Rescued by Data

1
Rescued by Data

• Tihomira Valkova
• BCIS 340
• Spring 2007

2
Leiner Health Products Inc.

• Parent company, P. Leiner Sons, was found in
  1700s in Budapest, Hungary as manufacturer of
  gelatin
• In 1971,company started selling vitamin capsules
  to the U.S. market through its gelatin operation
  in Detroit.
• Nowadays, Leiner Health Product company is the
  worlds largest manufacturer of private label
  vitamins, minerals, and nutritional supplements.
• It is also the second largest manufacturer of
  private label over-the-counter pharmaceuticals in
  the United States.

3
Leiners Market and Products

• The company markets more than 480 vitamins and
  stocks more than 6000 items
• It holds a 50 share of the private label vitamin
  market and a 25 share of all mass-market vitamin
  product sales in the United States
• Large retailers include Wal-Mart, Sams Club,
  Costco, Kroger and etc
• Some of their brands are Omega Care, Natural
  Life, and Beneflex.

4
Problem with Customer Service

• Although company market position was in good
  shape selling more than 4000 different products,
  its customer service was unsatisfactory
• 30 of their deliveries were not on time or
  incomplete
• Managers did not have information to figure out
  who their best and worst customers were
• Wal-Mart threatened to stop purchasing from them
  because they were late in restocking shelves

5
Not having enough information.

• They could not schedule the deliveries based on
  customers needs
• Financial situation was not good
• Company had to cut the prices on the inventory to
  well below the cost , and ended the year 2000
  with loss of 2 million
• In January 2001, managers realized that
  maintaining profit was going to be difficult
  without efficiency

6
First Consulting Firm

• Consulting firm helped Leiner that many customers
  were costing more than its revenue
• Leiner cut their clientele in half
• They dropped 40 of the products they made
• It shut down three of its five plants
• Leiner saved 40 millions because of these
  changes.

7
Second Consulting Firm

• New Consulting Company was hired to put in place
  a new database
• More than 17 000 pieces of data was collected for
  6
• months
• They modified their MRP( material requirement
  planning) system to receive up-to-the-minute data
  on customer orders and delivery timetables
• The amount of raw material ordered was not too
  high or too low

8
Third Consulting Company

• Leiner had problem with the collection of money
  from customers in timely matter
• Third consulting firm established a database and
  applications that replaced the manual process
  with billing
• No more paper orders
• Within 6 weeks, software reduced the number of
  backlogged payments by 75

9
IT makeover

• By 2002 , the company turned out completely, its
  output per employee increased by 63
• 95 of the shipments were on time and accurate
• Shipping costs decreased by 15 and inventory
  turnover went from 2.5 to 4
• Its profit increased from 40 million in 2002 to
  70 million in 2003

10
Quiz

• Where was the Parent Company found?
• a. London, England
• b. Budapest, Hungary
• c. New York, USA
• d. Vienna, Austria

11
Quiz

• 2. How much did the output per employee increase
  after the IT makeover?
• a. 15
• b. 25
• c. 50
• d. 63

12
Discussion Question

• 3. Why did Leiner Health Products Inc. have to
  hire three different Consulting Firms?