Over the past decade or so, the pharmaceutical industry has sporadically attempted to embrace lean manufacturing. While a manufacturing philosophy that aims to reduce waste and boost productivity would certainly appear to be a good partner for this industry, so far the results have been less that optimum. This does not have to be the case, however.
Up until fairly recently, the pharmaceutical industry has enjoyed healthy profit margins. That profit margin, coupled with the burden of meeting regulatory mandates, has led the industry to resist change and concentrate on maintaining the status quo. Today, however, that picture is changing due to rising costs – especially with respect to regulatory compliance, dwindling product pipelines, and growing competition from generic brands. Although the focus on quality has not changed, the pharmaceutical industry has failed to keep up with other sectors with regard to improving manufacturing efficiency and productivity. Now is the time for a whole-hearted, unreserved commitment to successfully implementing lean manufacturing techniques.
A 2006 study involving more than 1,500 pharmaceutical manufacturers yielded some eye-opening results. While more than 50% of the respondents indicated that their companies had implemented lean manufacturing solutions to one degree or another, less than 50% have been satisfied with the results. The major obstacle to a successful, complete adoption of lean manufacturing practices was the belief that efficiency and productivity boosting techniques developed in the auto industry could not be successfully implemented in the pharmaceutical industry. Although lean manufacturing has been more widely implemented in the industry during the past few years – evidence of this can be seen in the growing number of case studies, articles, and conferences focusing on lean manufacturing – the pharmaceutical industry has, overall, shown few signs of making substantial progress. Case in point, inventory turnover can be a reliable indicator of a company’s success in implementing lean manufacturing. If a company is improving processes, then the trend of inventory turnover should reflect that improvement over time. The data, however, seems to indicate that no significant improvement has taken place in this area over the last decade. Now, consider this – during the 1980’s the electronics sector in the United States appeared to be on the verge of death. Today, owing in large part to the adoption of lean manufacturing solutions, IBM, Hewlett Packard, and Dell have regained their former role of global leadership in the industry. Indeed, during the period of 2000 to 2009, Hewlett Packard’s inventory turnover improved by an average rate of 6.9%. Obviously, a lean manufacturing system does work. And it can work in the pharmaceutical industry with the right implementation.
The task for the pharmaceutical industry, then, is to effect an industry-wide adoption of lean manufacturing coupled with consistent application of lean manufacturing techniques. Up to now, consistent, committed adoption has been sporadic and isolated.
Next, companies need to take a comprehensive view of lean manufacturing implementation, look at the supply chain as a whole, and not concentrate solely on improved manufacturing operations. Without this broader focus, improvements will continue to be limited.
Finally, it’s critical that management call on the expertise of pharmaceutical consultants with experience in, and knowledge of lean manufacturing. This way a host of potential problems that could lead to failure can be avoided – including lack of leadership buy-in, imprudent cost-cutting, poor product selection, and less than optimum execution.
The fact that the pharmaceutical industry has lagged behind others in an otherwise totally successful implementation of lean manufacturing solutions can, if used correctly, prove to be a huge plus. The opportunity now exists for us to learn from the mistakes and assimilate the successes of other industries.
To learn more about how lean manufacturing strategies can streamline your business and improve your bottom line, visit Smart Lean Manufacturing .
