Olaf Schrake at Hameln Pharmaceuticals GmbH discusses how contract manufacturers can evolve into business partners for their customers
As competition gets fiercer for contract manufacturers, it becomes more and more important to stand out from the crowd. Since quality and a competitive price are now basic market prerequisites, service providers have to look at the quality of the service they offer and the customer benefits they create. The latter can be created by boosting operational excellence, thereby taking positive strategic and operational measures, such as implementing tools for identifying the equipment’s overall effectiveness.
Suppliers of pharmaceutical products are increasingly finding themselves with their financial leeway being squeezed and, at the same time, are subject to pressure to innovate with more stringent demands on quality and product documentation. It is absolutely essential for a supplier wishing to succeed in the market to comply with regulatory provisions and requirements. Resources – whether human or financial – which companies have to tie up with, for example product quality reviews (PQRs), cannot be employed again in the development of innovations, but it is precisely this information which can and must ensure the crucial ability to stand out from the competition. It is only the company that can offer new products, new application forms or new variants of established pharmaceutical products that will be a player – particularly a long-term player – in the competition for the customer.
In order to be able to concentrate in-house on those issues which relate to core business, and which ultimately ensure the ability to stand out from the competition, pharmaceutical companies are seeking more and more frequently to outsource tasks to their suppliers. Contract manufacturers of pharmaceutical products are therefore taking on a new role: they are evolving from suppliers to strategic partners who have a direct impact on the customer’s success.
This trend becomes even clearer in the delegation of productionrelated services, such as documentation services, when the focus is on highly specialised contract manufacturers. Not only can contract manufacturers specialising in niche products and whose manufacturing operations require extensive expertise take production-related tasks off the customer’s hands, they can also, more importantly, provide their customer with essential impetus for product innovation. The reason for this is that as a specialist for an active ingredient group, pharmaceutical form or production method, they often have a clear lead in expertise and experience over their customer – for whom the highly specialised products represent only a tiny fraction of their own portfolio.
OPERATIONAL EXCELLENCE – PREREQUISITE FOR CUSTOMER BENEFIT
Increasingly, having to take greater responsibility for the customer’s success requires specialised contract manufacturers to make a clear change in their self-image and also to make a definite break with what they have conventionally done. Whereas in the past it was enough for contract manufacturers to be able to offer high quality products at an optimum price, more farreaching qualities are now called for – first and foremost of these being the ability to put themselves in their customer’s shoes and generate real customer benefits. Contract manufacturers have to evolve from being their customer’s extended workbench to strategic business partners.
Being a business partner means being prepared to take on responsibility of their own initiative for the customer’s success. Instead of reacting to requests and requirements from the customer to the contract manufacturer, being a business partner also means anticipating the trends and developments of a niche segment for the customer and, on the basis of your own experience, expertise and assessments as a specialist, proactively advising with a focus on outcomes as well as submitting suggestions which go far beyond the customer’s own horizon.
Everything which is applicable in terms of advice for the customer must also apply to the contract manufacturer’s own inhouse corporate structure. Anyone wishing, as a business partner, to take responsibility for his customer’s success must be able to offer an organisation which is capable of and willing to work autonomously and consistently on its operational excellence. The Centre of Excellence for Total Productive Management (TPM) at Ansbach University of Applied Sciences defines operational excellence as “approaches which are designed to result in outstanding operational performance”. For contract manufacturers this means addressing various aspects of their own organisation when implementing operational excellence and integrating a very wide range of approaches. Ultimately, the manufacturers should be able to offer an organisation which thinks and acts customercentrically, is abreast of the technological state-of-the-art, whose manufacturing processes operate extremely efficiently, and which sets the benchmark within the niche segment in which it is a specialist operator.
FACETS OF OPERATIONAL EXCELLENCE
Measures for the holistic implementation of operational excellence within a company therefore take place at both a strategic and an operational level. They have an impact on the tasks, skills and responsibilities of almost every department in a company, starting from the executive management, continuing through sales and technical staff, the sharp end of a manufacturing company and the shop floor. They can refer to both the hard and soft factors and features of an organisation. For example, in addition to significantly shortening production times or adapting structures and processes within a company, it is also possible to look at actions to improve the internal flow of information or activities designed to kick-start a change in the company’s mentality.
There are two approaches to improving a company’s operational excellence, described below in greater detail, which have the advantage of making operational excellence something that can be clearly experienced or even measured. The approaches demonstrate the direct customer benefits that can be generated by means of operational excellence measures – primarily benefits such as cost-efficient problem solving, short time-to-market duration, reliable product availability and customised solutions.
INTEGRATED EFFICIENCY & OVERALL EQUIPMENT EFFECTIVENESS – STEPS TOWARDS OPERATIONAL EXCELLENCE
The optimisation of processes and working in accordance with lean manufacturing principles can make a substantial contribution to operational excellence. Lean manufacturing in this context means avoiding all waste and loss of resources – both material and human. If this is to be achieved, it principally requires the optimum conditions in respect of a manufacturing company’s hardware; to be precise, it requires a production environment which is exactly tailored to the needs of the actual manufacturing processes. Only a building which has been explicitly designed and constructed for a manufacturing process can offer the maximum integrated efficiency. The key feature of a successful company’s building concept is a rigorous commitment to lean management – from the plant layout to the configuration of the lines and machines, and on to the process design of the actual production operation. Reduced interim storage with optimised material and personnel flow on short shifts characterise the entire production layout. The set-up of the working areas follow the logical structure of the process itself and all equipment is installed in such a way that they support an efficient process run.
Where expenditure can be cut as a result of operational excellence, the customer can benefit directly in the form of cost and time benefits, and possible customised adaptations of the manufacturing process.
Programmes to reliably, continuously and measurably determine the overall equipment effectiveness (OEE), on the basis of these or similar conditions, can also be included in order to gain the maximum from a production operation. The function of these programmes is to measure and present the actual status of the production process and thus make it transparent and traceable. This enables optimum use to be made of machinery capacities, though it also permits faults and sources of malfunctions to be identified and eradicated. The coefficient of OEE, drawn up by Seiichi Nakajima from Japan in association with the concept of TPM is the product of availability, performance and quality. Since it is assumed that a production operation can never run without downtime or faults, its value is always less than 100 per cent.
IT solutions which measure the OEE coefficient, on the one hand, provide information on the order processing status and the availability of individual machines but, on the other hand, they also identify factors impacting on the efficiency of the lines. The latter is essentially a wide range of malfunctions that hinder the production flow, which have their duration and frequency recorded by the software tools.
The transparency that can be generated with OEE tools makes a significant contribution to process efficiency in production, not least because everyone involved is able to adjust their next operational steps in the actual production progress. Tooling times in the event of a format or batch change are also significantly optimised. “Operational excellence is when each and every employee can see the flow of value to the customer and fix that flow before it breaks down”, is how Kevin Duggan, founder of the Institute for Operational Excellence in North Kingstown, Rhode Island, US, defines it. It is of fundamental importance for the comprehensive success of an OEE system that the data gathered in the course of an OEE analysis should be made available not only to production staff but also to the departments which are directly customer-facing. That is because sales staff can only keep their customers proactively informed in the manner expected of a business partner if they have access to real-time data and detailed information on order statuses and delivery data.
CONCLUSION
Contract manufacturers who wish to be seen as business partners and are prepared to take responsibility for their customer’s success need to work continuously and consistently on their operational excellence at every level and with reference to every task that the company has to manage – within its own organisation and at the interface with the customer. The measures or tools described undoubtedly represent two key activities with which a contract manufacturer’s operational excellence can be improved. However, it is vital that these activities should not be seen in isolation or regarded as a panacea in themselves. When contract manufacturers are serious about evolving from a contractor to a customer’s strategic business partner, all the employees – irrespective of how close they work to the customer – must recognise that they contribute to the customer’s success. Only if such a customer focus can be firmly established in the attitudes and convictions of all employees, is it possible for those measures to actually promote operational excellence.
