Manufacturing Site Improvements Lead to 22 Percent Cost Reduction

Lower cost startups and generic manufacturers are active players in today’s pharmaceutical industry, making a dynamic landscape even more competitive and innovative. In response, traditional pharmaceutical companies are seeking ways to make their manufacturing facilities leaner without compromising quality and throughput.

Challenge
A leading pharmaceutical company engaged A.T. Kearney to improve the cost competitiveness of one of its main biological plants. The goal was to understand the potential for improvement without dramatic network changes and to begin executing on those improvements immediately.

Approach
During a six-week engagement, A.T. Kearney collaborated with the site management team to develop an aggressive performance improvement plan featuring a combined top-down and bottom-up approach. In the top-down approach, we identified areas with gaps and the size of potential improvements. In the bottom-up approach, we used process analysis and cross-functional workshops to uncover opportunities to reduce performance gaps. More than 100 ideas were identified, evaluated and prioritized.

The project not only addressed traditional production improvement levers (such as lean and asset effectiveness), but also indirect costs. This was critical, because indirect cost represented almost half of total costs at this manufacturing site, as it does at many other pharmaceutical sites, where quality control, validation, sales and operations planning and non-conformance management require significant resources.

Results
We helped the company implement a plan that reduced plant conversion costs by 22 percent in two years. The plan focused on the following:

• Improve use of direct labor through advanced staffing methodologies and cross-training
• Rationalize maintenance activities based on criticality and risk of failure
• Simplify and automate quality assurance processes, including non-conformances, CAPAs, and document management
• Standardize and simplify SOPs and their update processes
• Push aggressively for supplier certifications and simplify specifications
• Reduce management layers and increase span of control

The project also addressed site competitiveness, putting into perspective current and anticipated future site performance in relation to the highest-performing facilities in the market. The joint team also identified long-term opportunities based on choice of process technology (continuous or batch), complexity management and network optimization.