘Iv IlnventoryNVarehous:Iv '1 Material Handling ‘Iv IE, Distribution Environmentl

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2. Literature Review

This research is a development and feasibility case study to analyze design
criteria for medical device packaging and the cost associated with a returnable container
system. This case study followed the packaging development guideline introduced
during the Internship period at Medrad, Inc. (APPENDIX B).

In this chapter, a basic literature review of books, journals, seminars, databases
(PIRA, Teltech, CFR, FR) and lectures will guide the development of a returnable
container system for medical device components. A conversion analysis, planning and
implementation checklist will be described. In addition, the subjects (see Table 1) were
selected from a returnable/reusable logistical packaging framework (Kibler 1997) to

create an advanced model for logistical device packaging.

2. 1 Medical Device Regulations

The product to be packaged and shipped in a returnable container system is a
syringe barrel. It is a medical device component that will be assembled to an unﬁlled
MRI or ANGIO syringe for human use in hospitals. These barrels are not sterilized
before assembly. The ﬁnal product is a front load syringe (FLS) which will be ﬁlled with a
contrast media. With the help of the injector, the contrast media is injected into a human
body. To understand the product and its packaging requirements, the following
paragraph will introduce important aspects of devices such as history, legislation,
deﬁnition, medical device packaging, classiﬁcation, good manufacturing practices
(GMPs) including the GMP regulation 21 CFR 820 (Code of Federal Regulations), and

packaging-related recalls.

 

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The History of Medical Devices and Legislation

In 1906, the Food and Drug Act was enacted. It is the act under which medical
devices fall. Medical devices were not regulated by the federal government until 1938
when they became ofﬁcially part of this Act for the ﬁrst time. However, the Act and its
legal power were limited in scope. At the end of 1969, a medical device study group was
formed to conduct research on new device legislation. A report was made public to
show the need for new legislation because there were more than 10,000 injuries
reported over a 10 year period regarding medical device misuse. According to this
report, on May 28, 1976, a new Medical Device law was added to the Federal Food,
Drug, and Cosmetic Act of 1938 which provided the Food and Drug Administration
(FDA) with a more powerful law to regulate medical devices. This amendment made the
greatest impact on medical device manufacturers in this century. The goal was to
assure safety and effectiveness of medical devices, including diagnostic and laboratory
products, and to upgrade the regulatory authority over devices. Some of the key issues
were to classify devices with graded regulatory requirements due to the diversity of the
device market, and establish registration, device listings, pre-market approval,
investigative exemptions, good manufacturing practice (GMP) regulations, records and
reporting requirements, preemption of state and local regulation of devices, and
performance standards (O'Brien 1990). This amendment was followed by a number of
regulations to enforce it. These regulations can be found in the CFR updated by the
Federal Register (FR). The CFR includes 50 titles. The regulations of interest regarding
medical device packaging are listed under the title 21 CFR 820.

The FR is a government publication that publishes new, changed, or proposed

regulations of federal agencies which become of legal standing and ofﬁcial with their

appearance in the FR. A regulation is a statement by the governmental agency and
describes how the agency is applying the legal authority given through laws passed by
Congress. Proposed regulation can also be found in the FR and these invite public
comment. A petition to the FDA commissioner can be ﬁled by an individual, ﬁrm, or
organization requesting that certain actions be taken regarding a regulation that should
be changed, revoked or revised.

Copies of the CFR, FR, and proposed regulations are found on the Internet (for
web address, see bibliography) or as hard copy in libraries, court houses, and federal
ofﬁce buildings. It is important to mention, that the Food and Drug Act as well as other
acts are not the law but statute. Until an act is adjudicated in a court of law, it will remain

an act and is not the law.

Deﬁnition of a Medical Device

A device is deﬁned in the Food, Drug and Cosmetic Act as “an instrument,
apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or
related article including any component, part, or accessory which does not achieve any
of its principal intended purposes through chemical reaction within or on the body of
man or animals, and which is not dependent on being metabolized for achievement of
its principal intended purpose”. It is differentiated from a drug because it is deﬁned not to
be metabolized nor to undergo chemical reaction. In addition, a medical device is
recognized in the ofﬁcial National Formulary, or the United States Pharmacopeia, or any
supplement to them. It falls under this deﬁnition and is “intended for use in diagnosis of
disease or other conditions, or in the cure, mitigation, treatment, or prevention of
disease in man or other animals, or intended to affect the structure or any function of the

body of man or other animals. (FDA 1989).

Classiﬁcation

Due to the great diversity among devices on the market, the classiﬁcation into
three classes provides a system to regulate all devices depending on their degree of
importance to public health. Class I, general controls, is applied to all devices. It requires
appropriate labeling, registration, product listing, pre-market notiﬁcation, record keeping,
and compliance to GMP. Class II, performance standards, set standards for speciﬁc
devices for which general controls would be not sufﬁcient, i.e. it relates to construction,
components, ingredients, tests and properties of the device to assure safety and
effectiveness beyond class I. In this case study, the device belongs to class II. Class Ill,
pre-market approval, is applied where class I and ll are insufﬁcient to provide public
safety. The manufacturer must obtain performance data and have it reviewed by FDA
prior to market introduction. These include more sophisticated devices such as heart

pacemakers (O'Brien 1990).

Good Manufacturing Practices

The GMPs for medical devices are one of the most important regulations for
medical devices which include objectives for developing a quality assurance program.
They include requirements for methods, facilities, and controls used in manufacturing,
packing, storing, and installing medical devices. Three basic GMP principles for quality
assurance are: 1. Product quality, safety and effectiveness must be designed and built
into the ﬁnished product; 2. Quality cannot be inspected or tested into the ﬁnished
product; and, 3. Each step of the manufacturing process of the device must be
controlled to assure that the ﬁnished product will meet all speciﬁcation requirements on

quality and design (O'Brien 1990).

The returnable container system is a logistical package that is considered part of
the medical device. Therefore, the design, testing, and manufacturing process must be
FDA approved and continuously controlled by a medical device manufacturer.

The Device Good Manufacturing regulations include an overview of the GMP
regulations 21 CFR 820 related to medical device packaging. With respect to medical
device packaging, the most important ones for this case study are 21 CFR 820.20(a)(2),
and (4), 820.25, 820.40, 820.60, 820.100(a)(1), 820.115, 820.120(b)(c), 820.130, and
820.181 (FDA 1987).

Table 2 provides a description of each section of the regulation. 21 CFR 820.130
and 820.181 are more of interest and will be discussed in chapter 4.

Due to the complexity of this issue, it is strongly recommended to develop a
checklist to meet all GMP requirements, to be consistently reproducible and to keep
accurate records of exact speciﬁcations. if the medical device belongs to class III a

premarket evaluation is necessary that needs to be reported to FDA.

Packaging-Related Recalls

A recall is a voluntary action by a manufacturer or distributor to remove a product
from the market and correct the products that the FDA considers to be in violation of the
law in which the agency would initiate regulatory action, e.g., seizure (FDA 1998).
Packaging-related recalls make up to 10% of all medical device recalls. About 7.6% of
these are related to design and process problems, and another 7.6% are related to

packaging and labeling mistakes (O'Brien 1990).

Table 2 Device Good Manufacturing Practices (FDA 1998)

 

GMP

Description

 

21 CFR 820.20(a)(2)

Development of procedures to approve or reject all incoming
packaging materials.

 

21 CFR 820.20(a)(4)

Quality assurance check on incoming and ﬁnished packaging.

 

21 CFR 820.25

Personnel training regarding new operations (training on the job by
experienced employees or by contracting specialists).

 

21 CFR 820.40

Design of packaging storage and operations areas to prevent
contamination by particulate and microorganisms; to facilitate
cleaning and maintenance and to prevent mix-ups.

 

21 CFR 820.60

Appropriate design, construction, placement, and installation of
equipment, ease in maintenance, adjustment, and cleaning.

 

21 CFR 820.100(a)(1)

Installation of a QA system to assure the design basis for the
packaging and its translation into approved speciﬁcations.

 

21 CFR 820.115

Establishment of reprocessing procedures to assure that a
reprocessed device will meet the approved speciﬁcations including
evaluation of the effects on the package.

 

21 CFR 820.120(b)(c)

Separation of packaging-labeling operations to prevent mix-ups.
Inspection of the packaging-labeling area must be done before
another operation begins to assure that no items remain from
previous operations.

Establish written cleaning, maintenance and area inspection
procedures, and audit their use.

 

21 CFR 820.130

Medical device packaging design and material requirements.

 

 

21 CFR 820.181

 

Medical device speciﬁcations including methods and processes to
include in the device master record, or reference is to be made to
their location.

 

2.2 Medical Device Characteristics and Packaging Design

 

The new version of the GMPs from 1998 deﬁnes the medical device package as
a component of the device. As of last year, this has been approved but not published in
the new GMPs. If the package is an active part of the device, the package needs to be
developed along with the device (Lockhart 1998). This is an important statement for the
medical device packaging development whether it is a logistical or a consumer package

to follow 21 CFR 820.

10

A returnable container system can consist of various types of returnable plastic
containers and load bases. Most common are totes, bulk boxes, bins, crates, pallets,
and dunnage used to transport loose or prepackaged items in a reverse logistics system
where the container and dunnage are returned for reuse. Dunnage can be deﬁned as a
packaging material used to protect loose, fragile parts during transportation (MHIA
1999). It can be a thermoformed plastic tray, a plastic corrugated partition, or a hard
foam made from extended polystyrene (EPS) or other foam materials. There are many
types of materials for designing a returnable container system available (Kulwiec 1998)
depending on the product characteristics, environmental hazards, legislation,
regulations, and monetary value of the ﬁnal container design.

When designing a returnable container system for medical devices, it must be
understood that packaging is a socio-scientiﬁc discipline to deliver goods in the best
condition. The package operates in a complex system of product, packaging, and
distribution within the physical, atmospheric, and human environments. The functions of
packaging—protection, utility, and communication—are critical aspects to fully meet the
environmental requirements. This relationship can be described as a matrix where the
functions interact with the environments (Lockhart 1997). The designer of a returnable
container system for medical device components must consider these functions and the
product characteristics, its value, and the hazards of the distribution system. The
physical product characteristics, i.e. size, shape, weight, durability, fragility, and
environmental stability determine the degree of package protection required and what
types of reusable packaging designs can be used. With respect to the package
requirements, the main goal of designing a package is to provide the “right” amount of

protection by using the most cost-effective materials (Shires 1995).

11

The physical environment includes vibration in transport, shock from impacts,
drops, and crushing from stacking and compression during shipping and warehousing.
The fragility and durability of the syringe provide criteria for use in protecting the product
from breakage. In general, failure can occur in two modes: brittle and ductile (Burgess
1998). In this case, the syringe is a brittle product. The fragility of a product can be
determined after the ASTM standard D-3332-94a (ASTM 1994). It depends on the
received shock impulse measured by the peak acceleration and shock duration.

The atmospheric environment considers the stability of product and package
when exposed to various environmental conditions. These factors include environmental
stresses such as temperature (heat, cold), chemicals and microbial stability (liquids,
gases, and vapors), and ultraviolet sensitivity (direct sun light). The package must be
stable to resist these conditions to protect the product. For example, ultraviolet light from
exposure to sun can destroy the package and/or product due to environmental stress
cracking and degradation of plastic materials. Chemical reactions and biological activity
can be accelerated or decelerated by heat or cold. The plastic's glass transition
temperature is an indicator of whether the material will be brittle or glassy at a given
temperature, and whether if temperature changes will affect the material’s properties.

The human environment is one of the most unpredictable factors. Each person
has a different perception of vision, forgetfulness, or reliability. Cleanliness is one of the
most important factors in medical device manufacturing. The more human handling the
more likely it is that package and product will be contaminated. This is one of the
reasons to design a package for the most reliable product protection in terms of
cleanliness and package handling. Liability, legislation and regulations play an important

role in the human environment which are deﬁned by governmental agencies.

12

Finally, to design an economical and cost efﬁcient returnable package, the
product value is important. A product of high value will need higher protection and will
justify higher package cost. Overall, material investments and development cost are
factors that can decide whether an investment is feasible or not.

Package protection considers the product characteristics and all logistical
hazards. It is important that the package protects the product from the environment and
the environment from the product (Twede and Parsons 1997). Utility is the function that
makes the product useful or easier to handle, i.e. product containment, stackability, easy
to move and open, etc. Communication is traditionally interfaced with the needs of the
end user. In logistical and medical device packaging, it is important that the package
content is easy identiﬁable and traceable by appropriate labeling. A matrix (Figure 2)
was developed by Lockhart to summarize all package functions linked to their
environmental requirements (Lockhart 1997). This matrix is used in chapter 4 to

determine the package characteristics for the returnable container development.

Figure 2 Generic Environment Matrix (Lockhart 1997)

 

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13

2.3 Project Management for the Conversion from Expendable to Reusable

In most applications, returnable containers will replace corrugated containers in
the current packaging system. Converting the operations to a reusable plastic packaging
system can be a complex process. Many companies have problems in planning,
tracking and controlling their logistical packaging. To ensure a smooth transition from
expendable packaging to reusables, the current packaging and material handling
system must be analyzed. All requirements must be taken into account to develop a
conversion plan which includes people and processes of the facilities (supplier,
manufacturer) and shipping loops. Therefore, it is necessary to investigate how the
returnable containers can be integrated into the current system and what changes are
necessary to implement the new material handling process.

There are several steps in conversion planning and implementation to consider.
All steps can be seen as critical control points. The following plan in Table 3 is used as a
checklist for the conversion process. Container suppliers offer assistance in conversion

planning (Buckhorn 1996).

2.4 Material Handling and Operational Requirements

A situation analysis evaluates plant readiness for reusable containers and
identiﬁes requirements for change, i.e. for container storage space, changing
workstations, installation of cleaning equipment, automation, and labor planning. A walk-
through of the facilities and a ﬂowchart of the material handling process (Figure 3) can
help to identify key areas for improvement, i.e., effective labor placement, efﬁcient
material ﬂows, facility changes for faster loading/unloading of containers and higher
space utilization in transportation vehicles (Miller and Hehn 1998). Table 4 lists reasons

for container tracking and requirements for material handling and operations.

14

Table 3 Checklist for Conversion Planning

 

Action Item

Description

 

Team Building

A cross-functional team consisting of engineering (packaging, product,
facilities), purchasing, transportation, suppliers (product and container
suppliers) is assembled to direct all activities.

 

Project Plan

A team leader is assigned to update team members with project status
and timelines, to establish project guidelines for container selection
(weight limitations, size requirements, standardization, return ratios,
costs) and supplier performance evaluation.

 

 

 

Prioritization The team is deﬁning goals for conversion to reusable packaging, i.e.,
reduce packaging cost, increase product protection, ergonomics,
handling efﬁciency, facilitate automation, etc.

Packaging/Product Based on the company’s requirements for reusables, each part in the

Analysis facilities is evaluated by container type(s)/size(s), dunnage requirements
for trays and cushioning, handling methods, etc.

System Changes The plant readiness is evaluated for reusables to identify areas of change

(container staging space, workstations, cleaning areas).

 

Analysis of Current
Processes

A walk-through of the facilities helps to identify areas for improvement
such as production rate, material ﬂows, number of suppliers.

 

Economic Analysis

For each product, the economic feasibility will be evaluated. The
expendable packaging cost, system changes, shipping charges,
operational cost, and changes of the material handling system are
calculated (spreadsheet) as savings and expenses of the conversion
process. Theft, loss, repairs or production increase should be included in
an activity-based cost analysis.

 

Action Plan

The team decides whether the project is feasible or not, and evaluates
the beneﬁts and payback. The action plan includes material validation,
scheduling and assigning responsibilities.

 

Container Options
and Cleaning

It is determined the container type, dunnage or trays, wrapping, closures,
labeling, and cleanliness requirements. Benchmarking helps to ﬁnd the
best container and dunnage solution.

 

Quantities and
Inventory

The container and dunnage quantities are calculated to determine proper
inventory levels. Several methods can be used effectively to manage
inventory, i.e. KANBAN (Kamiske 1996).

 

Material Handling,
Container Control
and Tracking

A material handling system must be established to ensure efﬁcient
container ﬂow. Transportation routes must be planned for full and empty
containers. Tracking and identiﬁcation programs using bar codes for
proper container control from suppliers to workstations are recommended
for installation.

 

Third Party
Container
Management or
Ownership

With an increased container and dunnage use, piece-price negotiations
with suppliers for packaging materials can lead to a reduction in capital
investment. Purchasing and ownership is an option when smaller
container quantities are needed.

 

 

Maintenance Plan

 

Theft, loss, or repairs must be included in operational and material
handling planning.

 

15

 

Table 4 Material Handling and Operational Requirements

 

Description

 

Container Use

Returnable containers must be efﬁciently placed (right time and place) in
the facility to assure an optimized container ﬂow and to avoid container
delivery delays—internally to the next workstation and externally to
suppliers.

 

Container Tracking

A ﬂexible container tracking and identiﬁcation system to control container
use and availability must be installed. This system should be easy to
adjust for additional product coverage. It avoids volume ﬂuctuation per
cycle (one loop between manufacturer and supplier) and cycle time.

 

Inventory

The amount of containers needed in the system must be determined.
This depends on the company’s inventory level to satisfy external
delivery and internal production ﬂow (Meagher 1998).

 

Application

It is recommended to apply a returnable container system for a
consistent volume ﬂow and short cycle times. If a high inventory level on
returnables will be kept the cycle time is long and the number of
containers needed will increase.

 

Investment

The investment in containers and dunnage depends on cycle time,
production ﬂow, and a fast return of empty container to suppliers. The
number of containers will be increased as required to match the longest
cycle with each ﬂuctuation in volume per cycle (Thompson 1996).

 

Recommendations

To avoid any type of variation in the system and to improve the efﬁciency
of the returnable cycle, the cycle time should be shortened by reducing
inventory levels and faster returns. A tracking guideline for returnable
container was developed by the US automobile industry to optimize
shipments and reduce cost (AIAG 1991).

 

Material Handling
Systems

Computer programs, manual tracking, visual control, external pull system
control, and inventory management (Trudeau 1995).

 

Bar Coding

 

 

The use of bar codes facilitates container tracking via automated
scanning and transfer into a computer system for analysis (LaMoreaux
1995). It supports the trend towards material and information moving
simultaneously.

 

Tracking Systems

Container control and tracking is a non value added as well as a complex and

time consuming issue within the material handling process. Companies have realized

that the use of computer programs and services from third-party logistics providers, i.e.,

Systeme, Anwendungen and Produkte AG (SAP) can offer tremendous savings. These

companies provide services and training, install programs, help to optimize container

management along the supply chain. Tracking systems can be categorized as manual

16

 

or computer based. Manual tracking is used for simple container systems by manually
keeping records of incoming and outgoing containers by shipper and receiver. It does
not require high initial investments but it is labor intensive and will not provide enough
records in case of shipping problems. Human error is also more likely in manual
systems. Another product ﬂow system to limit in process inventory is KANBAN (Kamiske
and Brauer 1995). This method was developed in Japan and uses small lot sizes and
quick inventory turns. Visual controls such as different container colors, colored labeling
and other signs are used to easily identify products, containers, trucking information, lot
numbers, or other system information to provide easy control and identiﬁcation in the
container movement process from packaging through material storage. Visual controls
are easy to install and have low initial investments such as labeling but a well
understood communication system is needed among all users and records must be
carefully kept (MHIA 1999).

Instead of a manual system, computer technology can be used to track
returnable containers. Electronic data interchange (EDI) can be used which is a
computer-to-computer exchange of data, documents, and instructions between
companies (Melnyk 1997). Inventory can be best managed by computer controlled
tracking systems and these work best for complex distribution systems. They have the
best capabilities to link different computer systems among several suppliers to interface
with other material and logistics systems, i.e. truck, rail, air, ocean container shipment
information, container allocations, transit times, shipment receipts etc. They offer the
most beneﬁts in shipping cost reduction by avoiding additional freight movement for
adjusting additional containers due to out-of-stock container situations. Due to the

higher complexity it also require additional training of personnel.

17

External pull systems are used for small lot sizes in returnables and manually
handled containers with visual controls and a closed loop transportation system. It is
controlled by a trigger mechanism where material shipments occur on a regular (almost
daily) basis to replace material at the location of use. This system can be advantages
because it eliminates waste, increases quality in production, and reduces lead times due
to constant and regular delivery (Kibler 1997). It must be strictly controlled to avoid any
out-of—stock situations, it requires standardized containers, and an optimized placement
of resources including labor and material handling equipment (fork lift trucks, manual
hand lifts).

Container control can also be done by ﬁnancial transaction of supplier shipments
when the company’s shipping container are used. The supplier is ﬁnancially responsible
for returning the container after use. For each missing container, the supplier has to
reimburse the company. Also, the parts supplier may own the containers and bill the
company each time a shipment is received. This is the opposite where the company is
billed for each missing container (Kibler 1997). The advantage of this system is that the
container owner is protected against any risk of loss. It may risk loosing container
identiﬁcation and wrong billing in case of container loss, and the cost of bookkeeping is
higher because they are required to keep track of correct records, billing and deposits or
debits. Finally, inventory and warehousing management is most often used for container

tracking which is an inventory control method described in the next section.

2.5 Inventory and Warehouse Management

Returnable containers are continuously shipped and returned on a routine basis.
All partners of the supply chain have to inventory containers after predetermined time

periods to assure that the right amount of containers is still cycling. Adjustments will be

18

made due to changes in production schedules, i.e. an increase in sales volume that
requires more containers in the system or a faster return. Initial investments in this
system are relatively low but it can be a disadvantage if there is a lack of cooperation
between all members of the supply chain. Otherwise, container loss can signiﬁcantly
reduce investment beneﬁts. An integrated inventory and warehousing management
system can help to coordinate a reverse logistical system (Bojkow 1991).

Inventory management systems (IMS) of returnable containers controlled by a
computer system allow container management and material stocks by quantity and
value. Planning and data entry of container movements are recorded in the form of
documents. The physical inventory is used to compare physical stock against the book
inventory balance. All transactions are made in real time and the physical stock shown is
always accurate. The users are able to obtain an overview of the current stock level at
any time. Real time accuracy is an important advantage in container tracking. The
system recognizes container movements and updates stock values automatically. Each
material document posted for a movement can be printed as a receipt with a bar code if
needed to manually carry out physical movements within a warehouse.

A warehouse management system (WMS) supplements an IMS including all
material movements. It manages storage bins in complex warehouse structures and has

become imperative for efﬁcient processing of logistics (SAP AG 1994, Trunk 1998).

2.6 Transportation System

Efﬁcient shipment of returnables in a reverse logistic system depends on four
issues: Transportation mode, distance between locations, Truckload (TL) vs Less Than
Truckload (LTL) shipping, and the cooperation between supply chain partners (Kibler

1997).

19

  

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20

The package design decision will be made depending on the transportation
mode and function of the package. Product protection must be determined. Vendors can
provide test data regarding shock, vibration, stacking and compressing capability of their
products.

Currently, road transportation is the most common mode used for returnable
packaging. It offers many advantages due to high availability of roads and carriers, route
planning and ﬂexibility to easily adapt other modes if intermodal transportation is
needed, handling any type of containers and compatibility to current receiving facilities.
On the other side, it is more expensive compared to rail and water transport because of
higher variable cost mentioned earlier (Twede and Parsons 1997). Due to the fact of
high transportation cost of road transportation, returnable packaging design is focused
on using all available container cube and weight capacity. It is recommended to design
lightweight container with minimum cube utilization (Robertson 1994).

Distance is a cost driving factor which most inﬂuences the overall system cost of
operation since containers have to be returned to the place of origin. Return shipments
(empty containers) is not value-adding and will directly contribute to the variable cost
component of transportation consisting of labor, fuel and maintenance. Distance is a
dynamic component to be considered in the calculation of transportation cost per mile.
The cost to backhaul will be reduced per mile, but the longer the trip, the cost will
decline at a decreasing rate (Bowersox and Closs 1996). It is not a constant decrease in
cost and can be a major drawback in the ﬁnancial analysis for a low value product if
there are not other economies of scale to reduce cost. The use of collapsible container
with a high return ratio is recommended to decrease the return volume. In a closed loop
system, the shipper can use the additional cube for other items to ship back to the place

of origin. Other case studies have shown that shorter distances will decrease

21

transportation cost due to lower backhaul cost (Twede and Parsons 1997, DeGiorgio
and Palmer 1998, Romanski 1992).

For returnables, TL shipments are preferred compared to LTL shipment. During
TL shipments, the trailer is loaded for minimum damage, maximum cube utilization, and
minimum packaging use due to the fact that packages support each other in a stack
(Blasius 1988). TL was evaluated to be less expensive (Faucett Associates 1991).

The type of carrier is another issue to consider when evaluating transportation

issues. Shipping carriers are organized on a private, contract, or common carrier basis.

2. 7 Distribution Environment, Product Protection and Efficiency

The logistical environment during transportation can be challenging because of
many distribution hazards that can occur. Product damage in-transit may be caused by
several factors such as handling and storage, shock and vibration during shipping and
environmental conditions such as temperature changes or moisture inﬂuence. These
factors decide how the returnable package will be designed to assure product
protection.

To ensure product protection and a high lifespan of returnables, transit testing or
an accelerated life cycle analysis (Singh 1998) must be included in the returnable
container development. It is important to analyze distribution hazards, select corrective
actions, and test the returnable container system. Main transit testing procedures are
ASTM D-4169 and ISTA 1 and 2A which can be compared to ISO 4180/2-80. They give
positive reactions regarding less product damage (Brana 1993, Fiedler 1995, ISO
1980/1 and 1980/2, 1994a). Compression strength must be considered when products
are stacked. Several design considerations can increase compression strength such as

using strong raw materials (steel, wood, and HDPE), considering that the product

22

supports the load (only used if the product is allowed to support the load) or by adding
headspace which allows the load to compress the package but not bearing the load on
the product.

The weight, size, shape, frequency of returnable containers determine the
method of material handling. Heavy parts over 51 pounds (25 kilogram) cannot be
handled manually by one person, and need at least two persons, mechanical assistance
such as hand trucks and forklifts, or part redesign. The National Institute of Occupational
Safety and Health (NIOSH) published manual lifting guidelines and recommendations
for returnable packaging design and ergonomics (NIOSH 1998).

Cost efﬁciency and protection level must be evaluated parallel. Maximizing
protection should always be the goal but also means using more material. It is
recommended to reduce package weight, density, and size because carriers determine
freight cost by weight and cube. A greater cube utilization and lower weight is more cost

efﬁcient than higher weight and lower cube utilization.

2.8 Third Party Container Management vs Ownership

When considering investing in a returnable container system, the question of
ownership and handling signiﬁcantly inﬂuences the investment decision and availability.
There are three possibilities of ownership: Ownership by the shipper or consignee,
partnership or part service ownership and leasing, or third party ownership. In the ﬁrst
case, returnables are owned by a shipper or the consignee; second, a partnership with
part ownership and leasing of returnables is possible; and third, a third-party owns the
container and provides services to the customers regarding tracking and controlling

containers.

23

The ownership question depends on several factors: The price of service per
units, availability of contractors, ﬂexibility of partnering, the amount of containers
needed, cleaning requirements, and frequency or cycle time. The amount of container
components is a factor that can decide whether it is feasible to invest or to lease a
service. If the container price and amount of containers needed, as well as variable cost
will not exceed the leasing service, cleaning, tracking and control cost, than the
investment and direct ownership of containers should be pursued. If the amount of
containers used is very high, the investment and other variable costs will also increase
and become more difficult to control the system. Direct ownership requires the company
to track and maintain its containers themselves which may add cost.

VWth the increasing complexity of the supply chain, and more suppliers being
involved in the returnable containers system, third-party container management or
partnering is a better solution (DeGiorgio and Palmer 1998). Partnership is given in a
vertical marketing system where the shipper and consignee are linked by ownership,
strategic alliances, administration or contracts under the control of one ﬁrm (Bucklin
1970). In a partnership, it is important that the tracking and repair functions will be
coordinated and might be performed by more than one company. It depends on the
organization and structure of the returnable program as well as the industry that uses
the container.

Certain industries may require a particular cleanliness requirement, i.e. the
medical industry (pharmaceuticals and medical device) with distinct cleanliness and
particulate requirements following governmental standards on good manufacturing
practices (Pellizzi 1993) which do not existing, i.e. for the automotive industry. The
cleanliness of the container in direct contact must be controlled and more container

washing and cleaning is required which can signiﬁcantly increase service cost. The

24

federal standard 209E, “Airborne particulate cleanliness classes in cleanrooms and
clean zones” is required to be considered by manufacturers that have to meet good
manufacturing practices guidelines for device manufacturers. It also complies with
international regulations and standards. Therefore when choosing a partnership it is
recommended to coordinate within the same industry.

In the case of a medical company, more frequent cleaning of returnable dunnage
is required to comply with the GMPs. Partnership or third-party management compared
to ownership can be considered if the total cost of cleaning does not exceed the
investments in cleaning equipment, development cost, labor, maintenance, and material
handling (Gelblum 1998).

For each returnable container system development case, the beneﬁts for each
ownership model must be analyzed and justiﬁed individually. A cost evaluation is
recommended to incorporate the cleaning costs in a spreadsheet analysis for the net

present value (NPV) analysis.

2.9 Supplier Evaluation

Evaluating the sources of supply is a process by which potential and existing
suppliers are evaluated in terms of price, quality, reputation, location, service, ﬂexibility,
and ﬁnancial strength. Selecting a vendor is a purchasing function normally called
vendor analysis or supplier performance evaluation (Stevenson 1993). The criteria for
supplier evaluation are described in Table 5.

Due to the complexity of returnable suppliers (Kulwiec 1998), a supplier
evaluation is used to analyze the performance of a returnable packaging vendor. The
goal is to find a supplier who can provide the best crate and dunnage solution with

respect to price, quality, reputation, and service. Supplier performance can be compared

25

with the standards and speciﬁcations of the manufacturer who wants to use returnables,
or, who wants to design its own customized containers. A supplier evaluation will help
to understand the returnable container market and can be used as a part of the
selection step of Quality Function Deployment (QFD) discussed in the next paragraph.
For returnables that are designed for medical device applications, it is required that
suppliers are selected and evaluated based on their experience in the medical industry.
Furthermore they must provide design and performance capabilities based on current
container system technologies and FDA approved materials.

The length of time for a supplier evaluation should not exceed more than two
weeks for low volume products and should be less than four weeks for high volume
products to make the evaluation cost effective. The evaluation should not include more

than 3 suppliers because of evaluation costs.

Table 5 Criteria for Supplier Evaluation (Stevenson 1993)

 

Criteria Description

 

Price The price of a product is the most obvious selection criteria and may
include discounts. Prices are determined by price lists, competitive
bidding for large orders of standard products, and negotiation.

 

Quality The quality of products must meet or exceed customer demands with
respect to material and technical speciﬁcations and product functions.
ISO certiﬁed companies and qualiﬁed manufacturing programs may
insure high product quality.

 

Reputation The supplier’s reputation can be determined from past experience,
reputable engineering programs and recommendations through
networking associations, publications, and information services.

 

Location Location of a supplier can impact delivery time, transportation costs,
and response time for expediting orders. Local buying is recommended
to support the local economy and avoid additional costs.

 

Service Special services can be important in selecting a supplier, i.e. for
replacement and repair of defective parts, and technical support.

 

Flexibility Flexibility can be determined as the ability to respond to demand and
design changes quickly and provide sufﬁcient production capacity.

 

Financial Strength The supplier’s ﬁnancial strength, the ability to purchase raw materials,
and manufacture on demand is evaluated by credit reports.

 

 

 

 

26

2. 10 Quality Function Deployment (QFD)

A QFD analysis can provide a good understanding of the performance of
suppliers as a result of the supplier evaluation which selects the best companies to
compare with each other (ReVelle, Moran and Cox 1998). QFD is a method used for a
systematic planning process to develop new products or services. It helps to summarize
all customer demands, to translate the demands into design targets and quality
assurance points to be used throughout the manufacturing process. The goal is to 100
percent satisfy the customer by delivering a quality product (Daetz, Barnard, and
Norman 1995). The need to use the QFD method was driven by two objectives: To
convert the customer demands for a returnable crate into substitute quality
characteristics at the design stage. To deploy the quality characteristics identiﬁed to the
production or manufacturing activities of the crate supplier, thereby establishing the
critical control points prior to the purchase order.

The QF D method follows a systematic approach and builds a QFD matrix (Figure
9, page 51). In general, the QFD matrix consists of 12 parts (Guinta and Praizler 1993)

which are explained in Table 6.

27

Table 6 QFD Elements

 

QFD Matrix Element

Description

Application

 

Objective Statement

Goal description or problem
statement of the project.

To ﬁnd the optimum, cost
efﬁcient returnable crate
solution (see chapter 1).

 

“Whats"

Characteristics of the packaging
solution.

Easy to load trays, puncture
resistant, easy to move, etc.

 

Importance Rating

Weighted values assigning the
“Whats” and indicating the
relative importance.

Values are 1, 3, and 9 (see
matrix).

 

Correlation Matrix

Relationship between the
“Hows”. It covers conﬂicts
between the “Hows”.

Not used.

 

“Hows"

Ways of achieving the “Whats".

Stackable, collapsible, light
weight, durable crate, etc.

 

 

Target Goals Indicators whether the “How” Not used.
should be increased or
decreased.
Relationship Matrix Identifying the relationship level Middle part of the matrix

between the product
characteristic (“What") and the
way achieving it (“How”).

showing the importance ratings
correlated to the “Hows”;
values 1, 3, and 9.

 

Customer Competitive

Review of competitive product

Assessment of container

 

 

Assessment characteristics with the selected supplier by performance
product. comparison.

Technical Competitive The customers engineering Not used.

Assessment “How Much” speciﬁcations for each “How”
and the competitor’s.

Probability Factors Values indicating the ease to Not used.

achieve the “Hows”.

 

Absolute Score

Sum of calculated values for
each “How" or column in the
Relationship Matrix.

Sum of all calculated values.

 

 

Relative Score

 

Sequential numbering of the
“Hows" according to its absolute
value.

 

Numbering ranges from 1
(highest absolute score) to 10
(lowest absolute score).

 

28

 

2. 11 Capital Budgeting and Cost Evaluation

The use of returnable containers in the US, especially by manufacturer in the
automotive industry, is constantly growing. Recent trends have shown that also other
industries such as the grocery industry in the UK. are becoming more interested in the
beneﬁts of returnables (Twede 1999). Many automotive companies such as Chrysler,
Mercedes Benz or Ford Windsor have reported their success stories about the change
from expendable to returnable packaging as the best solution to satisfy their logistical
packaging and material handling needs (Auguston 1997, Forger 1998, Goetze 1998,
Randall 1998). However, all companies had carefully to justify their investments in a
returnable container system before they invested.

A national non-proﬁt organization found that companies can reduce their
container material used for shipments by 70.6 percent if returnable corrugates are used
at least ﬁve times. The number goes up to 98.5 percent if returnable plastic container
are used up to 250 times (Witt 1997, Table 7). Most companies do not accurately
present their accounting system by which they have calculated their cost savings. Many
returnable crate suppliers justify a container purchase only by the savings in expendable
cost (Blasius 1991). However, it is important to show the overall system cost and cost

drivers (Kolbach 1993).

Table 7 Life Time Cost Comparison Reusable Plastic vs Corrugated Container

Criteria Corrugated One- Corrugated Plastic Reusable
Container Way Reusable

Estimated Life

 

 

 

 

 

(Number of Trips) 1 5 250

Initial Cost $0.53 $1.06 $11.03
Cost per Trip (average) $0.53 $0.21 $0.044
Cost Savings $0.00 70.6% 98.5%

 

 

 

 

 

 

29

Some companies still use traditional cost accounting. Many businesses have
already switched to activity-based costing (ABC) which represents a different and better
concept, especially for manufacturers.

Before investing in returnable containers, organizations always ask “How much
does it cost and will this project be feasible under considerations of the total system cost
and not only considering returnable vs expendable”. Several case studies for the
automotive and furniture industry and other literature in business journals have been
reviewed which have used capital budgeting techniques to show the feasibility of their
projects (Uxa 1994, Rosenau 1996 and Kibler 1997). Most commonly used techniques
were ABC and Net Present Value (NPV) which will be used to show the effect of
returnable packaging investments in this medical device case study.

During a cost analysis, the real cost that matters is the cost of the total process,
and that is what ABC considers. Its basic premise is that manufacturing is an integrated
process that starts when supplies, parts, or materials arrive at the plant's loading dock
and continues even after the ﬁnished goods reaches the end user. Service is still a cost
of the product. Therefore, ABC is an accounting method that assigns identiﬁable costs
and allocates common costs to speciﬁc product lines or business segments. By using
this method, a company can determine the proﬁtability or proﬁt contribution that each
activity, segment, and product line brings to the company as a whole (Drucker 1995).
ABC is important to evaluate the overall system cost and not only to compare the
investments in returnables with the savings from expendables. The variable factors
involved in this cost analysis are listed in spreadsheets (see Table 13-22). Using ABC
can substantially reduce manufacturing cost by about one third or more. It shows the
impact of changes in the costs and yields of every activity on the results of the whole

process (Drucker 1995).

30

After all costs, savings and investments are summarized, the proposed capital
investment in returnable packaging must be evaluated. Companies typically measure
their investments in ﬁxed assets. NPV is recommended and presents in corporate
ﬁnance the present value of an investment in excess of the initial amount invested. In a
spreadsheet analysis, the NPV sums all cash ﬂows (CF) over the life time of a project
and discounts them by the cost of capital at the moment of investment. The investment
cost is subtracted form the discounted CF. The present value represents the value of
cash to be received in the future expressed in today’s monetary value.

When an investment has a positive NPV, it should be pursued; if negative, it
should not be accepted (Twede and Mazzeo 1998).

Most companies use the payback method in combination with NPV. lt calculates
the time how quickly an investment pays back. It involves constructing a table of the
NPV of the project by year until it reaches zero. In general, the shorter the payback

period the better the investment opportunity.

31

3. Research Method

It was found during an informal survey of several returnable crate suppliers that
a returnable container system for medical device components does not currently exist.
Therefore, a single case study involving a medical device manufacturer was used to
develop a returnable container system for syringe barrels and perform a feasibility
study investigating possible solutions for a returnable crate.

The single case study approach was chosen to deﬁne a theory for future
returnable packaging developments in the medical device industry. A case study
describes the characteristics of a praxis oriented real-life event such as an
organizational or a managerial process (Yin 1994). In comparison to a survey research,
a case study does apply analytical results, not statistical generalizations. These
analytical results can be applied to other returnable packaging development projects
within the medical device industry. Each medical device case has its own
characteristics, but there is a potential to advance the development endeavors by
creating a packaging development guideline as shown in APPENDIX B.

This case study analysis includes several steps as shown in the project
schedule (APPENDIX C) and project outline (Figure 4). The outline indicates all actions
taken including basic research, supplier evaluation, QFD, cost analysis, design and
prototyping, prototype fabrication, testing and speciﬁcations. All available resources
were used such as literature search in libraries, attending seminars and conventions,
interviews with packaging professionals, professors at MSU and industry, as well as
several ﬁeld trips including a walk-through demonstration at Medrad and its syringe

barrel supplier.

32

A medical device company, Medrad, |nc., provided the practical information to
formulate the single case study. In cooperation with the Manufacturing Manager at
Medrad and its syringe barrel supplier, K&W, the research included the comparison of
the current package to other returnable logistical packaging solutions.

Currently, Medrad is shipping 150 syringe barrels as bulk in corrugated boxes.
At this point, the company had not considered any returnable packaging systems yet.
The idea to ﬁnd a returnable packaging container system was introduced because the
company searched for an automated barrel loading system for the syringe assembly
line. A robotic pick-up was considered to load the syringe barrels on the line. The
current shipping conﬁguration—unorganized syringe barrels in bulk bags—was not a
useful conﬁguration for a robotic pick-up. The task was to ﬁnd a standardized crate or
tray conﬁguration to facilitate automated barrel loading and other manufacturing,
material handling and logistical operations. The manufacturing manager was convinced
that automation of the barrel loading operation would increase productivity and labor
savings due to less material handling, and increase product quality due to standardized
processes and less particulate created from shipping in bulk bags and corrugated.

First, all product and package characteristics for the new returnable logistical
packaging solution were deﬁned and grouped as a QFD matrix to evaluate their
importance and reduce development time. Secondly, a purchasing analysis was carried
out to ﬁnd returnable crate suppliers and thermoforming companies to deliver a tray
and crate suitable for medical device components. Three major crate suppliers and one
thermoforming company were found and evaluated by a supplier performance analysis
(see APPENDIX D, only crate suppliers). Third, a feasibility study was performed as a
spreadsheet ﬁnancial analysis to compare the current and proposed returnable

container system. The investment in crates and trays is evaluated to project the Net

33

Present Value of the overall project including capital investment, savings, expenses,
and start-up or development cost. Three inventory scenarios show the inﬂuence of an
efﬁcient inventory management system.

Fourth, a preliminary tray design was developed. The package requirements
were documented in a package speciﬁcation that included all parts of the returnable
container system (APPENDIX E). The speciﬁcations were given to three crate suppliers
and the thermoformer. Crate samples and tray prototypes were provided to Medrad to
conduct a walk-through demonstration and perform time studies to evaluate the labor
impact.

Considering other cost analysis studies, it is not an unusual case in the industry
that savings from the current package alone cannot be used to justify the use of
returnable crates and trays. This is because the expendable material savings are not
exceeding the combined investments in returnable crates and trays, a cleaning system,
automation, and the increased material handling cost. The challenge, therefore, is to
show whether there are direct and indirect labor and quality savings, as well as a
reduced scrap rate to justify the investments. In order to ﬁnd these impacts, activity
based costing is used to uncover the hidden cost drivers for particular activities and to
make a ﬁnal project decision based on the net present value for each container

alternative.

34

Figure 4 Project Outline

Returnable Crate Project

  

Visit Supplier, Process
Design, Automation,
Production Capacity

 

   

Dclivrzmiilrrt‘.
SChOt‘il of
Packaqlnq

 
   

 

 

 

x

Concepts:
Benchmarking, PIRA
Teltech,lnternet

endor Bids/NPV

QF D.
Cost Analysis
ABC, NPV Analysis

Prototyping/Design:
ProEngineer. Writing
Pkg Specs

”warm. .. > .. 'iﬂﬂh’nﬁ

Prototype Fabric tio .1,

Prototype Evaluation,
Time Studies

v;- .,

Testi ng/S pecs

Shock 8. Vibration,
Compression
Environm. Studies

Report/Thesis

 

35

4. Case Study Results

Chapter two followed a model consisting of important criteria to be used for
returnable packaging development for medical device (Figure 1, Returnable Packaging
Development Model). This chapter will describe the results of this case study approach

guided by this model.

4. 1 Medical Device Packaging and Regulations

The product to be packaged and shipped in a returnable container system is a
syringe barrel. It is a medical device component that will be assembled to an unﬁlled
MRI or ANGIO syringe for human use in hospitals. These barrels are not sterilized
before being assembled. The ﬁnal product is a front load syringe (FLS). It will be ﬁlled
with a contrast medium. With the help of the injector, the contrast medium is injected
into a human body.

This case study is strongly regulated by the device good manufacturing practices
published by the FDA. The returnable container system is a logistical package that is
considered to be a part of the medical device during transportation between the syringe
barrel supplier and the manufacturer of syringes. The syringe barrel is classiﬁed to
belong to class II. Therefore, it is not necessary to obtain the package design with FDA
approval before it will be used as logistical package. However, it must comply with the
device good manufacturing practices.

During design, testing, and manufacturing of these syringes, the medical device
manufacturer is responsible for complying with the FDA regulations given in the GMPs.

It is emphasized to comply with the GMP regulations as described in Chapter 2.

36

4.2 Medical Device Characteristics and Packaging Design

The size and geometry of the syringe determines how much space is required to
set up the package dimensions, to optimize truckload capacity, and reduce shipping
cost. The syringe barrel is light weight and does not require much cushioning. Syringe
barrels do not provide as much compression strength, so they cannot be used as load
bearing devices supporting a compressive load.
The following design requirements were considered to develop the returnable package
system which consists of thermoformed trays and a collapsible container (Figure 5 and

APPENDIX E).

Figure 5 Returnable Tray and Crate (Prototypes)

 

1. No sharp edges of the returnable container that can cause damage of the wrapping;

2. The syringe barrel should not support the load and should not be in contact with
another barrel to prevent generation of any particulate during transportation.

3. The container in direct contact with the syringe will enter the cleanroom at the
molder and manufacturer, and must comply with the cleanliness requirements of a
class 10,000 cleanroom. It should provide product containment, be stackable,

nestable when empty, provide enough stacking and compression strength to be

37

stacked 14 trays high, made of an FDA approved material that does not generate
particulate, is ﬂexible and resistant to temperature changes in distribution and
warehousing, should be compatible to the cleaning process.

4. The outer container should be stackable, collapsible to minimize the return ratio,
lightweight, easy to handle by one employee. The design should minimize any
contact phases where particulate can accumulate. Therefore, open edges must be
taped when plastic corrugated sleeves are used.

5. The tray should hold up to 14 barrels. It might be reduced because the ﬂanges of the
barrels are rubbing against each other which should be avoided to not generate any
particulates.

6. The container system does not need to consist of a sterilizable material but it must
be resistant to moisture or chemical contamination.

7. No sharp edges of the returnable container that can cause. damage of the wrapping.

8. The syringe barrels should not support the load and should not be in contact with
each other.

9. Wrapping material should be compatible to the package system, provide puncture
resistance to protect the syringe from particulate.

10. A closure solution must be provided to close the wrapping.

11. A labeling solution must be provided to trace each syringe barrel lot molded by a
particular molding machine. Labels must be placed on each packaging container
element or a packaging unit, i.e., a stack of trays packaged in a bag. Labels must be
tamper evident and legible throughout the distribution system.

12. A cleaning system should be recommended and in place to provide proper cleaning

of the container elements that enter a cleanroom environment.

38

Appropriate packaging materials were investigated for the returnable container
design, i.e., suppliers were asked to provide material speciﬁcations for their products to
evaluate the compliance with GMPs and compatibility to the packaging and material
handling process. In addition, packaging materials were requested to be recyclable.

A packaging speciﬁcation (APPENDIX E) was written to provide a guideline for
package design, prototyping and manufacturing for the returnable crate suppliers and
thermoformer. It was used to evaluate prototypes during the walk-through demonstration
and is subject for continuous change. The speciﬁcation is kept on record for future
reference to compare the delivered package components.

In this case study, the medical device packaging development, material handling
and cleaning of trays, labeling of the crates and trays for traceability purposes must
comply with the device good manufacturing practices. During the design stage, it must
be assured that all team members responsible for the returnable package development
(syringe tray in direct contact with the syringe barrels, see next paragraph), must
communicate and cooperate with other team members who are responsible for
materials, equipment selection, process validation, and quality control. It is
recommended to work with companies who are experienced in the area of medical
device packaging and who are familiar with GMPs and other FDA regulations mentioned
earlier.

In Figure 6, all functions of the medical device package are summarized and
linked to its environmental requirements. The matrix follows a system developed by

Lockhart (Lockhart 1997).

39

Figure 6 Environment Matrix for Returnable Packaging Development

 

 

 

 

 

Emirtmert
Pl'ys'ca Arrosmere I-erm
F Rdedim awe-scream Oa'ﬁress/thaﬁoJaer TarraEvich’tLabd
u I-laamsmerias TerrpaaueResistat l-b'dirglrstndios
n Vbalal/ND' fndlm' ' UAig'tFéstat hbSapEdﬁsﬂra/s)
C W")! Paldl.od<S/stan HeddeNderia Wmlrslnnim
t qullaos Omgated l-b‘dI-tiesEasedUae

 

Orrmncaim' ' Prirted Oate SoayVlbrirgs Legbl'rty, View
Barcndas TrammaimLabds Imataylriurraim
Label Hick Qm'rng’rg Ld Nera

30

 

 

 

 

 

 

 

4.3 Material Handling and Operational Requirements

At the beginning of the project, the company provided the process design and
automation requirements for automated device loading at the manufacturers assembly
line. The proper ﬁt of the tray to the automated barrel loading robotic pick-up was the
most important issue at that point. This was the main factor on the package design
requirement list. Other information and requirements were gathered at the plant trip and
a “wish list” for the QFD matrix was made.

Next, a plant visit at Medrad's molder facility in Westﬁeld, PA (K&W), and
Indianola, was arranged to investigate the current material handling ﬂow using
corrugated containers. Several possible returnable crate designs and dunnage/tray
solutions, as well as a preliminary tray drawing and prototype were introduced to the
supplier to visualize the new packaging solution. The walk-through demonstration of the
facility was made by reviewing the molding process (cleanroom), barrel packaging in
corrugated containers, releasing of full containers outside the cleanroom for palletizing
and storage for shipment.

The loading dock capacity was reviewed and it was found that the ceiling height

was not enough to handle two crates in a stack for efficient truck loading. The forklift

40

truck was able to carry only one crate at a time and place the crates inside the trailer on
top of each other. It was found that this would dramatically increase material handling
labor. A possible solution was to increase the loading dock height. However, it was
decided not to do any construction at this point until the feasibility study was done.
Another option was to use containers that are shorter in height.

Furthermore, overall plant readiness including cleanroom was evaluated.
Another criteria was the size of the cleanroom opening through which the corrugated
containers currently are conveyed from the cleanroom to the shipping area. The
cleanroom opening size is ﬁxed therefore the returnable crate dimensions had to be
within these values of 19"x 12” x 35” (LxWxD). Other material handling concerns were
associated with the investments in workstations, the loading dock changes for smoother
and faster returnable crate loading as well as a labor increase of one person due to
increased material handling. It was found that the current space and material handling
equipment is available to manage returnable crates.

The next step was to evaluate cleanliness requirements to determine the need
for sophisticated cleaning equipment, and where the cleaning should take place. It was
decided to perform the cleaning of the returnable trays at K&W. Since the empty trays
must be returned to K&W, the trays could be contaminated during transportation if
cleaned at the manufacturer. Several cleaning equipment suppliers were researched
based on the following criteria: Cleaning mechanism, cleanliness requirement
cleanroom class 10,000, automated continuous ﬂow to reduce labor and handling, and
price. Two systems were found: NEY Ultrasonics ($325K) and S&K Products ($125K).
These systems work with ultrasonic waves, NEY with a cleaning solution that is water
based and 88K with a chemical solution. The latter can be operated automatically, the

former only as batch cleaning which would increase labor.

41

In conclusion of the cleaning aspect, it was decided that Medrad would develop
its own in-house cleaning system that will basically consist of a particulate blow off and
an alcohol wipe down. This system meets the class 10,000 cleanroom requirements.
The advantage of this system: Medrad already has a system in place so development
costs as well as other investments will be saved, and furthermore, it is already validated.
The cleaning machine investments of suppliers were not feasible (see purchasing
analysis).

To evaluate labor due to a higher level of material handling, time studies were
performed during the second walk-through demonstration after the ﬁrst prototype of the
new thermoform tray was done. A walk-though demonstration plan guided the plant trip.
The time to ﬁnish each step was taken from the current packaging process, and also in
the cleanroom. The time studies were performed by an individual who was currently
working on the molding machine and packaged the syringe barrels. There were no time
studies performed at Medrad yet, since the automation system for barrel loading is not
in place yet. As a result of the time studies at K&W. it was found that the worker will not
have enough time to accommodate more material handling. One solution was
suggested to employ a new person per shift which increases labor by approximately
$30,000 to $60,000. The company is now looking for an advanced automation system at
the molding machine which includes inspection, packaging, and labeling.

To comply with the GMPs, traceability of containers and trays was very
important. Each set of trays has to be marked individually to show from which molding
machine the barrels were made. It was decided to label each stack of trays, and to place
a (self-adhesive or pocket) label on the shipping crate. Labeling was found to be a cost
driver. Automating the barrel loading process inside K&Ws cleanroom was not possible

because quality assurance required 100 percent visual inspection by inspectors.

42

4.4 Inventory and Warehouse Management

Inventory was another issue which was not considered to be risky. The company
tries to maintain enough inventory to satisfy its customers without an out-of-stock
situation for at least 15 to 21 days. The company does not have an electronic or
computer based tracking system in place nor a warehouse management system for
returnable containers. It was recommended to look into third-party tracking programs to
reduce manual labor costs and to make the system more reliable in terms of keeping
records.

Container tracking was not an issue since the company currently has a
sophisticated incoming computer system which is appropriate for inventory and

warehouse management, i.e. as introduced as SAP system.

4.5 Transportation System

Figure 7 shows the suggested material handling and transportation route model.
The stars in this ﬁgure mean that a supplier will provide the thermoformed trays who
also could provide cleaning as a third-party service. This would be integrated in stage I
at the facility of Medrad's syringe molding supplier K&W.

Barrel molding and loading in returnable trays will be done at K&W. The trays will
be manually double bagged, labeled with a tamper evident label and closed with a twist
tie. The packaged trays will be loaded into returnable containers outside the cleanroom.
The full crates are loaded onto a trailer with a capacity of 44 crates per truckload and
shipped to Medrad by truckload. A critical factor within the transportation characteristics
is the distance between Medrad and K&W. A truck must drive about 4 to 5 hours
between Medrad and K&W. Medrad pays for each truck shipment (one way only; from

K&W to Medrad) the price for a full round trip. Since empty returnable containers must

43

be shipped back to K&W, the costs for shipments in return to K&W are already
considered. To keep the empty shipped crate and tray volume low, the crates must be
collapsible and the trays nestable.

Figure 7 Flowchart Returnable Crate Handling

Returnable Crate Management

  

 

..vv

g "“’“““‘s’ubgsiié‘r”“ “ """
.Tray Mfg [Cleaning

 
   

Third Party *
Collapsible Crate

* Stage I \

StagelV
Barrel Molding E * : _
Packing/Wrapping E ‘ Supplier 3 Tray Cleaning
Shipping to Company 5 MOM" Barrels 3 Unwrapping

in crates : : Receivmg

Stage u g ' ' §

Receiving f f , 3‘39“ "'
Cleanroom 3 Company 5 Empty crates/trays
Unwrapping 3 Assembly U09 3 Shipping to Molder
Loading 5 5 Release
Assembling 3 3 Storage

Wrapping ._ - ......................................... °

4.6 Distribution Environment, Product Protection, and Efficiency

For the analysis of the distribution and environmental hazards, it is
recommended to monitor vibration, drop impacts and compression characteristics during
a one-way trip. As described, triaxial accelerometers to measure vibration, compression
testers to simulate a constant load, and drop tester are used to test the damage
characteristics of the individual package system in a stack of two crates. These tests
can only be conducted when the container prototype is ready for testing. It is

recommended to write a test plan which indicates assurance levels, tests performed,

44

standards used, etc. A possible information source for test a test center is the
International Safe and Transit organization (ISTA). Usually, performance tests in the
normal shipping environment are performed by using ASTM 4169 or ISTA 1 and 2A.

The lifespan of a crate or the tray is greatly inﬂuenced by the material used,
mode of transportation, and manual handling by individuals. Ergonomics of the tray and
crate play an enormous role to reduce employee injuries and faster handling. The crate
should be lightweight, able to be handled by only one individual, stackable and
collapsible with the lowest return ratio possible. The container design requirements were
already discussed earlier. However, it is important to mention that a universal crate is
required in order to reduce initial investment and so is a thermoformed tray.

The tray is preferably made from high impact polystyrene (HIPS) which is 35%
rubber modiﬁed to be more ﬂexible to withstand temperature changes and impact
resistant. A non-modiﬁed polystyrene tray would be more brittle, less resistant to
temperature changes and less impact resistant during handling. Rubber integrated in

the styrene matrix gives more ﬂexibility in the polymer chains.

4.7 Third-Party Container Management vs Ownership

The returnable system can consist of the following three options: a) Full-service
by the third party for bulk containers, trays, and cleaning of trays. CHEP and Perstorp
are returnable crate leasing companies, and Re-source America is offering third-party
cleaning; b) Third-party management of bulk container, and Medrad owns the trays
including cleaning; and, c) Medrad owns the whole system including container, trays,
and cleaning equipment (see Figure 8).

The returnable cycle between the tray supplier, K&W (barrel molder), Medrad,

and the third-party company is shown in Figure 7. It was found that full ownership by

45

Medrad would be the most beneﬁcial solution since it is a closed loop system with low
container tracking requirements, the number of containers needed per year is
continuously increasing, and the cost of a third-party management would increase the
systems' overall cost. Various options of returnable container systems and suppliers, as
well third-party service companies were researched as stated in Table 8 and Table 11.
Regarding cleaning service provided by a third party company, several companies were
evaluated to provide cleaned trays. It was found that the cost of cleaning by using an
outside supplier would drastically increase the operational costs. Under consideration of
labor, shipping, and availability of cleaning service, the price for one cleaned tray would
be approximately $1 (Re-Source America). Due to these additional costs, it was decided
that third-party cleaning is not feasible when considering 500,000 trays per year. The
investment in an in-house blow and wipe down cleaning system would be much lower
($75K) and considered to be feasible for the whole project.

Since the supply chain between Medrad and K&W is not very complex, both
parties can closely cooperate and use a contract carrier to ship returnables between
Medrad and K&W. The container and trays will circulate in a closed loop system. The
containers will be controlled by both partners. Records will be kept during incoming
inspection. Since Medrad would own the whole container system, the company has

better control over container use, availability, cleanliness, and ﬂexible manufacturing.

Figure 8 Container Management

46

Ownership vs Third Party Container Management

Third Party Medrad
Container Mgt Ownership

 

 

 

 

 

 

     

, i \ I I \
~Part SerVice" Tray ~PartServic‘e ‘ lnhouse , Full
Crate . Cleaning Dunnage Suppy’ Cleaning ZPWUEFShir.

 

 

 

 

 

 

 

4.8 Supplier Evaluation

A vendor analysis was performed to understand the current available returnable
container systems in the automotive industry, medical packaging, grocery, and
beverage industries. The following areas were investigated: Returnable bulk containers,
thermoformed trays, polymer ﬁlms/bags as wrapping materials, cleaning equipment
suppliers, and third-party container management, tray suppliers, and cleaning services.

The following tables include all supplier evaluation results based on the criteria:
Price, quality, lifespan, services, and ﬂexibility. Further information is provided in
APPENDIX D. In Table 8, all investigated container suppliers are listed, as are price and
performance criteria such as lifespan, and service information. It is a collection of data
provided by each company’s representatives which are not based on literature and
laboratory performance testing. Currently, there are no performance based test methods
to test and evaluate returnable intermediate bulk container (IBC) available (Singh 1999).
However, The School of Packaging at Michigan State University has been extensively
involved in the development of test methods that can be used to provide a uniform basis
to compare the performance of returnable containers. Singh has developed several
methods to test the performance of reusable plastic containers (Singh 1999). The ﬁrst

method developed was for closed reusable containers for loads up to 150 lb. This

47

method was recently adopted by the International Safe Transit Association as Project 1F
(ISTA 1998). Two new methods are currently being proposed. The ﬁrst is for open
reusable containers, and the second for reusable lBC’s.

Buckhorn, Ropak and Perstorp offered very durable container solutions. However,
these containers are heavy, cannot be handled by one person and are mostly used for
heavy parts in the automotive industry. Compared to the aforementioned suppliers,
TriEnda manufactures a light weight container that was considered a better solution for
medical device components because it was easy to handle and load by one person and

withstands sufﬁcient compressive load.

Table 8 Returnable Container Evaluation (Supplier Information)

 

 

 

 

 

 

 

 

 

 

 

Company Price Quality/Life Time Service/Flexibility

Ropak $140] best in class, ISO 9002 certiﬁed Best customer support, fast

C001. collapsible quality tests in laboratory quotation, 005"

Canada life time: 7 years, easy to handle gsgngggézﬁgpﬁagzon
supplies automotive Industry gave best results

Buckhorn $140/ collapsible life time: 5 years, supplies Good customer support

|nc., OH automotive industry

TriEnda, $80, collapsible sleeve system is less durable, Good customer support

Inc. life time: 5-7 years, very good and fast quotation, lowest
space utilization, light weight price

Perstorp $140l collapsible life time: 4 years Good customer support

Plastic third party management

System

Orbis $140/collapsible life time: 3 years Poor customer service

 

In the following table, supplier information regarding thermoforming companies are
listed. It was found that UFP Technologies was the most sophisticated and
knowledgeable company in the area of medical packaging and provided the fastest

quoting, designing and prototyping services.

48

Table 9 Thermoformed Trays Evaluation (Supplier Information)

 

 

 

 

 

 

 

 

Company Price Quality Service/Flexibility
UFP $1 .74/ high quality trays exhibited at Best customer service
Technologies tray PackExpo, ISO 9001, references in most information supplied
NJ for various industries, experience in fast quotation
30,000 medical device industry, Medrad is c ost/p erform an ce
trays; already customer for cushioning . comparison gave best
$6 000 supplies, FDA approved, HIPS white results
tooling thermoformed trays, 50 mil, with 35%
rubber modiﬁed, withstands cleaning
and high cycle time if proper handled
Tuscarora $652 for lower life time due to thinner tray Good customer support
25000 thickness, quality work, less expensive long customer
trays but more repairs needed, light weight, consultation
less protection fast quotation
Plastech $ not good quality Good service/no
available quotation

 

Table 10 Polymer Bag Evaluation (Supplier Information)

 

 

 

 

 

 

 

 

Company Price Quality Service/Flexibility
Polydynamic $ ??? no LDPE polybags, 1.5 mil thickness No further information yet
quote yet
Duratech $0.08 per 3 LDPE polybags, 3 mil thickness Only cost information from
pack tray UFP, company must be
contacted to get quotation
Crystal X $0.62/bag LDPE polybags, 2 mil thickness Currently used by Medrad

 

Table 11 Cleaning Equipment Evaluation (Supplier Information)

 

 

 

 

 

 

 

 

 

Company Price Quality Service/Flexibility
88K $325,000 chemical solvent cleaning, Best support
Pl’OdUCtS $40_000 applicable for Class 10,000 Clean most information supplied
NY maintenance room requirements, EPA fast quotation
22.3%.22.3%‘lf'3..2°3.pom .0........m....
sonic s stem d in batch ' comparison analysis over
y ' ry 9' . expected life time gave
process, automated, quality tests
. . best results
International references
NEY $125,000 water based ultrasonic, Good customer support,
Ultrasonics continuous process less motivated
Re-Source $1/ tray recommended by UFP Third party cleaning, fast
America cleaning service
Hague >$1ltray recommended by UFP Good customer service,
America cleaning fast service

 

49

 

 

 

Evaluation results for wrapping and the cleaning system are provided in Table 10
and Table 11. Medrad and K&W would continue to purchase polymer bags from their
current supplier Crystal X because of low prices of existing standard bags. None of the
cleaning systems offered by NEY Ultrasonics and 88K products would be considered

due to the high investments needed which would not justify a positive NPV.

4.9 Quality Function Deployment (QFD)

Three different crate suppliers and one thermoforming company were identiﬁed
to conduct the selection process. A QFD analysis and supplier performance evaluation
(Figure 9, APPENDIX D) was done to ﬁnd the best crate solution. The QFD matrix was
built by listing the customer demands as Medrad’s “wish list” (performance criteria) such
as puncture resistant crate walls, optimal containment of trays, cleanliness, reduction in
particulates, and low investment. Each criterium was rated. A supplier performance
assessment was done by comparing the crate performance of each supplier (Ropak,
Buckhorn, Trienda) with Medrad’s wish list. For each customer demand, the individual
crates were evaluated. The absolute scores were summarized and a relative score was
calculated in percent. From the matrix, it was found that the most important factors were
stackability, collapsible, light weight container with drop doors, less than 1.5 inch wall
thickness, made of a friction resistant material, i.e. HDPE, to reduce particulates and
guarantee cleanliness. The ideal package was found to be the TriEnda crate with 91%
customer satisfaction over all customer demands (Figure 9).

The outcome of the QFD analysis is that TriEnda delivers the best crate solutions
with respect to 91% customer satisfaction over all customer demands, i.e. light weight,

easy tray loading, easy crate handling, and lowest investment.

50

 

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51

4. 10 Financial Analysis

The ﬁnancial analysis is designed as a spreadsheet in Excel format which allows
to be adjusted for various sale forecasts, inventory levels, ﬂoat days and container
amounts. The analysis is divided in three different levels of evaluation:

. Inventory level (100%, 60%, and 40%);

. Returnable system ﬂoat (four and two days); and

. Savings received (starting in year zero or year one).

In Table 12, sales forecast determines the number of containers needed. Annual
sales increase is included in percentage. All numbers have been modiﬁed and do not
represent Medrad’s syringe sale forecast. Two different returnable system ﬂoats are
used: Four and two days. By reducing the ﬂoat from four to two days, the containers are
returned to the manufacturer in only two days (instead of four) and are used twice as
much as with a ﬂoat of four days. Therefore, the amount of containers ﬂoating in the
system can be reduced by 50 percent. This lowers the initial investment in containers.

The current expendable cost of $56,352 (Table 13) is compared to the proposed
returnable container investment considering three different inventory levels (100%, 60%,
40%). These new investments represent the new package costs for each inventory
level. 100% inventory level represents the company’s current amount of containers
needed to accommodate a production quote of 304,800 barrels for 24 days inventory.
60% and 40% inventory levels were chosen as opportunities for reduction of initial
investments. The total savings or expenses associated with wrapping, labeling, freight,
disposal, labor cost at Medrad and K&W as well as quality savings due to less
contaminated barrels are listed in Table 15 through Table 22. In these tables, the

current system (expendables) is always shown on the left and the proposed system on

52

the right side. Savings or expenses are indicated as “New" which are integrated in the
total cost analysis to evaluate the proﬁtability. The total savings or expense numbers in
these tables are summarized in the NPV tables for different inventory levels to identify
the NPV difference and payback period due to lower investments in returnable crates if
a lower inventory level or floating time is considered.

Beside inventory levels and ﬂoating time, it was investigated the inﬂuence of
savings received in year zero and year one. The calculations for year zero are shown in
table 23 through 34, and for year one in tables 35 through 46.

The NPV is calculated under consideration of an internal rate of return of 30%.
For the analysis, only the best suppliers TriEnda and UFP Technologies were chosen.
NPV and payback period were evaluated. It was found that the NPV continuously

increases and the payback period decreases the lower the inventory level.

Table 12 Cost Analysis - Returnable Container System

 

Company: Medrad, Inc. Returnable System Float: 4, and 2 days

 

 

(*Barrels/day, barrel in stock, no inventory reduced)
(**Crates/day for 24 days inventory)

Sales Forecast 2000 2001 2002 2003 2004
Annual volume: 3,004,568 3,305,025 3,602,477 3,890,675 4,201,929
Annual increase: 10% 9% 8% 8%
Barrels/day (*) 304,800

Total Crates/day (**) 300 303 306 308 310
100% Inventory, 4 days 300 303 306 308 310
60% Inventory 180 182 184 1 85 186
40% Inventory 120 121 122 123 124
100% Inventory, 2 days 150 152 153 154 1 55
60% Inventory 90 91 92 92 93
40% Inventory 60 61 61 62 62

 

53

 

 

 

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57

Table 23 NPV (100% Inventory, Float 4 days, Savings in Year 0)

 

 

 

 

 

 

 

NPV Analysis (100% Inv., 4 days float) Year 0 Year 1 Year 2 Year 3 Year 4
Investment Capital $222,084

Total Investment Required (222,084) 0 0 0 0
10 year Depreciation $22,208 22,208 22,208 22,208 22,208 22,208
Cash Flow from Depriciation (35%) 7,773 7,773 7,773 7,773
Total Cash Flow from Investment ($222,084) $7,773 $7,773 $7,773 $7,773
Savings/Expense

Reduction current pkg cost $56,352 $62,169 $67,228 $71,804 $77,208
Increase Freight/Shipping (17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 90,000 99,290 107,369 114,678 123,308
Increase Labor Manufacturer (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost (374) (412) (446) (476) (512)
Reduced Particulate/Quality 10,314 11,379 12,305 13,142 14,131
Savings Disposal Cost 400 441 477 510 548
Total Savings 119,178 131,480 142,178 151,856 163,284
Total Cash Flow Savings $77,466 $85,462 $92,416 $98,706 $106,135
Development

MSU, Labor $18,000 $0 $0 $0 $0
Lab Testing 2,000 0 O 0 0
Tray Prototype 2,000 0 0 0 0
TestingNalidation Cleaning 15,000 0 O 0 0
Total Start-Up 18,500 0 0 0 0
Total Cash Flow Development ($18,500) $0 $0 $0 $0
Total Cash Flow ($163,118) $93,235 $100,189 $106,479 $113,908
Internal Rate of Return 30% ($163,118) $71,719 $59,283 $48,466 $39,882

 

 

  

Net Present Value (NPV)

 

Payback (years, months)

 

$56,232 NPV if inventory levels not reduced!

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Table 24 Payback (100% Inventory, Float 4 days, Savings in Year 0)

 

 

Returnable Container Investment Payback Period: (Months) (Years)
32 2.66
Gross Savings Cummul. Net Savings
Year (Months) 0 (0) ($163,118) ($163,118)
Year (Months) 1 (12) 71,719 (91,399)
Year (Months) 2 (24) 59,283 (32,116)
Year (Months) 3 (36) 48,466 16,350
Year (Months) 4 (48) $39,882 $56,232

 

 

58

 

Table 25 NPV (100% Inventory, Float 2 days, Savings in Year 0)

 

NPV Analysis (100% lnv., 2 days float)

Year 0 Year 1 Year 2

Year3

Year4

 

 

 

 

 

 

Payback (years, months)

 

 

Investment Capital $190,932

Total Investment Required (190,932) 0 0 0 0

10 year Depreciation $19,093 19,093 19,093 19,093 19,093 19,093

Cash Flow from Depriciation (35%) 6,683 6,683 6,683 6,683

Total Cash Flow from Investment ($190,932) $6,683 $6,683 $6,683 $6,683
Savings/Expense

Reduction current pkg cost $56,352 $62,169 $67,228 $71,804 $77,208

Increase Freight/Shipping ( 17,288) ( 19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 90,000 99,290 107,369 114,678 123,308

Increase Labor Manufacturer (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost (374) (412) (446) (476) (512)
Reduced Particulate/Quality 10,314 11,379 12,305 13,142 14,131

Savings Disposal Cost 400 441 477 510 548

Total Savings 119,178 131,480 142,178 151,856 163,284

Eotal Cash Flow Savings $77,466 $85,462 $92,416 $98,706 $106,135

Development

MSU, Labor $18,000 $0 $0 $0 $0

Lab Testing 2,000 0 0 0 0

Tray Prototype 2,000 0 0 0 0

TestingNalidation Cleaning 15,000 0 0 0 0

Total Start-Up 18,500 0 » 0 0 0

Total Cash Flow Development ($18,500) $0 $0 $0 $0

Total Cash Flow ($131,966) $92,145 $99,098 $105,389 $112,818

Internal Rate of Return 30% ($131,966) $70, 881 $58, 638 $47, 970 $39, 501

Net Present Value (NPV)

$85 022 NPV if Inventory levels not reducedl

Table 26 Payback (100% Inventory, Float 2 days, Savings in Year 0)

 

 
 

 

Year (Months)
Year (Months)
Year (Months)
Year (Months)
Year (Months)

 

o (0)
1 (12)
2 (24)
3 (36)
4 (48)

Returnable Container Investment Payback Period:

Gross Savings
($131,966)
70,881
58,638
47,970
$39,501

(Months)
25

Cummul. Net Savings
($131,966)
(61,086)
(2,448)
45,522
$85,022

(Years)
2.05

 

 

59

Table 27 NPV (60% Inventory, Float 4 days, Savings in Year 0)

  

NPV Analysis (60% lnv., 4 days float) Year 0 Year 1 Year 2 Year 3 Year 4

             

 

 

 

 

 

 

Investment Capital $196,255 $0 $0 $0 $0

Total Investment Required (196,255)

10 year Depreciation $19,626 19,626 19,626 19,626 19,626 19,626

Cash Flow from Depriciation (35%) 6,869 6,869 6, 869 6, 869

Total Cash Flow from Investment ($196,255) $6,869 $6,869 $6,869 $6,869

Savings/Expense

Reduction current pkg cost $56,352 $62,169 $67,228 $71,804 $77,208

Increase Freight/Shipping (17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 90,000 99,290 107,369 114,678 123,308

Increase Labor Manufacturer (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost (374) (412) (446) (476) (512)
Reduced Particulate/Quality 10,314 11,379 12,305 13,142 14,131

Savings Disposal Cost 400 441 477 510 548

Total Savings 119,178 131,480 142,178 151,856 1 63, 284

Total Cash Flow Savings $77,466 $85,462 $92,416 $98,706 $106,135

Development

MSU, Labor $18,000 $0 $0 $0 $0

Lab Testing 2,000 0 0 0 O

Tray Prototype 2,000 0 0 0 0

TestingNalidation Cleaning 15,000 0 0 0 0

Total Start-Up 18,500 0 y 0 0 0

Total Cash Flow Development ($18,500) $0 $0 $0 $0

Total Cash Flow ($137,290) $92,331 $99,285 $105,575 $113,004

Internal Rate of Retur 30% ($137,290) $71,024 $58,748 $48,054 $39,566

Net Present Value (NPV) $80,103 60% Inventory

Payback (years, months) a... (.322. 53,558. ,,,2,'"" '

 

 

 

Table 28 Payback (60% Inventory, Float 4 days, Savings in Year 0)

 

Returnable Container Investment Payback Period: (Months) (Years)
26 2.16
Gross Savings Cummul. Net Savings
Year (Months) 0 (0) ($137,290) ($137,290)
Year (Months) 1 (12) 71,024 (66,266)
Year (Months) 2 (24) 58,748 (7,517)
Year (Months) 3 (36) 48,054 40,537
Year (Months) 4 (48) $39,566 $80,103

 

 

 

60

Table 29 NPV (60% Inventory, Float 2 days, Savings in Year 0)
NPV Analysis (60% lnv., 2 days float) Year 0 Year 2

   

  

  

  

  

      

  

Year 1 Year 3 Year 4

 

 

 

 

 

   
 
    

 

Investment Capital $177,035 $0 $0 $0 $0

Total Investment Required (177,035)

10 year Depreciation $17,703 17,703 17.703 17.703 17.703 17,703

Cash Flow from Depriciation (35%) 6,196 6.196 6,196 6,196

Total Cash Flow from Investment ($177,035) $6,196 $6,196 $6,196 $6,196

SavingsIExpense

Reduction current pkg cost $56,352 $62,169 $67,228 $71,804 $77,208

Increase Freight/Shipping (17,288) (19,073) (20,625) (22.029) (23.686)
Savings Labor Cost (Medrad) 90,000 99,290 107,369 114,678 123,308

Increase Labor Manufacturer (12.043) (13.286) (14.367) (15,345) (16,500)
Increase Wrapping (8.184) (9.029) (9,763) (10,428) (11,213)
Increase Labeling Cost (374) (412) (446) (476) (512)
Reduced Particulate/Quality 10.314 11.379 12,305 13.142 14.131

Savings Disposal Cost 400 441 477 510 548

Total Savings 119,178 131,480 142,178 151. 856 163. 284

Total Cash Flow Savings $77,466 $85,462 $92,416 $98,706 $106,135

Development

MSU, Labor $18,000 $0 $0 $0 $0

Lab Testing 2.000 0 0 0 0

Tray Prototype 2,000 0 0 0 0

TestingNalidation Cleaning 15,000 0 0 0 0

Total Start-Up 18,500 0 0 0 0

Total Cash Flow Development ($18,500) $0 8 $0 $0 $0

Total Cash Flow ($118,069) $91,658 $98,612 $104,903 $112,331

Internal Rate of Retur 30% ($118,069) $70,506 $58,350 $47,748 $39,330

Net Present Value (NPV) $97,866 60% Inventory

Pﬁback (years, months) “3.93:3 ._

      

 

 

 

Table 30 Payback (60% Inventory, Float 2 days, Savings in Year 0)

 

 

 

Returnable Container Investment Payback Period: (Months) (Years)
22 1.82
Gross Savings Cummul. Net Savings
Year (Months) 0 (0) ($118,069) ($118,069)
Year (Months) 1 (12) 70.506 (47,563)
Year (Months) 2 (24) 58.350 10,788
Year (Months) 3 (36) 47.748 58.536
Year (Months) 4 (48) $39,330 $97,866

 

 

61

Table 31 NPV (40% Inventory, Float 4 days, Savings in Year 0)
NPV Analysis (40% lnv., 4 days)

Year 0 Year 1 Year 2

Year 3 Year 4

 

 

 

 

 

 

 

 

Investment Capital $183,542 $0 $0 $0 $0

Total Investment Required (183,542)

10 year Depreciation $18,354 18,354 18,354 18,354 18,354 18,354

Cash Flow from Depriciation (35%) 6,424 6,424 6, 424 6, 424

Total Cash Flow from Investment $183,542 $6,424 $6,424 $6,424 $6,424

Savings/Expense

Reduction current pkg cost $56,352 $62,169 $67,228 $71,804 $77,208

Increase Freight/Shipping ( 17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 90,000 99,290 107,369 114,678 123,308

Increase Labor Manufacturer (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost 10,314 11,379 12,305 13,142 14,131

Reduced Particulate/Quality (374) (412) (446) (476) (512)
Savings Disposal Cost 400 441 477 510 548

Total Savings 119,178 131,480 142,178 151,856 163, 284

Total Cash Flow Savings $77,466 $85,462 $92,416 $98,706 $106,135

Development

MSU, Labor $18,000 $0 $0 $0 $0

Lab Testing 2,000 0 0 0 0

Tray Prototype 2,000 0 0 0 0

TestingNalidation Cleaning 15,000 0 0 0 0

Total Start-Up 18,500 0 0 0 0

Total Cash Flow Development ($18,500) $0 $0 $0 $0

Total Cash Flow ($124,577) $91,886 $98,840 $105,130 $112,559

Internal Rate of Retur 30% ($124,577) $70,682 $58,485 $47,852 $39,410

Net Present Value (NPV) $91,852 40% Inventory

Payback (years, months) 1.9 965*353‘5‘9116 I ' :54.

 

Table 32 Payback (40% Inventory, Float 4 days, Savings in Year 0)

 

 

Year (Months) 0 (0)
Year (Months) 1 (12)
Year (Months) 2 (24)
Year (Months) 3 (36)
Year (Months) 4 (48)

Returnable Container Investment PaybackPeriod:

(Months) (Years)
23 1.92
Gross Savings Cummul. Net Savings

($124,577) ($124,577)

70,682 (53,895)
58,485 4,590
47,852 52,442
$39,410 $91,852

 

 

62

 

Table 33 NPV (40% Inventory, Float 2 days, Savings in Year 0)

 

NPV Analysis (40% lnv., 2 days)

   

Year 0 Year 1

Year 2

Year 3 Year 4

 

 

 

 

 

 

Payback (years, months)

Investment Capital $170,074 $0 $0 $0 $0

Total Investment Required (170,074)

10 year Depreciation $17,007 17,007 17,007 17,007 17,007 17,007

Cash Flow from Depriciation (35%) 5,953 5, 953 5, 953 5, 953

Total Cash Flow from Investment $170,074 $5,953 $5,953 $5,953 $5,953

Savings/Expense

Reduction current pkg cost $56,352 $62,169 $67,228 $71,804 77,208

Increase Freight/Shipping (17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 90,000 99,290 107,369 114,678 123,308

Increase Labor Manufacturer (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost 10,314 11,379 12,305 13,142 14,131

Reduced Particulate/Quality (374) (412) (446) (476) (512)
Savings Disposal Cost 400 441 477 510 548

Total Savings 119,178 131, 480 142,1 78 151,856 163, 284

Total Cash Flow Savings $77,466 $85,462 $92,416 $98,706 $106,135

Development

MSU, Labor $0 $0 $0 $0 $0

Lab Testing 0 0 0 0 0

Tray Prototype 0 0 0 0 0

TestingNaIidation Cleaning 0 0 0 0 0

Total Start-Up 0 0 0 0 0

Total Cash Flow Development $0 $0 $0 $0 $0

Total Cash Flow ($92,608) $91,415 $98,368 $104,659 $112,087

Internal Rate of Retur 30% ($92, 608) $70,319 $58,206 $47,637 $39,245

Net Present Value (NPV)

$122 799 40% Inventory

 

 

 

Table 34 Payback (40% Inventory, Float 2 days, Savings in Year 0)

 

 

Gross Savings

Year (Months) 0(0)
Year (Months) 1 (12)
Year (Months) 2 (24)
Year (Months) 3 (36)
Year (Months) 4 (48)

 

Returnable Container Investment Payback Period:

($92,608)
70,319
58,206
47,637

$39,245

(Months)
17

Cummul. Net Savings

($92,608)

(22,289)
35,917
83,554
$122,799

(Years)
1.38

 

 

63

Table 35 NPV (100% Inventory, Float 4 days, Savings in Year 1)

  

NPV Analysis (100% lnv., 4 days float) 4 tﬁYeal’ 0,94%” 141qu 2 mYear 3..-—.Year 4 “Year 5

 

 

 

 

 

Investment Capital $222,084

Total investment Required (222,084) 0 o o o o
10 year Depreciation $22,208 22,208 22,208 22,208 22,208 22,208 22,208
Cash Flow from Depriciation (35%) 7,773 7,773 7,773 7,773 7,773
Total Cash Flow from Investment ($222,084) $7,773 $7 .773 $7,773 $7,773 $7,773
Savings/Expense

Reduction current pkg cost $0 $56,352 $62,169 $67,228 $71,804 $77,208
Increase Freight/Shipping 0 (17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 0 90,000 99,290 107,369 114,678 123,308
Increase Labor Manufacturer 0 (12,043) (13,286) (14,357) (15,345) (15,500).
Increase Wrapping 0 (8,184) (9,029) (9,763) (10,428) (1 1,213)
Increase Labeling Cost 0 (374) (412) (445) (476) (512)
Reduced Particulate/Quality 0 10,314 11,379 12,305 13,142 14,131
Savings Disposal Cost 0 400 441 477 510 548
Total Savings $0 119,178 131,480 142,178 151,856 163,284
Total Cash Flow Savings 50 $77,466 $85,462 $92,416 $98,706 $106,135
IDeveIopment

MSU, Labor $18,000 $0 $0 $0 $0 $0
Lab Testing 2,000 0 0 0 0 0
Tray Prototype 2,000 o o o o o
Testing/Validation Cleaning 15,000 0 o o o 0
Total Start-Up 18,500 0 0 0 0 0
Total Cash Flow Development ($18,500) $0 $0 $0 $0 $0
Total Cash Flow ($240,584) $85,239 $93,235 $100,189 $106,479 $113,908
Internal Rate of Return 30% ($240,584) $65,568 $55,169 $45,603 $37,281 $39,882
Net Present Value (NPV) $2,919 NPV if inventory levels not redude

 

anback (years, months)

 

 

4.93 Years 59 Months

 

 

Table 36 Payback (100% Inventory, Float 4 days, Savings in Year 1)

 

Year (Months)
Year (Months)
Year (Months)
Year (Months)

Year (Months)
Year (Months)

 

Returnable Container Investment Payback Period:

0 (0)
1 (12)
2 (24)
3 (36)
4 (48)
5 (60)

(Months)
59
Gross Savings Cummul. Net Savings

($240,584) ($240,584)
65,568 (175,016)
55,169 (119,847)
45,603 (74,245)
37,281 (36,963)

$39,882 $2,919

(Years)
4.93

 

 

64

Table 37 NPV (100% Inventory, Float 2 days, Savings in Year 1)

 

NPV Analysis (100% lnv., 2 days ﬂoat)

 

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

   

 

 

 

 

 

Investment Capital $190,932
Total lnvestrnent Required (190,932) 0 0 0 0 0
10 year Depreciation $19,093 19,093 19,093 19,093 19,093 19,093 19,093
Cash Flow from Depriciation (35%) 5,583 5,583 5,583 5,583 5,583
Total Cash Flow from Investment ($190,932) $6,683 $6,683 $6,683 $6,683 $6,683
Savinngxpense
Reduction current pkg cost $0 $55,352 $62,169 $67,228 $71,804 $77,208
Increase Freight/Shipping 0 ( 17,288) ( 19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 0 90,000 99,290 107,369 114,678 123,308
Increase Labor Manufacturer 0 (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping 0 (8,184) (9,029) (9,753) (10,428) (11,213)
Increase Labeling Cost 0 (374) (412) (446) (476) (512)
Reduced Particulate/Quality 0 10,314 11,379 12,305 13,142 14,131
Savings Disposal Cost 0 400 441 477 510 548
Total Savings 0 119,178 131,480 142,178 151,856 163,284
Total Cash Flow Savings $0 $77, 466 $85,462 $92,416 $98,706 $106,135
Development
Imsu Labor $18,000 $0 $0 $0 $0 $0
Lab Testing 2,000 0 0 0 0 0
Tray Prototype 2,000 0 0 0 0 0
Testing/Validation Cleaning 15,000 0 0 0 0 0
Total Start-Up 18,500 0 0 0 0 0
Total Cash Flow Development ($18,500) $0 $0 $0 $0 $0
Total Cash Flow ($209,432) $84,148 $92,145 $99,098 $105,389 $112,818
Internal Rate of Return 30% ($209, 432) $64, 729 $54,524 $45,106 $36,900 $39,501
Net Present Value (NPV)

 

 

 

Payback (years, months)

 

$31, 327 NPV if Inventory levels not reduced!

. 1 5.4.3:. -£ 2’ ‘ IZMH ..
n ' '. u '
o n 'o o - l ‘,,",'.-.'i‘.'i v e d‘ﬂqﬂ‘“ . . I

 

 

Table 38 Payback (100% Inventory, Float 2 days, Savings in Year 1)

 

Year (Months)
Year (Months)
Year (Months)
Year (Months)

Year (Months)
Year (Months)

 

Returnable Container Investment Payback Period:

(Months) (Years)

50 4.21
Gross Savings Cummul. Net Savings
0 (0) ($209,432) ($209,432)
1 (12) 64,729 (144,703)
2 (24) 54,524 (90,179)
3 (36) 45,106 (45,073)
4 (48) 36,900 (8,173)
5 (60) $39,501 $31,327

 

 

65

Table 39 NPV (60% Inventory, Float 4 days, Savings in Year 1)

     

 

 

 

 

 

 

 

 

 

NPV Analysis (60% lnv., 4 days ﬂoat) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
$196,255
Total Investment Required (196,255) 0 0 0 0 0
10 year Depreciation $19,626 19,626 19,626 19,626 19,626 19,626 19,626
Cash Flow from Depriciation (35%) 6,869 6,869 6,869 6,869 6,869
Total Cash Flow from Investment ($196,255) $6,869 $6,869 $6,869 $6,869 $6,869
Savings/Expense
Reduction current pkg cost $0 $56,352 $62,169 $67,228 $71,804 $77,208
Increase Freight/Shipping 0 (17,288) ( 19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 0 90,000 99,290 107,369 114,678 123,308
Increase Labor Manufacturer 0 (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping 0 (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost 0 (374) (412) (446) (476) (512)
Reduced Particulate/Quality 0 10,314 11,379 12,305 13,142 14,131
Savings Disposal Cost 0 400 441 477 510 548
Total Savings 0 119,178 131,480 142,178 151,856 163,284
Total Cash Flow Savings $0 $77,466 $85,462 $92,416 $98,706 $106,135
Development
IMSU, Labor $18,000 $0 $0 $0 $0 $0
Lab Testing 2,000 0 0 0 0 0
Tray Prototype 2,000 0 0 0 0 0
Testing/Validation Cleaning 15,000 0 0 0 0 0
Total Start-Up 18,500 0 0 0 0 0
Total Cash Flow Development ($18,500) $0 $0 $0 $0 $0
Total Cash Flow ($214,755) $84,335 $92,331 $99,285 $105,575 $113,004
lntemal Rate of Retur 30°/ ($214, 755) $64,873 $54, 634 $45,191 $36,965 $39,566
Net Present Value (NPV) ll

Payback (years, months)

 

  

$26 473 INPV if Inventory levels not redude

(W
44 3. r as” ‘ ;-,':~'*--"- ..
We 383.3353 313‘.

‘:~ it}; 1:

 

     

71,, t... ‘.
tar-r11 [;‘:\,,"-

   

Table 40 Payback (60% Inventory, Float 4 days, Savings in Year 1)

 

 

Returnable Container Investment Payback Period: (Months) (Years)
52 4.33
Gross Savings Cummul. Net Savings
Year (Months) 0 (0) ($214,755) ($214,755)
Year (Months) 1 (12) 64,873 (149,882)
Year (Months) 2 (24) 54,634 (95,249)
Year (Months) 3 (36) 45,191 (50,058)
Year (Months) 4 (48) 36,965 (13,093)
Year (Months) 5 (60) $39,566 $26,473

 

 

66

Table 41 NPV (60% Inventory, Float 2 days, Savings in Year 1)

  

NPV Analysis (60% lnv., 2 days ﬂoat); a.) Year 0 ,

 

Year 1 , s—Near zerear 3 ,meear 4 maYear 5

  

 

 

 

 

 

 

Investment Capital $177,035

Total Investment Required (177,035) 0 0 0 0 0
10 year Depreciation $17,703 17,703 17,703 17,703 17,703 17,703 17,703
Cash Flow from Depriciation (35%) 6,196 6,196 6,196 6,196 6,196
Total Cash Flow from Investment ($177,035) $6,196 $6,196 $6,196 $6,196 $6,196
Savings/Expense

Reduction current pkg cost $0 $56,352 $62,169 $67,228 $71,804 $77,208
Increase Freight/Shipping 0 ( 17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 0 90,000 99,290 107,369 114,678 123,308
Increase Labor Manufacturer 0 (12,043) (13,286) (14,367) (15,345) (16,500)i
Increase Wrapping 0 (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost 0 (374) (412) (446) (476) (512)
Reduced Particulate/Quality 0 10,314 11,379 12,305 13,142 14,131
Savings Disposal Cost 0 400 441 477 510 548
Total Savings 0 119,178 131,480 142,178 151,856 163,284
Total Cash Flow Savings $0 $77,466 $85,462 $92,416 $98,706 $106,135
Development

IMSU, Labor $18,000 $0 $0 $0 $0 $0
Lab Testing 2,000 0 0 0 0 0
Tray Prototype 2,000 0 0 0 0 0
Testing/Validation Cleaning 15,000 0 0 0 0 0
Total Start-Up 18,500 0 0 0 0 0
Total Cash Flow Development ($18,500) $0 $0 $0 $0 $0
Total Cash Flow ($195,535) $83,662 $91,658 $98,612 $104,903 $112,331
lntemal Rate of Return 30% ($195,535) $64,355 $54,236 $44,885 $36,729 $39,330
Net Present Value (NPV) $44,001 NPV if inventory levels not mducedl

[Payback (years, months) '3L'87‘Years ‘ 46 Monjt'h? ‘

 

 

Table 42 Payback (60% Inventory, Float 2 days, Savings in Year 1)

 

Year (Months)
Year (Months)
Year (Months)
Year (Months)

Year (Months)
Year (Months)

 

0 (0)
1 (12)
2 (24)
3 (35)
4 (48)
5 (50)

Returnable Container Investment Payback Period:

Gross Savings Cummul. Net Savings

($195,535)
64,355
54,236
44,885

36,729
$39,330

(Months)
46

(Years)
3.87

($195,535)
(131,180)
(75,944)
(32,059)

4,670
$44,001

 

 

67

Table 43 NPV (40% Inventory, Float 4 days, Savings in Year 1)

 

NPV Analysis (40% lnv., 4 days float) 3,..Year 03....Year 13.3,Year 2.3Year 3 33-. Year 4 3.3 Year 5

 

 

 

 

 

 

 

lnvestrnent Capital $183,542

Total Investment Required (183,542) 0 0 0 0 0

10 year Depreciation $18,354 18,354 18,354 18,354 18,354 18,354 18,354

Cash Flow from Depriciation (35%) 6,424 6,424 6,424 6,424 6,424

Total Cash Flow from Investment ($183,542) $6,424 $6,424 $6,424 $6,424 $6,424
Savings/Expense

Reduction current pkg cost $0 $56,352 $62,169 $67,228 $71,804 $77,208

Increase Freight/Shipping 0 (17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 0 90,000 99,290 107,369 114,678 123,308

Increase Labor Manufacturer 0 (12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping 0 (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost 0 10,314 11,379 12,305 13,142 14,131

Reduced Particulate/Quality 0 (374) (412) (446) (476) (512)
Savings Disposal Cost 0 400 441 477 510 548

Total Savings 0 119,178 131,480 142,178 151,856 163,284

Total Cash Flow Savings $0 $77,466 $85,462 $92,416 $98,706 $106,135
Development

IMSU, Labor $18,000 $0 $0 $0 $0 $0

Lab Testing 2,000 0 0 0 0 0

Tray Prototype 2,000 0 0 0 0 0

TestingNaIidation Cleaning 15,000 0 0 0 0 0

Total Start-Up 18,500 0 0 0 0 0

Total Cash Flow Development ($18,500) $0 $0 $0 $0 $0

Total Cash Flow ($202,042) $83,890 $91,886 $98,840 $105,130 $112,559

lntemal Rate of Retur 30% ($202,042) $64,530 $54,370 $44,989 $36,809 $39,410

Net Present Value (NPV) $38,066 NPV if inventory levels not reduced!

[Payback (years, months) '* "4:0?Years ‘ “- 45mm

 

 

 

Table 44 Payback (40% Inventory, Float 4 days, Savings in Year 1)

 

Year (Months) 0(0)
Year (Months) 1 (12)
Year (Months) 2 (24)
Year (Months) 3 (36)
Year (Months) 4 (48)
Year (Months) 5 (60)

 

Returnable Container Investment Payback Period:

(Months) (Years)
48 4.03
Gross Savings Cummul. Net Savings

($202,042) ($202,042)
64,530 (137,512)
54,370 (83,141)
44,989 (38,153)
36,809 (1,344)
$39,410 $38,066

 

 

68

Table 45 NPV (40% Inventory, Float 2 days, Savings in Year 1)
NPV Analysis (40% lnv., 2 days ﬂo 3 Year 0 Year 1

   

Year 2 3 Year 3

 

    

. 3 Year 4 3.3.,Year 5

 

 

 

 

 

 

 

Investment Capital $170,074

Total Investment Required (170,074) 0 0 0 0 0

10 year Depreciation $17,007 17,007 17,007 17,007 17,007 17,007 17,007

Cash Flow from Depriciation (35%) 5,953 5,953 5,953 5,953 5,953

Total Cash Flow from Investment ($170,074) $5,953 $5,953 $5,953 $5,953 $5,953
Savings/Expense

Reduction current pkg cost $0 $56,352 $62,169 $67,228 $71,804 $77,208
Increase Freight/Shipping 0 (17,288) (19,073) (20,625) (22,029) (23,686)
Savings Labor Cost (Medrad) 0 90,000 99,290 107,369 114,678 123,308

Increase Labor Manufacturer 0 ( 12,043) (13,286) (14,367) (15,345) (16,500)
Increase Wrapping 0 (8,184) (9,029) (9,763) (10,428) (11,213)
Increase Labeling Cost 0 10,314 11,379 12,305 13,142 14,131

Reduced Particulate/Quality 0 (374) (412) (445) (475) (512)
Savings Disposal Cost 0 400 441 477 510 548
Total Savings 0 119,178 131,480 142,178 151,856 163,284
Total Cash Flow Savings $0 $77,466 $85,462 $92,416 $98,706 $106,135
Development

MSU, Labor $18,000 $0 $0 $0 $0 $0
Lab Testing 2,000 0 0 0 0 0

Tray Prototype 2,000 0 0 0 0 0
TestingNaIidation Cleaning 15,000 0 0 0 0 0
Total Start-Up 18,500 0 0 0 0 0

Total Cash Flow Development ($18,500) $0 $0 $0 $0 $0
Total Can Flow ($188,574) $83,418 $91,415 $98,368 $104,659 $112,087

lntemal Rate of Return 30% ($188,574) $64,168 $54,092 $44,774 $36,644 $39,245
Net Present Value (NPV) $50,349 NPV if inventory levels not reduced!

'PaTback (years, months) p 870 Years 44’ Months ' ' '

 

Table 46 Payback (40% Inventory, Float 2 days, Savings in Year 1)

 

 

Returnable Container Investment Payback Period: (Months) (Years)
44 3.70
Gross Savings Cummul. Net Savings
Year (Months) 0 (0) ($188,574) ($188,574)
Year (Months) 1 (12) 64,168 (124,406)
Year (Months) 2 (24) 54,092 (70,314)
Year (Months) 3 (36) 44,774 (25,540)
Year (Months) 4 (48) 36,644 11,104
Year (Months) 5 (60) $39,245 $50,349

 

 

69

 

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71

In order to justify the ﬁnancial analysis it should be assured that the data are
accurate. The data used in this case study are modiﬁed by a multiplication factor. They
do not represent the actual costs at Medrad.

However, the beneﬁts, payback and NPV are greatly inﬂuenced by the inventory
level at K&W and Medrad, the frequency of returnable container use (ﬂoat or rotation
per time), and the time the savings are counted or the investment took place.

Tables 13 through 22 show the cost analysis including the comparison of
expendable vs returnable crate investment, the additional packaging cost from
wrapping, labeling and cleaning. The cost analysis for the bag closures are not included
yet, since data were not available at the time of publication. Activity-based costing is
applied to analyze potential savings from operation and investments.

Tables 23 through 46 show the capital budgeting analysis using the NPV method
and it also shows the payback based on the calculated values. In all inventory cases
(100%, 60%, and 40%), the NPV is positive and will be even increased if the inventory
level or the ﬂoating time is decreased. It is also important to consider the time when the
savings start to return to the project and the time of investment. In this NPV model, the
savings are counted in year zero and year 1. If savings return in year zero it becomes a
return to the investment and decreases the amount invested and being discounted over
the life time of a project. This is positive because a higher NPV will be achieved and the
payback period decreases. Figure 10 and Figure 11 show the relationship of
accumulated cash ﬂows and payback. More cash ﬂow is generated the more inventory
is reduced and the lower the floating time due to lower initial container and tray
investments and lower total cost of inventory. Variable costs are constant. It is also

shown the relationship if savings are credited already in year zero.

72

The spreadsheet analysis used during this case study can be used for any
further adjustments or new returnable packaging projects. All changes are easy to
review since all numbers are programmed based on the annual sales forecast. All charts
are linked with the NPV analysis. Even changes of annual production volume, returnable
crate/tray amounts and prices, as well as cleaning equipment cost are easy to adjust,

since they are the basis for this calculation.

73

5. Conclusions

5. 1 Research Summary

The change to returnable packaging for medical device components is
technically feasible with minimal technical risks. The most signiﬁcant outcome of this
research was to show that the new logistical package system will improve product
integrity, increase quality due to less particulate from shipping, handling and materials.
The thermoformed tray will also facilitate automated barrel loading which increases
productivity, machine efﬁciency, and decreases labor by approximately $90,000 per
year. There are other savings in automation and cleaning possible due to the fact of
reducing manual handling and particulate in the cleanroom that need to be further
investigated.

The compatibility of the package system to comply with device good
manufacturing practices is assured due to the use of FDA approved materials from UFP
Technologies. The technical design of the thermoformed trays can be improved by
designing a tray that accommodates various device components. In this case, the
shipped product volume per year can be increased as well as the usage of returnables
for other product lines. By using the same amount of returnable containers, the savings
would increase depending upon the current cost in expendables and disposal costs. The
investments in returnables are also better utilized be expanding the use of the
containers to other medical device components manufactured at Medrad.

The new package system is a corporate asset and can generate a positive NPV
if the whole system is well adjusted and additional cost from cleaning and increased
material handling at the suppliers' base (K&W) will be limited. The payback period

varies from 32 months to 17 months depending upon which inventory level, returnable

74

system ﬂoat, and savings return (in year zero or year one) is used. The lower the
inventory level and the returnable system ﬂoat, the lower will be the initial investments in
returnable containers. Therefore the payback period can be reduced down to 17
months. This period is acceptable for a return on investments considering an internal

rate of return of 30%.

5.2 Final Decision and Profitability

The company evaluates returnable packaging for medical device components as
a “borderline” ﬁnancial opportunity. The company will consider implementing this project
in the future when all open questions raised during the feasibility and design stage are
answered. The project complexity is high due to major process changes at K&W, the
need for an automation system for automated barrel loading, and tray cleaning and
package development. Engineering capacity (labor) is needed to develop these system
components to make the returnable crate solution work. The estimated cost savings are
currently not high enough to justify the investments in returnable container if the
inventory level as well as ﬂoating time are kept at 100 percent and 4 days. Other
justiﬁcations to ﬁnd more savings should include the reduction of inventory in stock and
inventory in process which is waiting to be assembled at the supplier and the
manufacturer. Considering marketing requirements and customer orders, it is suggested
to map the whole manufacturing, shipping, and order process to ﬁnd possible cost
savings from reduced inventory levels and shorter ﬂoat times. Finally, the comparison
between returnable and expendable would give a more favorable result if additional
investments in cleaning, cleanroom automation, or material handling equipment at K&W
were much lower. The investments are necessary due to cleanliness requirements and

automation. Under the current circumstances, the least cost were associated with this

75

project. Further cost savings could come from further in-house developments in cleaning
and barrel loading automation, as well as much lower inventory levels (60% or 40%).
The current inventory level is considered to be 100%. There is no doubt that the
returnable system is a beneﬁcial investment for a long term perspective.

Compared to the automotive, furniture or grocery industry, the medical device
industry is much more challenging in terms of regulatory and cleanliness requirements,
validation, and quality assurance which is stronger regulated by the FDA. Therefore, as
this case study has shown, more investments in cleaning equipment, wrapping, labeling,
and automation are needed.

5.3 Strength and Opportunities of Returnable Packaging for Medical
Devices

In the long run, returnable packaging is a good opportunity for quality
improvement, productivity, and customer satisfaction. It will also contribute to the
company’s overall ﬁnancial performance. All beneﬁts, opportunities and risks as well as
threats and weaknesses are shown in Figure 12. These are areas for improvements,
i.e., the cost driver due to more tray and crate handling could be adjusted by a better
material handling system at K&W and Medrad. Transportation is another issue which
increases cost tremendously. The opportunity to decrease these costs by using another
carrier and negotiate lower shipping costs should be investigated. There are major
changes at the supplier necessary which mean barrel inspection and loading inside the
cleanroom could be automated if a better visual inspection system were in place.
Another issue is the inventory risk when the number of crates in inventory is reduced. A

well adjusted lMS can help to reduce this risk.

76

 

5.4 Recommendations

Other packaging materials and dunnage forms should be considered that are
more standardized to reduce tooling cost. In terms of the crate development, it is
necessary to keep the crate clean during life time. It is necessary to investigate a
dunnage or container washing system for in-house use that is packaging material and
medical device compatible. It can be of benefit if inventory levels are better controlled to
lower the total cost of inventory and investments. Since the project is not integrated in
Medrad’s manufacturing processes yet, it is recommended to monitor the returnable
packaging market, new developments of cleaning solutions and better transportation

opportunities such as larger truck sizes to reduce the number of trips.

Figure 12 Strengths, Opportunities, Weaknesses, and Threats of Returnable Packaging
for Medical Devices

Strengths Opportunities
. Feasible? YES 0 Automation labor savings
0 Product quality 0 Inventory management
0 Material savings 0 Lower investment based on
o Stackablelcollapsible lower inventory levels

0 Easy handling

Weaknesses Threats
0 Cost driver: More ' M310? changes at summer
handling 8. 0 Cleaning investment
transportation 0 Inventory risk
0 lnvestrnents J“

 

77

APPENDICES

78

ﬂ,

 

APPENDIX A

Packaging Evaluation Criteria

 

 

 

 

 

 

 

 

 

 

E = Engineering Disposables

L = lntemal Logistics

M = Marketing

P = Purchasing/Supplier Evaluation
0 = Quality I Environment (Recycling)
S = Sterilization

T = Transportation/Extemal Logistics

r: em Ime rea mmwmm

Idea Satisfaction
”173m

1.1. Prefilled Syringe ST E 5

1.2. Container Utilization ST E 3

1.3. Dispensing Feature ST M 5

1.4. Printing ST M 4

1.5. Tape ST M 3
2. Tray

2.1. Easy opening/Label ST M 4
2.2. Recycling number ST M/E 2
3. Distribution Cycle

3.1. Standard Syringe ST E 3
3.2. Prefilled Syringe ST E 5
4. Automation

4.1. Loading syringe/tray LT A 5
4.2. Loading tray/box LT A 4
4.3. Pre-steriliz inspection LT Q 5
4.4. Pallet wrapping LT T 3
5. Transportation/Supplier

5.1. Returnable syr manuf pkg LT P 4
6. Bar Coding

6.1. Bar Coding System LT L 4
7. Lid

7.1. Sterilizable Mat. (Paper) LT S/E 3
8. Seal

81 Color safe seal LT M/E 2
9. Sterilization

9.1. Materials LT S/E 3
9.2. Machinery LT S/E 3
10. Recycling

10.1. ln-house recycle system LT Q 2
m

 

 

= ort en'n r0jects
LT = Long Term Projects

 

79

APPENDIX B

Packaging Development Guideline

Based on the course Packaging System Development (PKG 485 1997), and the
internship at Medrad (Block and Castro 1998), the following document was prepared.
The guideline is a checklist to develop new packaging solutions including packaging
processes and equipment from the planning stage through implementationlvalidation. It
follows the six phases: planning, feasibility, technical design, implementation, validation,

and improvement.

1. Planning

. To focus on a major packaging problem which is a reason for packaging innovation
or improvement.

. To describe the packaging idea (project outline).

0 To deﬁne the goals of the packaging project (time, cost, savings, beneﬁts).

. To guide the activities and coordinate package planning responsibilities.

Procedure

1. Description of the packaging problem (focus).

2. Deﬁne the company's packaging goal (match with other department goals).

3. Setup a project management plan with problem solving steps, schedules, and
responsibilities.

2. Feasibility

The feasibility phase is proposed:

. To evaluate the packaging problem.

0 To show the feasibility of the packaging project by evaluating internal and external
requirements and resources.

. To specify new packaging investment (ﬁnancial evaluation).

. To describe a packaging concept (packaging alternative spreadsheet) including the
pretechnical evaluation (concept testing, prototyping, full screen).

Procedure
1. Deﬁne a model for the overall packaging project evaluation (matrix or decision table)
and consider following aspects:
. Customer needs: Internal (other departments), external customer (Hospitals).
0 Investigation of product requirements:
0 Product protection: Packaging material durability; distribution cycle (shock,
vibration, stacking, dropping, climate hazards)
- Utility/function purpose for external/internal customer

80

0 Communication requirements concerning the packaging problem (damage)
or external requirement (hospital/marketing need)

. Environmental and legal considerations (regulatory: federal, state, local,
international)

Financial Analysis (ﬁnancial worksheet, NPV, investment/expenses/cost, labor

savings; see appendix 4 and 5)

Innovation/Starter: Investigate internal technical capabilities, suppliers'

capabilities, Benchmark competitors/non-competitors/supplier; visit other

benchmark companies

2. Additional Feasibility Aspects

Project management: Scheduling (urgent, importance for internal/external
customers)

Consider lead time for packaging development and testing: Select outsourcing
areas (testing at the School of Packaging), in-house resources (packaging
dept)

Internal resources: Drawings (Departments participated in testing prototypes)

0 External resources for research & development (investigate new package

materials), design, production, supplier (prototypes), machinery (assembly line,
forming, printing, sealing, cutting, boxing), market research (size, type, and
target share of market, project market success).

A) Conceptual design/prototyping and testing (see appendix 2).

Investigate packaging design (tray, pouches, boxing, other types)
Prototyping and testing (packaging student, interns, MSU)

B) Conceptual process analysis (ﬂow charts: packaging idea implemented in process)

Consider market research aspects (growing into the global market, deﬁne
business tactics)

0 Technical safety factors
. Applicable regulations, standards (ASTM, ISTA, ISO), global laws (recycling

issues: European Packaging Waste Directive; Japanese packaging standards)
Environmental considerations (other markets, domestically)

. Logistics considerations (shipping, production logistic, materials handling)

Final evaluation review: consumer evaluation, competition, conﬂicts with current
processes

3. Conclude decisions

Deﬁne packaging materials speciﬁcation (plastic, paper, glass, metal, wood)
Deﬁne type of packaging (ﬂexible, aerosol/tube, closure, adhesive, medical
device, industrial, returnable, distribution package)

Deﬁne the packaging process (assembly line, packing operations) and internal
customer requirements concerning the current production layout

Close gaps between packaging and non-packaging machinery, conveyer
systems (material handling), supplier, and the package

0 Deﬁne packaging machinery
- Start purchasing equipment, tools, in-house testing equipment as needed

(involve internal technical capacities): Consider lead time of supplier.

. Deﬁne shipping requirements (distribution cycle)
. Outsource tasks (packaging consultants, packaging students at school, interns)

81

3. Technical design

This phase is considered:

To develop and design the packaging idea.

To plan and organize the needed equipment and simulate the packaging process
within the whole production layout for the applicable speciﬁcations.

To close gaps between packaging and syringe assembly line (facilitate automation).

Procedure

Deﬁne and review packaging design, process, equipment.

. Packaging materials composition.

Write design veriﬁcation for QC, testing, prototyping, sterilization.

Evaluation of the facilities of external resources (universities, consultants).
Involve other related packaging alternatives (Decision table).

Rewriting of manufacturing speciﬁcations/documentation including ﬂowcharts,
drawings, facility changes.

. Review technical design and set further target lines, identify upcoming tasks.

4. Implementation

The implementation phase is following the steps:

To setup the packaging solution and validate in-process with the current
manufacturing line requirements.

To communicate the product’s / package's competitive advantage to internal and
external customers.

. To review packaging and other speciﬁcations.
. To redesign the package idea.

Procedure

Establish shipping procedure including contract carrier, logistical channels,
distribution modes.

Deﬁne packing and shipping requirements (palletization, stacking, contract carriers,
handﬁng)

. Market testing and launch, promotion, advertising (external customer survey)
0 Write Medrad's/supplier packaging speciﬁcations and requirements (purchasing

cocoa.

agreements)

Deﬁne and perform a protocol, review test results

Suggest redesign and rewrite specs (also for packaging vendors)

Implement the solution (updated with drawings, new software written, innovative
machinery/equipment).

. Validation

Feedback with regulatory testing.

Review facility changes, safety aspects, and GMPs.

Integrate maintenance activities.

Plan for TPM/QC/QA: process control and monitoring the packaging materials,
machinery and facility including the sterilization process).

. Improvement

Deﬁne continuous packaging improvement plan, set new quality targets, starter for
new projects. Feedback from other departments.

82

APPENDIX C

Project Plan

This project plan shows all packing development activities and dead lines for completion
of tasks.

 

Deliverables

Time Line

 

Basic research/process concept generation

Flowchart

Returnable Packaging Seminar, MSU

Visit the suppliers' facilities, PA

Benchmarking analysis (crate design, cleaning equipment)
PackExpo, Chicago, IL

Teltech/PlRA/lnternet research

Vendor bids/ﬁnancial evaluation (payback/NPV calculation)
Cost analysis

Outlining various options

6—8 weeks (10/31/98)

9/29-30/98
10/8/98

11/8-11/98

 

Detailed prototyping/design

0 Drawings (AutoCAD, ProEngineer)

. First report to Medrad: Discuss options

. ProMat, Material Handling Show, Chicago, IL
0 Evaluation/selection of concept

2-3 weeks (12/31/98)

1 day (118/99)
2/8-11/99
3-5 weeks (02/15/98)

 

 

Prototype fabrication (extern) 7 weeks (3/21/99)
. Writing packaging speciﬁcations for all crate components

o Arrangement of prototype schedule with all suppliers

0 Tooling, prototype sample

Package/product testing/evaluation 3 weeks (4/15/99)

Time studies

Meeting to discuss material handling concept
Report test results

Testing: Shock, vibration, compression.

1 day (3I30I99)

 

 

 

Package/process speciﬁcations

Crate cleaning: system/process evaluation

Inventory control/management recommendations
Rewriting speciﬁcations (Palletization, Inspection, etc)
Transportation/logistical cost evaluation/recommendations

 

 

5—6 weeks (5/31/99)

Final MeetinglReport
Thesis Defense

 

83

 

Project Schedule
Project Schedule

 

 

 

 

 

I Oct Dec Feb Apr

1. Basic Research I

2. Concept P_kg

3. Detailed Design Sem * O

4. Financial Analysis -

5. Report Medrad Pack * — .

S. :ackage Specrﬁcatlon Expo '

. upplier Scheduling ”0* /
8. Prototype Fabrication Mat _ .
9. Walk-Through Demo
10.Thesis MSU Final Report . . . L 1 . . . ‘;

Sept Nov Jan Mar May

Timeline

84

 

 

APPENDIX D
Supplier Performance Assessment - ROPAK

 

MSU Research

 
 

IllE 5:”; g! :l
Returnable Packaging .;.. PACKAGING
Development for Medrad, Inc. :1: MICHIGAlislAE

  

iillllll" u N r v E R SIT Y

Investigator: Christine S. Block

 

 

Date: 11/10/98 MEDRED'
Vendor No: 001

Vendor Name: ROPAK

ADDRESS:

 

Contact Person: Filige Amorim
Phone#: ( ) Fax #( )

Critical Supplier IZI ISO Certified Medical Device Experience Audit
Product(s):

 

 

Supplier Performance Evaluation:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

E e
(U
8 3 ‘3
tr 3 o
2 8 2
O 8 ‘6 :1
Packaging Performance (7’, =: General Evaluation ‘1 Z Z
Puncture resistant 5 x Servioe&Support _x_ _ _
Compressive load resistant 5 x Quality System in Place 7 - -
Cleanliness/no particulate 3 x Network/Associations ‘7 - ‘-
Containment of trays 3 x Sampling 7 - -
Easy to move 2 x Design/Prototyping - I 7
Easy to open 3 x Meet Speciﬁcations 2 : :
Easy to load trays 4 x Manufacturing Capability x
Easy to label/to print 3 x Meet Delivery Date x
Low investment 2 x’ Financial Strength at :
Absolute Survey Score 30
Relative Survey Score 67%
Comments:

 

 

85

 

Supplier Performance Assessment - TriEnda

 

MSU Research i... '

   

IIIILSQHQQLQE
'. PACKAGING

Returnable Packaging

 
   
 

Development for Medrad, Inc. -,_, 53,3 MINQHIGéAl: 2W?
Investigator: Christine S. Block “Hum“ U I v

Date: 11/11/98 MEDRED'

 

 

Vendor No: 002
Vendor Name: TriEnda

ADDRESS:

 

Contact Person: Rick
Phone#: ( ) Fax #( )

 

Critical Supplier ISO Certified El Medical Device Experience IZI Audit
Product(s):

 

 

Supplier Performance Evaluation:

 

 

 

 

 

 

 

 

 

3 9
2 a
I.I.l 2 a
': n 3
I- I! 8
e 8 <
o 8 ‘6 3
Packaging Performance 8 General Evaluation < Z i
Puncture resistant 4 Service & Support x _
Compressive load resistant 5 x Quality System in Place x j-
CIeanliness/no particulate 3 x Network/Associations x _
Containment of trays 5 x Sampling x
Easy to move 5 x Design/Prototyping x i:
Easy to open 5 x Meet Speciﬁcations x _
Easy to load trays 4 x Manufacturing Capability x
Easy to label/to print 5 x Meet Delivery Date x _
Low investment 5 x Financial Strength x
Absolute Survey Score 41
Relative Survey Score 91%

 

 

 

 

Comments:

 

 

86

 

Supplier Performance Assessment - Buckhorn

 

MSU Research

  

. IHLSQHQQLQE
PACKAGING

MI HIGAN STATE
ﬁlliiiii“: u er E R s r TY

Returnable Packaging
Development for Medrad, Inc.
Investigator: Christine S. Block

Date: 11/12/98 MEDRED'

    

 

 

Vendor No: 003
Vendor Name: Buckhorn

ADDRESS:
Contact Person:
Phone#: ( I Fax #( )

Critical Supplier IZI ISO Certiﬁed Medical Device Experience Audit
Product(s):

 

 

 

 

 

Supplier Performance Evaluation:

  

Not Acceptable

N/A

2
_o
3
._.
o.
a)
o
o
<

Packaging Performance
Puncture resistant

General Evaluation
Service & Support

 

 

Compressive load resistant x Quality System in Place
Cleanliness/no particulate x Network/Associations
Containment of trays x Sampling

Easy to move x Design/Prototyping

Easy to open x Meet Speciﬁcations

Easy to load trays ,x Manufacturing Capability

Easy to label/to print . x Meet Delivery Date

Low investment x ' Financial Strength

 

8IN o) e. N N w c.) U. A Score Buckhorn

 

Absolute Survey Score
Relative Survey Score 62%

 

 

 

 

Comments:

 

 

87

 

APPENDIX E

Packaging Speciﬁcation

Package Speciﬁcation, Part A: Returnable Tray Design (UFP Technologies)

Purpose:

To provide the tentative design requirements for prototyping of the returnable tray for
the 200mL FLS barrel (and 125mL). Barrel capacity 14 barrels per tray.

Prototyped trays are used to perform time studies within the returnable cycle
Medrad/K&W and to adjust the ﬁnal tray design.

To be provided to UFP to deliver tray design (drawings, tooling, prototypes, ﬁnal tray
design).

Design:

Based on the inside dimensions of the returnable crate (package speciﬁcation part B:
TriEnda pallet and plastic sleeve with Ever-Lok2 system), the tray dimensions are
determined as follows: L x W x D = 19” x 15” x 2.683”.

0 Barrel orientation:
0 No clearance is considered to be between the stacks when placed in the pallet.
0 Material: High Impact Polystyrene (HIPS), 35% rubber modiﬁed virgin, white, FDA

approved for use in medical packaging. 50 mil thickness.

If tray does not need to be FDA approved, recycled material can be used instead of
virgin resin if the required performance properties mentioned in this spec such as
toughness, lifespan, cleanliness, no migration of resin into product over time are the
same. Advantage of recycled resin: Less expensive. Disadvantage: Tray color would
have a pink huge, does not look as clean as white looks. Product properties can
become more brittle over time and inﬂuences lifespan of trays. Medrad needs to
decide! It is recommended to use virgin material with no recycled content.

Final weight of tray: 0.55575 lbs. (needed to determine gauge and compression load
requirements of TriEnda pallet (Part B).

Weight calculation: Length x Vlﬁdth x Gauge of material x “K” Factor‘ = Weight of one
tray, in this case the calculation is: 19”x 15” x 0.05” x 0.039” = 0.55575 lbs. per tray.
The tray is formed to hold the contents securely during shipment and storage without
product contact. The tray is neither covered by a lid nor considered a hinged
package.

The tray will be bagged to protect against environmental inﬂuences during shipment
and storage.

The tray will neither have undercuts nor sharp edges or corners (It will have round
edges/corners that will not puncture plastic bags).

The tray is used to be part of the assembly process; barrels will be loaded
automatically. It will need to ﬁt on Medrad's future assembly line, and must ﬁt on
K&W's conveyer system.

The trays will not be sterilized only cleaned with alcohol wipe down.

 

The “K” factor for High Impact Polystyrene is 0.039. Each polymer resin has a different “K” factor
based on the speciﬁc gravity.

88

 

o The tray must pass regulatory requirements for testing and cytotoxicity. It must be
resistant to alcohol cleaning solutions (wiping solution used for tray cleaning).

- Stacking characteristics. When tray is ﬁlled it should not be supported by product
(syringe). It should stack.

- Nesting: When trays are empty trays should nest inside each other and be easily
separable by incorporated denesting lugs to facilitate handling and loading.
Nesting/stacking: Reversable image.

Return ﬂange: The tray on top of another tray should be considered as a cover for
the tray underneath. It is not a separate lid but it functions as a lid. The tray design
should incorporate this cover function.

. Stack height: Max 12 trays per stack/crate based on crate size (customized sleeve
height up to 38" possible), 4 trays individual bagged to ﬁt K&W conveyor size.

a Universal tray to accommodate (2) product conﬁgurations (200ml, 125ml barrels).
Desired but not required if tray design is not feasible within dimensions and barrel
numbers as speciﬁed.2
Desired contact surface between syringe and tray will be shown in sample.

0 Tray Interior is based on product conﬁgurations speciﬁed in drawings to be provided
to UFP.

 

Materials provided by Medrad

a Product samples and drawings for two product conﬁgurations (200ml, 125ml barrels)
will be send by Medrad, EA Gelblum to UFP. Shipping address of UFP is needed.

. The existing ﬁnal package will be sent to UFP to show the desired contact surface
between the syringe and the package.

Thermoformer Requirements:

- Knowledgeable company with competent staff and designer (UFP Technologies).

0 Experience in medical packaging.

0 Proper facilities to manufacture/thermoform the trays.

0 Design assistance by the technical staff to meet the speciﬁed design and budget

requirements.

Material inventory provided by thermoformer to meet requested lead times.

Full service capabilities have to be provided for prototyping, tooling, and production

processes. The thermoformer advises Medrad in all design and prototyping stages.

0 Quality assurance: Excellent quality standards approved by inspection, SPC, and QA
procedures that meet GMP guidelines covering the whole manufacturing process
must be guaranteed.

. Overall production cost should be kept to a minimum to increase perceived value.
Drop, vibration, and compression testing should be provide by thermoformer based
on ASTM 4169.

 

Note: This will be difﬁcult to design without compromising loading efﬁciency.

89

 

Package Speciﬁcation, Part B: Returnable Crate Design (TriEnda)3

Purpose:

The inside dimensions (ID) of the returnable crate are the required dimensions to
determine the tray outside dimensions (OD).

To provide dimensional ﬁt to accommodate the returnable trays for maximum loading
capacity.

Barrel capacity per crate: 6 trays/layer x 12 layers x 14 barrels/tray = 1008 barrels
per crate. Number can be optimized if truck size would be increased, or last pallet
removed and cover used instead (would increase truck capacity by 168 barrels/crate.
Design is tentative and to be adjusted during time studies.

Design:

The crate consists of (3) components: (2) Pallet (top, bottom), (1) sleeve with Ever-
Lok2 system integrated in sleeve and pallet for safe ﬁt and secured distribution.

A top, twin sheet layer as cover can be supplied instead of a top pallet only for the
top crate. That saves about 3" height used for a higher sleeve and more barrel
loading capacity per truck. The cover will be quoted by TriEnda. Final decision if
cover needed is done by Medrad. The cover is not necessarily needed. The cover will
also be supplied with the sample crate.

Price/quotation - will be new quoted by TriEnda. Sample crates: No cost! Crates
based on 1400 pallets, 700 sleeves: $24.13/pallet, $30/sleeve = $78.26/crate
(tentative, new quote will follow). Total crate cost < $80.

0 The sample crate will have standard dimensions: 40” x 48" x 36” sleeve height.

Light weight single sheet thermoformed plastic pallet construction guarantees
durability and lifespan (estimated trips/lifespan: 400 trips/lifespan depends on how
the crates are handled during distribution and warehousing at Medrad, K&W and by
the trucking company. It is recommended to educate people how to use these crates
to assure proper handling and to reduce damage. Lifespan is considered for
NPV/ﬁnancial analysis.

TriEnda will provide benchmarks of other medical device companies, addresses will
be provided by TriEnda.

Universal crate design with standard US pallet conﬁgurations (40” x 48").

o The weight of pallet is 19 lbs. Weight of sleeve to be determined when compression

load is known. To be determined by TriEnda.

Based on truck height (height is not determined yet, must be provided by K&W,
Medrad), the crate dimensions are determined as follows: L x W x D = 40” x 48” x D”
(sleeve height as speciﬁed by TriEnda depends on truck height).

Sleeve ID: 38.25” x 45.875" x sleeve height (check ID after truck height is known).
Sleeve height: Up to 38” ID, total 41” (sleeve stack in pallet 3” deep in total).
Materials: High Density Polyethylene (HDPE) for the pallet, for the sleeve: PP.

All components are weather resistant, resists UV light.

Materials can be FDA approved but is not a requirement.

Pallet: black as standard color. Four-way entry for quicker more efﬁcient handling.
Interlocking pallet legs for secure stacking. Create safer and stable stacks.

 

'01

A second, more severe crate solution has been suggested during the feasibility study. The package
speciﬁcation has to be revised if Medrad decides to use ROPAK container as presented during
meeting I/8.

90

 

 

 

Light weight system to reduce shipping cost, labor, and manual material handling.
Advantage against heavy bulk container from Ropak.

Pallet thickness/gauge: 0.250 in. The gauge of the pallet depends on the
compressive load on top of the bottom pallet (load/weight of trays, product, bags,
pallets, and sleeves). Based on a stack height of two crates high, the following
weights are expected on top of the bottom pallet. The total weight on top of the
bottom pallet is about 464 lb. The gauge of 0.250 in is sufﬁcient to carry the load
without product or packaging damage.

 

 

 

 

 

 

 

Parts Number Weight Total Weight (lb.)
Barrels 1008/crate 0.1564 315.28
Trays 72/crate 0.55575 80.03
Bags 18/crate 0.025 3
Pallets 2/crate 1 9 57
Sleeves 1/crate 4 lb. 8

463.31

 

 

 

 

 

 

Reinforced fork entry resists damage and helps to guide fork tines into proper
position.

0 Top an bottom pallet are interchangeable - less inventory.
- Sleeve: Corrugated plastic (single wall, 10mm and 8mm are offered) - to be speciﬁed

when product/tray weight is known.

a The corrugated ﬂutes should be sealed to prevent contamination.
o Sleeve color and printing can be customized for Medrad Cl.
0 The sleeve or pallet must contain a proper place for labeling (label pocket to insert

labels, ﬂexible/interchangeable solution). Labels must be a clean solution, easy to
place and remove, no residuals when removed, and should not involve additional
labor or equipment.

The crate does not need to pass regulatory requirements for testing and cytotoxicity
since it is not in direct contact with product. It must be resistant to any type of
cleaning method to be speciﬁed by Medrad.

Stacking characteristics. When the crate is ﬁlled with trays the crates should stack.
The stack should not be supported by product (syringe).

Pallets are fully nestable to save space on return shipping and while stored.

Pallets are partly used to ship empty trays back to K&W.

The pellet have a mirror image design.

Collapsible characteristics: The sleeves should Z-fold to minimize return ratio and
storage space requirements.

Stack height of crates/pallet in truck: (2) crates high to utilize truck height of 96”.
Max stack height in warehouse depends on gauge size, Medrad's requirements to
utilize warehouse space and TriEnda's recommendations. 2 crates per stack to be
shipped from K&W to Medrad based on container height and storage space at K&W.
Performance: Floor 3,500 lbs., Fork 400 lbs. Sleeve 1,500 lbs.

Barrel capacity per crate: To be determined.

Pallets per truck (truck dimensions: 90” x 48’ x 96” (height)). Check dimensions.
Pallet and sleeve design to be provided by TriEnda.

Performance/lifespan data will be provided from TriEnda and other returnable crate
user within medical device/cleanroom related industries.

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Materials provided by Medrad

Sample crates will be delivered within two weeks.

Sample crates are provided by TriEnda free of charge, and consist of 2 crates (4
pallets, 2 sleeves with Ever-Lok2 system, twin-sheet cover, diverse opening
designs—no opening, two drop doors).

Information provided by TriEnda

Based on compressive load, TriEnda will calculate starting gauge.

Performance testing information will be provided by TriEnda.

List of customers within the pharmaceutical and medical device industry, or similar
industry applications to be used within cleanrooms (e.g. computer and appliances
industry).

0 Cost quotation for ﬁnal order.

Lifespan and number of trips to be checked.

0 Return ratio of pallets, sleeves, and trays.

Material Handling

The crate can be carried by one person.

Lifespan: Up to 6-8 years if treated properly.

Predicted number of trips: 400.

Custom printing on sleeves: possible, S will be quoted. It depends on design wishes.
Provide printing for bar code or Medrad ID (if needed).

Covers needed for top cover. Crate quote should include covers.

Test data for compression, puncture resistance, drop, vibration and shock, as well as
ease of cleaning etc. to be provided by TriEnda. '

How will the pallet and sleeve be cleaned? Some cleaning solutions will be suggested
by TriEnda.

o What is the return ratio on all components.
0 Fork lift truck height to lift one stack of (2) crates? To be speciﬁed by K&W or

TriEnda. Must be approved during time studies at Medrad/K&W.

Package Speciﬁcation, Part C: Disposable Plastic Bag (Crystal X)!

Purpose:

The new bag will provide containment and protection for the tray (Part A).

Current bag spec: L x W x D = 23" x 17” x 48". 2mil. Polyethylene.

The current bag is used to bulk package the barrels in the currently used corrugated
shipper.

K&W wants to get the new bags supplied by its current supplier since K&W receives
the best quality and particulate free bags from Crystal X. Contact at Crystal X: Joe
Burman, (800) 255-1160. Price/bag: $0.26. K&W uses Medrad's speciﬁcation to
determine the bag needed.

 

4

It is suggested to use the previous K&W bag supplier, Crystal X.

92

 

Design:

The bag speciﬁcations depend on stack height of (4) trays per bag.

The returnable tray is double bagged for shipment from K&W to Medrad, and back.
The plastic bag is designed to accommodate the returnable trays and to protect the
trays from dust and particulate.

Before the empty tray is leaving the cleanroom, the tray will be put back in its clean
bag.

Approx. dimensions: L x W = 48” x 51” = ((399212) + 10%) x (((1_5”+2*1_2”) + 10%)
+ 8” to fold over the inner bag, and twist twice the outer bag).

Bag dimensions should be approved for dimensional ﬁt by the bag supplier and
Medrad when time studies are performed. Bags need to be ordered by Medrad prior
on tray arrival!

Bag closing: Folding over the inner bag and twist twice the outer bag is
recommended to close5 the bags tightly and prevent trays from contamination.
Folding should not prevent nesting of the (4) tray stack on another stack. Thickness:
2 mil.

Design: A stock item provided in regard to the tray stack size should be ordered. In
general, Medrad should purchase a stock item, since a speciﬁc designed bag cost
much more, or, Medrad has to consider trade-offs, such as higher cost but material
savings and better product protection. It is recommended to use a standard bag size
and material speciﬁed as a stock bag offered by a supplier.

Material: LLDPE or LDPE. (LLDPE recommended because tougher and better
clarity).

Material should be FDA approved for medical device use.

Materials provided by K&W and Medrad:

Sample bag. Bag speciﬁcation.

Package Speciﬁcation, Part D: Crate and Bag Labeling (Label Supplier, not selected
wet)"
Purpose:

The bags and crates have to be labeled to meet traceability requirements of Medrad
and K&W.

Design:

The labels will be placed on each crate and each stack of (4) trays on the outer bag.
Labeling should not involve additional labor.

Labels must be compatible to the crate and bag material.

Pressure sensitive adhesive is used to provide permanent adherence of labels to
bags.

The labels placed on crates should provide a good adherence, ease/clean label
removal.

Requirements: The label must include the following information—part name, tool
number/molding machine, date, container number (sequential), control# and operator
name.

 

'J'

O‘

A zip lock could be another (better) bag closing device. It will associate higher cost.
It is suggested to use the previous K&W bag supplier, Crystal X.

93

 

 

Current label set up: L x W = 6” x 4”, place manually by hand on the outside of the
box in an area visible when the boxes are palletized.

The current label used by K&W includes additional information requested by Medrad.
These issues must be addressed in future labeling application.

The following issues are recommended: For the bag labeling, it is suggested to use a
permanent adhesive label that is tamper evident. It should not be easy to remove that
tamper evidence is seen if manipulations are done. Tracebility will be maintained.

For the crates, a non-permanent adhesive label is suggested that is easy to remove,
it is a clean solution and no further investments for label holder are needed. For both
applications-tray stacks packaged in bags (stack of four trays) and the crate, you
may need two different labeling machines. The letter can be manually done ($1,200),
the former should be in-line labeling ($8,000).

K&W has different molding machines. Each label needs to show the molding machine
or tool number. There are several machines that mold the barrels at a time, and each
label must include the machine number, operator name, etc.

Labels need to be applied on each stack of trays for all molding machines.

Materials provided by K&W and Medrad:

Label speciﬁcation. Name of supplier, contact address and phone number.

Sample label (done).

Medrad's and K&W's labeling requirements and description of current labeling
process (as speciﬁed in memo CB-1-98; done, see enclosure).

A material handling layout including the material handling of barrels and labeling is
needed.

A material handling study should be performed by K&W/Medrad, how labeling can be
integrated and controlled in-line at K&W.

Additionals
Testing:

The returnable container system will be tested at the School of Packaging. A test
plan will be provided.

The Guide for the Testing of Returnable or Reusable Transport Containers is used to
outline the test plan. This guide is not an ASTM standard. It is under consideration
within an ASTM Technical Committee but has not received the approvals required to
make it an ASTM standard. It is not considered to be published without ASTM
approval.

Cleaning:

The cleaning system will be designed and evaluated by Medrad.

94

 

Figure 13 Returnable Crate with Drop Door from TriEnda

 

95

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Code of Federal Regulation

http://www.access.gpo.gov/nara/cfr/cfr-retrieve.html#page1

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