Lean Practices in a Life Sciences Organization
Lean Six Sigma may help pharma manufacturers improve performance, increase operational efficiency and ensure quality
By John Danese and Dennis Constantinou
The pharmaceutical industry, which is generally associated with precision and quality control, has in reality failed to keep up with other industries in terms of manufacturing efficiency and productivity, largely because of the cost and burden involved in revalidating any process changed in the spirit of improvement. Once manufacturers confirm or validate their processes as compliant, they traditionally have been very reticent to change them. The simple fact is that pharmaceutical manufacturers, which historically have enjoyed consistently robust profit margins, have had little economic incentive to introduce change.
The industry's focus on maintaining the status quo in its manufacturing environment has produced inefficiency and waste. It is estimated that the potential worldwide cost savings from efficiency improvement could be as high as $90 billion.1 While R&D is generally considered a major cost center for the pharmaceutical industry, manufacturing quietly accounts for more than twice the expense of R&D -- representing 36% of a pharmaceutical manufacturer's costs, on average. The true cost of manufacturing becomes even more apparent when one considers the amount attributed to non-value-added activities and waste -- 80% and 50%, respectively.2
Quality has also suffered under the status quo. The reject percentage in the pharmaceutical industry ranges from 5% to 10% (<2 Sigma), compared to 0.0001 (6 Sigma) in the semiconductor industry. This reject percentage costs the industry between $4.5 billion and $9.0 billion per year based on $90 billion/year spent on manufacturing.3
A new era is dawning in the industry as pharmaceutical manufacturers increasingly focus on reducing operational costs while ensuring compliance. Cost pressures are intensifying as many pharmaceutical manufacturers see a dwindling product pipeline, as well as greater competition. To ensure that their bottom lines remain solid, pharmaceutical manufacturers are looking to increase the efficiency of their operational and manufacturing processes -- optimizing Resources , improving efficiency, reducing waste and controlling inventory. Pharma manufacturers are now looking to Lean Manufacturing and Six Sigma principles -- proven in other industries -- to help them boost operational efficiency and improve quality, while facilitating compliance.
While several important factors have converged in recent years to jumpstart substantial change in the pharmaceutical industry, the regulatory climate plays a significant role in how pharmas approach and manage their manufacturing operations. The FDA, in addition to other regulatory bodies, now supports approaches that seek to reduce risk by building quality into the manufacturing process from the start, as opposed to relying on end-process testing. Further, regulatory organizations have begun to endorse a "quality by design model" that contrasts with the industry's historical "quality by test" results approach. As part of this shift, the FDA launched its Process Analytical Technology (PAT) initiative, a risk-based guidance model that seeks to direct pharmaceutical manufacturers toward consistent and predictable quality (higher sigmas). The PAT approach is to build in quality improvements on the factory floor through a deep understanding of how variable process attributes affect product quality at a fundamental level.
Lean Six Sigma in the Manufacturing Environment
As pharmas seek to transform manufacturing operations and enhance quality, many are turning to two highly regarded management approaches -- Lean Manufacturing and Six Sigma -- that have proven effective in other complex industries, such as electronics and auto manufacturing.
Lean Manufacturing focuses on eliminating manufacturing waste, with the objective of making manufacturers more responsive to customer demand and market changes. Six Sigma is a business process methodology that focuses on minimizing variation in product and process to reduce product defects. When pharmas implement Lean and Six Sigma concepts, they have a powerful methodology to help them improve quality, compliance, productivity, costs and speed, ultimately enabling them to bring better products to market, faster and more cost effectively.
To achieve transformation to a Lean Six Sigma environment, organizations must focus on change at three levels: operating systems, management systems, and mindsets/behaviors. At the operating system level, manufacturers must understand demand levels, design lean production systems around material and information flow analysis (e.g., optimize layout), create tactical implementation plans, and develop standardized work charts and instructions.
When transitioning to a Lean Six Sigma environment, pharmaceutical companies must also assess their management systems at several different levels and direct changes that support Lean concepts. Transition teams must consider what management tools, including IT systems and communication tools, the company requires. The organization must also consider how it will define or measure success, by setting key performance indicators (KPIs) at different levels of production. It is also essential to create a highly visible problem resolution system to drive and institutionalize change. Finally, organizations must implement and scale these capabilities so that they span the entire value chain, which is often dizzyingly complex and can extend beyond traditional organizational boundaries.
The final arena for change, transforming mindsets and behaviors, is often the most challenging. When moving to a Lean Six Sigma environment, it is critical that the management team defines and communicates a consistent mission, vision and value system throughout organization, while always maintaining the customer focus. The transformation team should focus on achieving top-down buy-in, aligning resources to help build and transfer momentum across the organization. Training cannot be overlooked. The transformation team must provide training opportunities at multiple points in the process to build stronger organizational buy-in and competence from both management and the ranks.
Adopting an Integrated IT Infrastructure
IT factors heavily in the transition to a Lean Six Sigma enterprise and the subsequent journey of continuous improvement. Because of the complexity of the pharmaceutical manufacturing environment, organizations require flexible and interoperable IT systems that provide information, not just data, across the enterprise. In a Lean Six Sigma environment, information flows must complement and keep pace with physical flows to deliver the information needed. (See Figure 1.)
Just as important is the ability to mine data and interpret it efficiently, quickly and seamlessly. Using the data and turning it into information quickly enables pharmas to outperform their competition. Having the right data readily available when it's needed also makes it easier to respond to FDA inquiries.
IT supports several tenets essential to the implementation of a Lean Six Sigma environment, including:
Ensuring Integrity of Data
Organizations can only make wise decisions with good data. Most pharmaceutical manufacturers have IT environments with solutions from multiple vendors. These systems are often siloed, precluding the exchange of information. In addition, manufacturers often have multiple instances of applications across their various production facilities. For example, it is not unusual for pharmaceutical manufacturers to have separate data files for products and customers in different IT systems at different sites. This approach also precludes a comprehensive view of the enterprise, which is essential to a quality-by-design focus.
To obtain the end-to-end visibility needed in a Lean Six Sigma environment, pharma manufacturers must have an integration strategy for linking heterogeneous systems, creating a single source of trusted information that enables a complete picture of operations.
Building Quality into the Manufacturing Process
Process and workflow automation, which allows organizations to build quality into the process, may be IT's single greatest contribution to enabling a Lean Six Sigma environment. Integrated IT infrastructures allow pharmaceutical manufacturers to rely less on manual checks, which present greater risk and variability, and more on automated checks that are built in, enforced going forward, and can easily be audited by the FDA and other regulatory agencies. For instance, automation enables manufacturers to enforce electronic signature checkpoints during the processing of a production batch order and automatically notify key personnel of nonconformances, so that reviews and action can be undertaken quickly.
The capture and processing of in-line data is critical to a Lean Six Sigma environment, as well as PAT, because manufacturers must understand all sources of product variability. This understanding cannot be achieved without collecting data from every part of the supply chain and manufacturing process. For example, a manufacturer probe sensor might sample the particle size of a batch of product during a granulation process. To make adjustments that would improve product quality or consistency, the manufacturer must determine how the particle size compares to previous batches and standards, a process that depends on the capture and analysis of in-line and benchmarked data, and understand how various possible process adjustments will impact all critical technical attributes of the material. An integrated IT infrastructure is essential to enabling manufacturers to capture the secure, analyzable and actionable data needed to transform their operations.
Enabling Rapid Analysis and Modeling To Respond to Change
Pharmaceutical manufacturers possess massive quantities of data on processes as far ranging as purchasing of office supplies and analysis of data from gas chromatographs. Many, however, cannot analyze or interpret paper-based or siloed information to identify important trends and drive improved manufacturing practices.
A single source of truth, coupled with advanced analytics, enable pharmaceutical manufacturers to run real-time analysis that yield the kind of business intelligence that reduces risk, helps to improve operating efficiency and agility, and streamlines compliance. For example, a manufacturer can use advanced analytics to conduct quality analysis, risk assessments, yield analysis, on-time production tracking, scrap reason analysis, cost comparisons by job, and comparisons of manufacturing plans and efficiencies between sites, to name just a few of the endless possibilities.
Instituting and Controlling Businesses Processes and Standard Operating Procedures
Removing variability in processes and materials is fundamental to a Lean Six Sigma environment. IT systems provide the information necessary to establish an environment that supports risk-based decisions. IT serves as a lens through which processes can be observed, monitored and measured. Only then can manufacturers enable greater control over variability.
Process automation further enhances operational efficiencies. On the materials management front, an integrated IT infrastructure drives automation that enables manufacturers to enforce business rules that require materials to go through certain quality tests before they reach a customer, as opposed to relying on a paper document to confirm a test has been completed. Automating controls also reduces ongoing complexity, redundancy, the potential for operator error and, ultimately, waste.
Enabling a Real-time Demand-driven Sales and Operations Planning Process
A demand-driven model that supports Lean Six Sigma principles allows pharma manufacturers to postpone inventory build-up and reduce inventory carrying costs and the risk of a product expiring before sale. The transition from a make-to-stock approach to a demand-driven environment, however, has not been an easy one for many manufacturers.
Most companies today have a very fragmented process for Sales and Operations Planning (S&OP). Each department tends to have its own process with critical company data stored on spreadsheets. Departmental plans are not aligned, and there is misalignment between how departments are measured and overall company objectives. IT solutions can help manufactures address their complex S&OP needs by enabling them to bring all business areas together for the purpose of aligning supply with demand and delivering an operational plan designed to achieve a defined corporate business strategy.
Pharmaceutical manufacturers often have multiple manufacturing plants, warehouses, distribution centers, and transportation lanes and modes. Determining the best manufacturing, distribution and logistics choice becomes an exercise in selecting from among thousands of combinations. Advanced strategic network optimization (SNO) solutions can help manufacturers optimize choices and combinations by allowing users to define, simulate and evaluate complex manufacturing, distribution and transportation supply chain problems, before making costly mistakes.
Ensuring Compliance and Security
The information required for a corrective and preventative action includes appropriate details of the event, the time/date of the nonconformance, the phase of the batch in which the nonconformance occurred, details of the incident or observation, level of criticality, and required follow up, as well as the signatures of various operator(s) and/or supervisors. This process, which is essential to both quality improvement and regulatory compliance, is costly and time consuming when completed manually. It also presents many opportunities for data omission or the recording of incorrect data. CAPA (Corrective Action, Preventive Action) solutions manage issues to closure through an automated workflow, and provide appropriate documentation required for regulatory compliance.
Pharmaceutical manufacturers are on the cusp of reaping benefits that Lean Six Sigma practices can deliver to their organizations and the industry as a whole. To successfully transform their organizations, however, pharmaceutical manufacturers must gain greater visibility into their end-to-end operations and increasingly must look to integrated IT infrastructures to help them execute Lean Six Sigma paradigms and, ultimately, achieve new levels of operational efficiency, quality and corporate performance.
- Benson, R.S. and D.J. MacCabe. "From Good Manufacturing Practice to Good Manufacturing Performance." Pharmaceutical Engineering, July/August 2004.
- "New Prescription for Drug Makers: Update the Plants," The Wall Street Journal, September 3, 2003.