How lean manufacturing can cut costs
What the auto industry can teach the pharma sector about manufacturing efficiency.
By on Nov 11, 2009What the auto industry can teach the pharma sector about manufacturing efficiency.
What can the pharma sector learn from the auto industry? In AstraZenecas opinion, a lot. The pharma giant has borrowed several car assembly plant experts from the luxury car company Jaguar in an effort to streamline its manufacturing operations. Jaguar agreed to lend the experts as a means to cut short-term costs during the recession.
We are looking to reduce any waste in our manufacturing processes, such as down time, recycling, long decision times, and bureaucracy, says Eva Idn, head of AstraZenecas UK operations. She notes that efficient manufacturing operations havent always been a priority in pharma, so minimal were those costs compared to R&D. But AstraZeneca hopes that trimming the fat out of manufacturing will release funds to re-invest in R&D.
Car companies are a good place to look for advice. In the 1990s, Toyota grew to one the largest auto companies in the world due to its manufacturing efficiency, which benefited from lean production and a just-in-time inventory strategy. In the early 2000s, the rest of the auto industry, including Jaguar, tried to catch up.
Now AstraZeneca thinks its pharmas turn. In addition to car assembly plant experts, the firm has borrowed advisers from consumer healthcare and fast-moving consumer goods. We are particularly looking to implement a culture of continuous improvement and excellence in manufacturing, says Idn. Eliminating waste is a key priority in lean [production], and by bringing in people from the outside, we are opening ourselves up to fresh pairs of eyes.
AstraZeneca isnt the only pharmaceutical emphasizing lean manufacturing. Pfizer has launched multiple initiativesfrom operational excellence and lean manufacturing to process analytical technology and green chemistryin an effort to control quality, costs, and environmental impact. At the companys factory in Illertissen, Germany, where it manufactures Chantix, several of these recently implemented techniques and technologies have yielded cost reductions of 52 percent while increasing efficiency 300 percent. The Illertissen site won the 2008 Facility of the Year Award from the International Society for Pharmaceutical Engineering.
Cost is always a concern in the industry, but Pfizer balances that consideration with two others, namely uncompromising standards on quality and reliability of supply, says Tony Maddaluna, Pfizers senior vice president of strategy and supply network transformation. We are tenaciously focused on building the best globally competitive internal-external supply network.
Likewise, Abbott has prioritized reducing waste and variability across its manufacturing processes to increase efficiency and quality and to bring down overall cost. In particular, the company has applied a lean approach to products from the beginning to the end of the manufacturing cycle. That means ensuring efficiency from the materials at the bottom of the supply chain all the way through manufacturing and distribution to customers. This approach really drives efficiency across multiple processes, sites, and functional areas for true end-to-end optimization, says Steve J. Lichter, Abbotts vice president of pharmaceutical manufacturing. "Our results from this end-to-end approach have enabled us to reduce product manufacturing cycle times and also to react to market changes and demands more quickly."
Similarly GlaxoSmithKline has specified that its employees are trained in lean six sigma, a statistics-based business management strategy to reduce variability and errors. But like Pfizer and Abbott, all of GlaxoSmithKlines expertise is based in-house. Which makes AstraZenecas experiment with the auto industry unique. The car assembly plant experts theyve borrowed came from Jaguars Halewood plant in the UK and now are based at AstraZenecas Macclesfield factory, also in the UK, where theyre contracted to stay until May 2010. My view is that all of R&D-based pharma is on the same journey, says AstraZenecas Idn. What I believe will make AstraZeneca successful is our willingness to reach out and draw on experiences from across other industries.