As companies consider applying Lean in their industry they face the challenge of determining how it will work in their environment. Part of the difficulty is much of the information available is from other industries. This lack of information can cause confusion on how they can apply the Lean Principles. For example, a major method of improvement in the manufacturing industry is eliminating large batches. When manufacturing discrete items, the idea of making a batch smaller is challenging, but easy to envision. A batch in other industries such as food preparation and pharmaceuticals brings a whole other set of issues.
In the pharmaceutical industry, the first thought is reducing the size of the blend. The blending of pharmaceutical products is highly regulated and any change to blend size requires significant testing and many levels of approval. Thus, some companies that associate Lean with reducing batch size believe that Lean won’t work in the pharmaceutical industries.
The question is how you can apply a strategy that has its roots in the car industry in the Pharmaceutical industry.
Here is the approach that one pharmaceutical company is using. Like many companies going Lean for the first time, there were many concerns about the benefits they could achieve. The senior team put their faith in the hands of their Lean champion and Kaizen Institute Lean Advisors to take them on the Lean Journey.
The key in all industries is to follow the Lean Principles. The first of which is to define value. The pharmaceutical company’s value is to blend components in the right quantities to produce a quality product for their clients. This is the science of their job. As with most applications of Lean, the science of the job is not the area of opportunity. The opportunity for improvement lies in between these steps.
Once the value was determined it was time to value stream map the processes. We started from the receipt of the components through to the packaging process. Like most non lean processes each area operated in silos with each department being concerned with their own schedule and productivity. Their goals were to meet their schedule and keep their employees busy.
The lead time identified by the current state map was around 250 days for one of the product families. The team identified many areas where significant inventories of partially finished product (WIP) were stored. Analysis indicated that less than 5 days of lead time was caused by the original size of the blend. What the team found was that there were nine completed blends waiting to be made into tablets. There were weeks of finished tablets waiting to be packaged. Reducing the size of the blends was a small opportunity compared to the other in process opportunities. Inventory causes many incidental activities as well as impacting cash flow. In the pharmaceutical industry, there are some added impacts. For example, if these inventories are kept too long, extra testing is required tying up valuable lab hours. In some situations, much of the inventory needs to be destroyed when kept too long.
The next step was to create a future state for the process. This involved the application of the 3rd and 4th principles of Lean, The creation of flow and pull from the customer. To create flow it was important to tie the processes together. In the first pass the goal was to only have a week of material in between each processing step. Although this is not the perfect future state, it brings us to principle number 5, seek perfection.
Sometimes a company or the employees feel they have failed when they don’t achieve a perfect future state on the first pass. The goal in the first 3 to 6 months is to get significantly better. In this case, the lead time will improve by over 100 days or close to 50%. What company wouldn’t be pleased with a 50% reduction in all their lead times?
To achieve this reduction in inventory, the team had to set up a kanban system. It’s a fairly simple system, when the customer needs to be replenished the product is packaged from a small supermarket of product. This creates an opening in the tablet area and they draw a batch of blended material which sends a signal production control. Production control sends a request to the dispensing area. Dispensing gathers the components and puts them in a FIFO lane for the blending area to work on.
This process was implemented in two weeks, initially with the extra inventory as a safety stock. The safety stock was quickly reduced until they reach their first target. This allows the employees, and some of the management, to understand the process and to be comfortable that it will work.
There are still cultural barriers to overcome. The employees feel nervous with their safety net reduced. There are questions about what to do when you complete the work before the end of the shift. It is easier to just produce a few more thousand tablets than find some other value adding work for the employees. These are common concerns and are only eliminated as the employees see that Lean works in their industry. They have already taken the first and most critical step which is to try.
They are on their way to achieving major gains in the first 3 to 6 months.
- 50 % reduction in Lead times
- 20 to 30 % reduction in storage space
- The elimination of an offsite storage facility
- Reduced changeover times
- 90 to 100% reduction in retesting
Does Lean work in pharmaceuticals, without a doubt.