Beckman Coulter Inc. is overhauling distribution of its medical testing gear and retooling some manufacturing in another sign that Chief Executive Scott Garrett is putting his mark on the county’s largest medical device company.
So far, Fullerton-based Beckman Coulter has combined six small West Coast warehouses into a new, sprawling facility in Chino. The company is looking to do the same in other parts of the country.
And Beckman, which makes instruments and supplies for medical testing laboratories and researchers, has outsourced production of some electronics that go into its products.
The changes are the latest under Garrett, who took over for longtime leader John Wareham in early 2005.
Last year, Garrett combined the company’s dominant diagnostics business with its smaller biomedical research unit. He also cut some 350 jobs. And he changed the way Beckman accounts for leases of its instruments.
“Scott stays close to many things in the company, among them are all these ‘change’ sort of projects to improve the business,” said Don Fuller, Beckman’s senior vice president of supply chain management.
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Garrett: has overseen several big moves since taking over a year ago |
Fuller was an independent consultant before coming to Beckman. He previously worked with Garrett at Dade Behring Holdings Inc. and Kendro Laboratory Products LP.
Fuller said he and David Mastromatteo, vice president of logistics and distribution, modeled the changes for Garrett before they were implemented.
The pair looked at transit times to show the change wouldn’t disrupt shipments.
Beckman opened its 180,000-square-foot Chino distribution center late last year. That facility, which has 65 workers, ships chemistry instruments for labs as well as chemicals used for testing blood.
A distribution center in Brea was one of those combined at Chino. Some 30 distribution jobs moved from Brea to Chino, Mastromatteo said.
Beckman still has other operations in Brea, just blocks from its Fullerton headquarters.
Now all instruments made in California go to Chino, instead of to three different warehouses, Mastromatteo said.
The move also consolidated Beckman’s handling of reagents, which are chemicals used to run tests on its machines. Some 60% of Beckman’s $2.4 billion in yearly sales comes from supplies, chemistry kits and services.
“The customer in Seattle will receive hematology and chemistry reagents from one shipping point instead of multiple distribution points,” Mastromatteo said.
Chino won out for the distribution center because of the size of the building there and cheaper rents in the Inland Empire, he said.
“Also, we wanted to stay as close as we could to Brea to keep the existing work force here,” Mastromatteo said.
Beckman looked in Orange County. But that “didn’t really produce the building of the size and the scale that we needed,” Mastromatteo said.
The shift saw some hiccups.
“I would say we had our share of challenges with some of our (information) systems, in moving our inventory out of third-party warehouses and into our warehouses,” Mastromatteo said.
The company faced a “training curve” with new distribution workers. The center also had to comply with regulatory rules.
Meanwhile, the business had to keep going.
“We have a lot of customers,” Mastromatteo said. “We don’t have the luxury of shutting down. We had to do all of this making sure that we were keeping up with our customers’ needs and demands.”
Shipment speed has improved since the consolidation, according to Mastromatteo.
“It’s fair to say that we went through a startup period in the September-October time frame,” Fuller said. “We came out of that and are reaching the goals that we’ve set.”
Now Beckman plans to replicate the change in other parts of the country.
“The steps are largely around building efficiencies in our distribution system,” Fuller said. “We’re not about consolidating distribution centers to reduce costs. That would be a bad approach to the business.”
Beckman is saving money. The company expects yearly savings of 5% to 8% in operations and shipping once the changes are done.
Beckman is building a distribution center for the central U.S. in Florence, Ky. “Study work” has been done for a similar hub in the East, Fuller said.
Beckman now ships products for East Coast customers out of Somerset, N.J.
The company also is seeking a single site for Europe, Fuller said.
Manufacturing is getting its own tweaks.
Beckman is combining a pair of circuit board plants in Hialeah, Fla., and Porterville near Bakersfield. The company plans to close the Florida plant and cut 150 jobs. It plans to add some 75 jobs to the Porterville plant, which now has about 130 workers.
The move also includes outsourcing “raw boards”,a building block for circuit boards,to a Chinese supplier, Fuller said.
“With any company our size, you would look at outsourcing as an option for certain areas of the business,” Fuller said. “We do not foresee a situation where there would be any massive outsourcing in the short- to medium-term.”
Meanwhile, Beckman plans to sell 53 acres of unused, undeveloped land in west Kendall, Fla., south of Miami.
The land is part of Beckman’s 102-acre corporate campus in Kendall, which became part of the company after Beckman Instruments spent $1.1 billion Coulter Corp. in 1997.
