Lean Technical Operations
Supply chain becomes a board room issue
The key levers to drive pharmaceutical company value have always been Research & Development and Sales & Marketing. Given the small proportion of overall cost, it is no surprise that the supply chain has usually avoided board focus. Supply chain has only ever made it to the board when problems have affected revenue, such as compliance issues or unforeseen bottlenecks restricting supply.
However, recent trends in the industry have meant that supply chain is increasingly becoming a key area of focus. Expensive product pipelines, shorter periods of exclusivity and intense competition mean that pharmaceutical companies need access to highly efficient, compliant and cost effective supply chains.
Technical operations - causes of pain
To understand the key issues that prevent pharmaceutical supply chains being effective it is necessary to focus on Technical Operations.
Within the Tech Ops arena it is not uncommon to find excessive compliance costs caused by inappropriate over interpretation of regulations. To test this, have a look at the size of your batch documentation and ask yourself 'do the regulations really require all this?' You may be surprised that the answer could well be 'no'. Excessive bureaucracy becomes a drag on resources, delaying throughput and adding cost not value.
Pharma operations are also typically fragmented and functionally organised. The consequence of this is that planning and co-ordination between functions is poor, driving up overall cost, not to mention management stress! Functions try to optimise performance, but overall supply chain performance often suffers. For example, producing large batches might improve the efficient of a tablet press but overall lead times and stock will be adversely affected.
Perhaps the hardest pill to swallow is the fact that pharma operations are inefficient. Your operations might be good compared to other pharma benchmarks, but when compared to best practice from other industries, such as automotive, pharma operations are way off best practice. For example, equipment performance is often poor and not effectively measured. Take a walk through your operation and count the number of machines actually producing product - you may well be disappointed! Why is this the case? Long cleaning times, poor maintenance, incapable processes, inflexible skills, poor planning and insufficient focus on performance. It is not a short list!
Significantly, poor performance is often 'planned in' to operations. When planners make decisions, they often add 'padding' to their calculations: batching up, running campaigns, assuming longer lead times, building safety stock, adding excessive production capacity and recruiting extra shifts. Inaccurate forecasting and poor data often drive this type of behaviour which results in high stock levels, long lead times and poor service.
'Lean Tech Ops'
WCI has been working with pharma clients to transform the performance of technical operations by migrating best practices from other industries and adapting them to work in pharma operations. We have named our approach 'Lean Tech Ops'. Essentially this provides your people with the skills and techniques that will enable you to get the most from your existing operations, assets and information technology.
Making it better
WCI have extensive experience successfully applying the Lean Tech Ops approach to good effect. This has often involved using breakthrough Kaizen events, for example, to rapidly reduce changeover times, without the need for re-validation, so that flexibility, lead time and responsiveness can all be significantly improved. In one case, working with a leading pharmaceutical client, manufacturing efficiency was improved by 25% and throughput by 22% as a direct result of applying this approach in a structured, focused manner.
Elsewhere, WCI implemented an integrated planning process that enabled operations to manufacture more closely to demand. Although the forecast was highly variable, analysis showed the underlying demand was actually quite smooth. The team implemented a 'pull' replenishment system that used kanbans to replenish controlled stocking points. This enabled operations to run much more smoothly, with minimal management intervention. The new planning process, which optimised the use of existing IT infrastructure, reduced stock by 25% and improved service by 50%.
WCI recently worked with another client that had received several FDA warning letters and quickly needed to improve compliance and throughput. By reducing the complexity of their major business processes, focusing only on what was truly necessary and removing excessive procedures, the warning letters were rescinded. In a recent FDA inspection, this client received no 483 observations (inspectional observation).
Finally, a recent project, QC lead times were reduced by 27% as a result of identifying the rate controlling tests, reducing these tests to a minimum and scheduling all other steps to the rate controlling drumbeat. Lab productivity was also increased by 23% as a result of eliminating non-regulatory tests, re-engineering the processes and by optimising the use of lab capacity.
Conclusion
So, the 'Lean Tech Ops' message is very straightforward: significantly improve the performance of your supply chain by making better use of what you already have! By using lessons learnt everywhere, the benefits that can be realised in the pharmaceutical environment can be truly staggering. And at a time of increased pressure for company performance, these benefits will translate into measurable profit improvement.