Operations and Business Environment - Fresenius Medical Care

departments enter into outline contracts with suppliers
and coordinate queries from internal departments and
external partners.
In 2006, we concluded delivery agreements for electricity
and gas at a favorable point in time and were therefore
able to keep the purchasing prices stable. Despite
higher purchasing quantities and the pooling of needs,
due to the development of oil prices no savings could
be made on petroleum-based products and semifinished
goods such as plastics and different types of
foils for product packaging.
In the U.S., we reduced the average inventory level by
6 % over the previous year, to 86 days, by optimizing
our distribution logistics. Overall, we have been able to
significantly improve the efficiency of our warehousing
in the last five years. Although piece numbers increased
by about 40 % during this period, we reduced the stock
on hand by a quarter. In addition, the integration of
Renal Care Group was a primary focus of our activities.
We ensured a smooth transition phase for supplying
more than 400 RCG clinics.
A steady supply is particularly important for our peritoneal
dialysis (PD) patients. They can carry out the
vital treatment only if we provide them with the
necessary PD solutions and disposables in time and in
sufficient quantity. In the U.S., we rely on 13 regional
distribution centers. They are located in areas where
a high percentage of patients live. We can reach more
than half of them within two hours and three-fourths
within four hours. The products needed for treatment
are supplied to 95 % of our PD patients within
six hours.
Production
Fresenius Medical Care has a global network of production
sites on all continents. The selection of production
sites is primarily determined by the respective
product. For the production of highly complex dialysis
machines, for example, we rely on decades of experience
at a central facility. Our analyses show that
the concentrated production know-how regarding this
product group offsets the costs of transporting the machines
to our international markets.
Other products are manufactured directly in the regions
where the demand is particularly strong. As the global
leader in dialysis, we possess the necessary expertise to
develop efficient production processes that are customized
for each specific product type.
Our products are primarily in demand within the euro
and U.S. dollar regions. We have established a predominantly
decentralized structure for our production sites
to meet the demand and significantly reduce transport
costs. An additional advantage: our plants in the U.S.,
Japan and Europe help protect us from currency fluctuations
and minimize transaction risks, as the costs and
the revenue generated are in the same currency.
We have implemented a particularly consistent global
production network for dialyzers: our sites in Ogden
(Utah, U.S.), St. Wendel (Germany) and Inukai (Japan)
allow us to not only operate as a provider but also as
a producer of dialysis products in these three major
dialysis markets. In addition, we operate a plant for
dialyzers in France and other countries.
Hemodialysis machines are produced mainly at two
sites – in Schweinfurt (Germany) and in Walnut Creek
(California, U.S.). While the German plant manufactures
components as well as complete dialysis machines,
the American plant is specialized in the production of
dialysis machines. Concentrates for hemodialysis are
produced at various sites around the world – including
Italy, Great Britain, Spain, Turkey, Morocco, Argentina,
Brazil, Colombia, Australia and the U.S.
We operate two of our largest plants for peritoneal
dialysis supplies in Mexico and Japan. Our extensive
product portfolio also includes peritoneal dialysis
machines, bloodlines and water preparation equipment,
which are manufactured in our factories in North
America, Europe, Latin America, Asia and Australia.
We produced about 65 million dialyzers and fiber
bundles in 2006, some five million more than in the
previous year. Considering the total volume of approximately
160 million dialyzers produced globally in 2006,
Fresenius Medical Care supplied about 40 % of them.
Due to the ever-growing demand for dialyzers from
Fresenius Medical Care, our production sites in all
regions have reached their capacity limits. As a conse-
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Fresenius Medical Care 2006