The principles of Lean Six Sigma are frequently leveraged in the pharmaceutical industry to drive process improvements. Historically, such initiatives were most often conducted within the confines of commercial drug production operations; more frequently, R&D teams are also leveraging these tools. Joint engagement with an external partner can also offer similar benefits.

This article provides background information on the topic of Lean Six Sigma and describes a case study in which these principle were jointly applied by Aptuit and our client, Novo Nordisk, to manage study close-out inventories more effectively.

Lean Six Sigma

The phrase “Lean Six Sigma” combines two concepts. In short, “Six Sigma” refers to defects per million, while a “Lean” process considers the expenditure of resources for any goal other than creation of value for the end customer to be wasteful.

Originally developed by Toyota as the Toyota Production Process, “Lean” describes the constant redesign of a process.¹ Lean is focused on eliminating waste — evaluating a process and determining how to get a high-quality result with less effort and a simpler approach to the process, whatever that process might be.

Six Sigma was originally developed by Motorola in 1981 to achieve and maintain a desired level of performance.² A six sigma process is one in which 99.99966% of products manufactured are statistically expected to be free of defects (3.4 defects per million).

Lean Six Sigma efforts seek to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. The process incorporates a set of quality management and statistical methods and leverages people within the organization (ranked as “Black Belts,” “Green Belts,” etc.) who are expert in these methods. Process improvement initiatives that leverage the Lean Six Sigma approach follow a defined sequence of steps and are guided by quantified targets such as cost reduction or an increase in efficiency.

The principles of Lean Six Sigma have been widely embraced by many industries and are being leveraged by drug developers more frequently. Faced with intense pressure to control costs and get more out of R&D investments, pharma companies are increasingly interested in ways to “lean out” their processes and improve profitability without passing along price increases.

As these companies seek to reinvent themselves, downsize, and try to do more with less, Lean Six Sigma can be a primary tool to help achieve objectives.

Leveraging Lean Six Sigma with Suppliers

In an effort to revitalize pipelines and reverse a trend that has seen returns in R&D fall below the cost of capital, drug developers are exploring a range of new partnership models. Through these models, industry is increasingly seeking access to more promising early stage science, leveraging opportunities to transfer capacity, and attempting to reduce the number of partners from (in some cases) hundreds to a strategic handful.

In order to drive gains in productivity, accelerate R&D, and improve efficiency, both sides of the “externalization equation” — that is, contract research organizations and pharmaceutical companies — must transform their approach to collaboration. Part of this transformation should include the joint application of Lean Six Sigma principles.

Consider the supplier base of companies that have embraced a Lean Six Sigma approach for 20 to 30 years. These organizations look at the supplier relationship differently than most pharmaceutical companies would today — they recognize that they don’t want to or can’t afford to change suppliers on a regular basis.

They want to have a supplier base that becomes part of their fabric, that they have a senior-level relationship with; instead of negotiating every transaction, it’s understood that they will do business with the supplier for many years. In these situations, the senior management teams from both organizations seek true integration.

Even if a drug developer isn’t quite ready for that level of commitment, a step in this direction can be a collaborative effort to apply Lean Six Sigma principles to processes in need of improvement.
The first step in such an effort is for senior-level decision makers from both organizations to come together and define the charter for the team that will undertake the process improvement initiative.  People from both organizations will be coming together to create one team and will need executive guidance to keep it on track and establish objectives.

As the team forms, it is important to clearly define the deliverables, the timeframe, the rules of engagement, and what a “win” looks like. With a hybrid group of individuals from two companies, establishing these parameters upfront is critical to success.  

Collaborating for Success

The following case study describes a process improvement initiative undertaken jointly between Aptuit and Novo Nordisk to improve the management of close-out inventories.

Aptuit is a global pharmaceutical services company focused on delivering contract drug development and manufacturing services. Novo Nordisk is a global healthcare company headquartered in Denmark; it employs more than 30,000 employees in 74 countries and markets its products in 179 countries.

For more than 10 years, Aptuit had managed several hundred studies for Novo Nordisk as the company’s preferred clinical packaging and logistics partner.

During this time, both Aptuit and Novo Nordisk had embraced the use of lean process improvement initiatives and had undertaken various programs individually. When it became clear that the close-out process was in need of improvement, Aptuit suggested a joint project that would have a combined team examining the process and mapping improvements. The companies came together to map the current study close-out process and identity opportunities for improvements.

The close-out process encompasses procedures for providing accurate inventories of clinical packaging and logistics stock at the end of a clinical study, as well as managing the ultimate disposition of the stock. Under Good Clinical Practice (GCP) guidelines, once a study is closed, full accountability for all supplies provided for the study, whether dispatched to a clinical site or not, needs to be documented and the drug inventory has to be either returned to the sponsor or destroyed by an authorized vendor.

The process improvement effort brought together representatives from both companies to form a Lean Six Sigma team that defined the current close-out process, identified sources of inefficiency, and developed an improved, highly efficient process.

The process for requesting and providing study close-out inventories and requesting destruction was not, however, always clearly defined between the parties. The actual steps of the process varied among the Novo Nordisk study coordinators and, understandably, closing out old studies was a lower priority for both parties compared with initiating new studies. As a result, both companies were facing a number of challenges:

• There was long-term storage of expired stock at a cost to Novo Nordisk; this resulted in unnecessary utilization of warehouse storage space at Aptuit.
• Invoices for storage were sometimes generated well after a study budget had been closed.
• Aptuit was storing goods that were not invoiced.
• There was a long lead time and protracted elapsed time to provide data and documentation around the destruction.

The combination of these factors was the impetus to apply Lean Six Sigma principles to the process in an effort to create a more efficient, effective, consistent process all the way from initial request for inventory from the client to final invoicing from the provider.

The first step in identifying key areas for improvement was a Kaizen event that was conducted with stakeholders from both companies. Kaizen is a Japanese word that means rapid, continuous change. At a Kaizen event, a group of people assemble and focus on nothing but solving a particular problem. What comes out of the event is a project and communication plan that outlines the solution to the challenge at hand. The format and structure of a Kaizen event drives rapid and often breakthrough changes and is a very powerful tool used in Lean Six Sigma initiatives.

A Kaizen event works because you are able to energize a number of great minds rather than one driver of change. The team should ideally be of different backgrounds and experiences and include people who touch the process and others that are customers to the process. The team should be empowered by the sponsors and project champions to make decisions during the Kaizen event, all driving towards the same objective/goal.

Generally, a Kaizen event can last anywhere from a half a day to an entire week. Attendees are selected based on their knowledge base and included sponsorship of the senior level. In any Kaizen event, a number of stakeholders participate. For our event, we included the following people:

• The sponsor was the director of the Clinical Supplies Coordination Group at Novo Nordisk. The sponsor kicks off the meeting by thanking everyone for their participation and their efforts to improve and reinforces the sponsor’s support for the team.
• The process owner was the senior director for Clinical Operations at Aptuit’s Deeside facilit in the UK. The process owner is a critical approver of the change, as he has a responsibility after the Kaizen event to ensure the plan becomes a reality.
• Members attending the Kaizen event included representatives from Project Management, Warehousing, Operations, and Finance.
• Facilitators are “black belts” — people trained in Lean Six Sigma from both companies. The facilitators ensure the team keeps on track with the objective and act as catalysts for change.

Representatives from Aptuit’s global locations that worked with Novo Nordisk attended the event. The highly interactive event was held at our Deeside location and it extended over a period of two days.

Preparation is key to the success of Kaizen event. Prior to our face-to-face, it was important to collect data from both sides to effectively define issues and opportunities for improvement. In the next step, the integrated team clearly outlined the objective, what needed to be accomplished, and what measurable indicator(s) would be used to define success. In this case, the primary metric was to reduce the time following notification from Novo Nordisk of the destruction request to final invoice for storage by 50%. This in turn would have a financial benefit, as inventory would not remain at Aptuit beyond when it should.

The next step was mapping the process as it currently stood — “as is”; this included the information flow, the decision-making process, milestones and other parameters. From here, the team focused on stripping the “wastes” from the process.

We created a flow chart that mapped the original process, and we flagged and removed steps that the team felt were not needed. We identified value-adding activities, non-value–adding but necessary activities, and non-value-adding activities.

Interestingly, both parties expected that most of the delays and challenges would be attributable to Aptuit. However, during the course of the event, a “lightbulb moment” occurred when it became clear there were a number of areas that Novo Nordisk found they contributed to also. This “sharing” helped foster the team dynamics and commitment to the project. The team found that there wasn’t enough priority and importance given to returns; there were inventories being stored at Aptuit that should not have been, since the trial was closed, but there was no communications process in place to convey this information. We found there were excessive wait times to decide what to do with the remaining stock and this took up inventory space at Aptuit — which Novo Nordisk was paying for.

An optimal “future state” of the process was then created, structured around only those needs and compliance steps that are absolutely necessary. We identified initiatives or actions that would get us from the current state to that future state and identified which tasks or actions belonged to which organization.

Once the ideal process was agreed upon, it was taken back to the management team for approval and support; once we secured the necessary approval and support, the new process was rolled out through both organizations. And in true Lean Six Sigma fashion, the cycle begins again — with a watchful eye on the newly established process to ensure it is meeting our collective objectives.

Kaizen is an excellent vehicle to open up discussions that can sometimes be difficult with a supplier-customer relationship. It allows the joint team to understand the root cause of the problem that may be driven by several steps and responsibilities in the process, to clearly identify the expectations and drive a solution that both companies are happy with.

Results

As a result of this initiative, the inventory close-out process has become much more consistent across studies and much faster and efficient. We’ve been able to apply this process and resulting benefits across our client base. An additional benefit in undertaking this process is a strengthening of the collaboration between our companies as it required a great deal of trust and openness to engage in a Kaizen event such as this with a partner.

A collaborative process improvement initiative can lead to important advancements in efficiency and cost savings. Best practices include:

• Approach the process with an open mind, be receptive to change and new ideas.
• Be ready to move away from preconceived ideas about how a process “should” happen in order to envision what the optimal process can be and how to get there.
• Preparation is critical, as is assembling the right team. The Kaizen event may only be a day or two in length but participants should arrive having thought through the current process and should bring ideas, including input from others in their organization, as to how to create greater efficiency and remove waste from the process.
• The support of senior management is also vital, as they have to be in support of the process and the recommendations that come from the Kaizen event in order for positive improvements to take hold.
• Ensure a robust process for follow-up and monitoring progress of agreed actions. Remember that the process is only beginning when the Kaizen event ends.

Lean Six Sigma initiatives can deliver significant improvements and efficiencies across the drug discovery and development continuum. Joint exercises with partner organizations can be powerful for and deliver significant benefits to both organizations.  

References
1    Holweg, Matthias (2007). “The genealogy of lean production”. Journal of Operations Management 25 (2): 420–437.
2    Tennant, Geoff (2001). SIX SIGMA: SPC and TQM in Manufacturing and Services. Gower Publishing, Ltd. p. 6.

Esther Sadler-Williams is senior director, Strategic Alliance Development, Aptuit. She can be reached at esther.sadler@aptuit.com.