CASE STUDY No. 9710
KEY WORDS GLASS VIALS, BULK PACKAGING
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, IN 46285
Contact: William R. Gierke, Manager, Global Packaging Technology and Development.
Tel: 317-276-7351. Fax: 317-277-2403.
Summary
Through progressive reductions in bulk packaging of glass vials of an injectable fluid, a drug company reduces consumption of expendable materials and cuts distribution costs.
Action
Eli Lilly and Company is a major world producer of injectable fluids. An example is the drug insulin. Over a period of time, Lilly has revised its method of packaging glass vials of insulin for distribution.
Originally, bulk shipments of insulin vials were packed in a corrugated cardboard box with interior cardboard partitions, providing a separate compartment for each vial. The next step was to replace the cardboard partitions with a block of expanded polystyrene with molded slots about an inch apart, providing individual compartments for vials. This change improved handling but resulted in the dedication of additional space for shipping materials at Lilly and the accumulation of large quantities of polystyrene at the delivery end, where handling and disposal costs were rising.
A new packaging method for insulin vials was adopted in 1997 after several years of development and testing. This method does away with separate packaging compartments for individual vials. Instead, the glass containers are bound tightly against one another with polypropylene shrink film. This method of glass-to-glass packaging of bulk quantities has already proven reliable in the food industry.
Payback
Lilly does not disclose product cost details. But it can be inferred that the company's step-by-step reduction of bulk packaging of insulin reduced both Lilly's cost of production and customers' cost of handling and disposing of packaging.
Other Considerations
Customer perceptions are extremely important when companies consider changing packaging, not only the individual retail container but also bulk packaging. Lilly had to be certain that its customers perceived the elimination of separate compartments for insulin vials as an improvement in quality, or at least no reduction in quality. Sometimes, packaging changes that make very good sense in terms of product quality and reliability nonetheless appear undesirable to customers.
An example is a packaging change that Lilly considered but did not implement. The product is a growth hormone, which is shipped in a thermally insulated container to protect the drug from temperature extremes while en route to the buyer. A re-analysis of the distribution system found that storage time during transit of the hormone was much less than had been assumed, and little if any product degradation was occurring. Eliminating the thermal insulation could save up to $500,000 a year in packaging materials--a strong incentive to change.
But Lilly decided not to eliminate the thermal insulation out of concern that
customers--irrespective of the facts--would view its absence as compromising quality.
Interestingly, Lilly people not associated with the packaging function held this same
view.