Transforming Chemical Formulations: A Case Study of Innovation in Contract Manufacturing

About The Customer

The company is a global contract formulation company with customers such as Unilever, P&G and specializes in research and development of chemical formulations. Their industry expertise spans across Personal Care, Cosmeceuticals, Babycare, Homecare, Petcare, and Pharma (OTC & Wellness). In addition to contract formulation, the company provides end to end procurement and supply chain guidance to their customers enabling them to accelerate from formulation to mass production stage quickly.

The company has a global supplier base for the raw materials it uses for formulations and uses various supply routes to manage its procurements.

The company’s large team of chemists/researchers work on various formulations simultaneously. The formulations involved executing various lab experiments, tracking a wide array of independent lab results and managing approvals on formulations. Tracking of all this work was managed by the team members in Excel and other documentations. Approved formulations were prepared for mass production by evaluating raw material availability, country of sourcing, regulations and compliances of the country where the final product was going to be used.

At any given time all formulations could be in different stages of development.

The Problem

Given their scale, the company faced challenges in having visibility on all ongoing formulations. There was a clear need for optimizing the formulation process across the board, to centralise the approval process at critical stages of development etc. Further, any oversight could mean using a raw material that was not compliant in the country where the final product was going to be sold.

While one raw material was available from many suppliers across different countries, choosing them without care would mean choosing an expensive alternative, which may not be available in required quantity, may add to overstocking or was going to be delayed in shipping. Outcome would either mean adding to the cost of the final product or having an impact on gross margins, both of which were not ideal scenarios.

Solution

Upon speaking to various stakeholders it was evident that the core of the problem lay in not having a common view across the entire formulation process. We considered a few SaaS tools that could suit their situation but they were either too expensive (forcing customers to buy more licenses than what they actually needed) or not having the features needed by the customer.

On a dollar-to-dollar comparison, while procuring them would have been faster, the overall return on investment was going to be very low. A home-grown cloud solution was clearly the need of the hour.

Given the criticality of their work, it was evident that the cloud solution needed to be designed with features like high availability, security, scalability and less operational expenditure on an ongoing basis.

The design focussed on building dedicated yet interconnected modules for managing formulations. A small Machine Learning engine helped chemists choose the right raw materials for every formulation, a Test Tracking module helped them track all different lab results seamlessly.

A formulation is a collection of many raw materials, each one needing its own separate composition and method of integration. Going through one could be time consuming and error prone for many. Yet with the cloud based solution, their chemists could now compare these complex formulations in a few seconds.

Strict workflow management ensured no formulation reached an advanced stage without required approvals. Dedicated Access Control ensured the right level of visibility and control at all times. Alerts assisted management of any violations. Summary reports covered various dimensions of business with real time data.

A module was dedicated to evaluate the right quantities of raw materials to order for bulk production. This Machine Learning enabled module ensured cost of production remained low and prevented any overstocking. Since most of these raw materials came from different countries, the module considered currency conversions in making its proposals.

At a later stage, the entire module was extended to have a CRM integration. Now the company could receive formulation requests right from the software, collect all required inputs digitally and procure final approvals from their customers too.

Outcome

The project took about 4 months to complete, and was completed without any cost overruns. The live version was deployed in a carefully chosen international zone such that the overall cost of operations of this software remained low while maintaining the right level of user experience for the company.

In 2 months post go-live the company reported reduction in errors in raw material selection of as much as 92%. Customer complaints reduced by about 6%, and the turn-around-time was reduced by around 12%.

Currently, we continue to serve the company as Managed Service providers responsible for managing their entire go-live setup, and for delivering any enhancements needed to the solution.