Identifying key performance indicators

PharmTech» What other KPIs or balanced scorecards do contract-service providers and sponsor companies use to set measurements for accountability and product supply?

»Jenkins (Abbott): It is important to work with suppliers to ensure you have what you need when you need it and to produce and deliver customer products on time. The backbone of our relationship with partners is a high degree of communication and transparency. In addition, we use various tools to help us drive accountability.

»Dixon (Baxter): In addition to on-time delivery, quality, and meeting product specifications, we evaluate our success by analyzing a number of other performance indicators through client scorecards. These scorecards serve as a measurement of the ultimate value for both Baxter and our customers and are reviewed by both parties on a regular basis. For example, saleable yield is one KPI that helps us outline our end result. Other scorecard factors focus on process quality, including monitoring cycle times throughout the batch life cycle and conforming to schedules.

In addition to strictly quantitative factors, we focus heavily on customer-service measurements by using a robust customer feedback program that is matched with an internal assessment and health scorecard. Ultimately, we look for comprehensive and real-time evaluations to help demonstrate mutual accountability and partnership value.

»Alberstetter (Vetter): Depending on the relationship with the customer (i.e., multiple products/projects) we usually share and discuss KPIs along the entire supply chain. This supply chain begins with the "inspection of incoming goods to setpoint" and follows the preset material flow. Other shared KPIs include: lead time, yield, stock coverage, right-first-time-rate, and master production-schedule stability. During the precommercial phase in project work, we use the methods outlined by the International Project Management Association (IPMA) Baseline 3.0. (IPMA is a nonprofit standard-setting body based in The Netherlands.) A respective certification program has therefore been established. Vetter's projects are released and steered by an operational and strategic steering committee.

Tracking performance results

PharmTech» How does your company evaluate internal performance? For example, is performance benchmarked against other projects? Do you employ a Six-Sigma approach or other total quality management approach?

»Jenkins (Abbott): At the core of our relationships is a strong focus on the four Cs previously mentioned (cost, compliance, customer service, and continuous improvement). We aim to provide high compliance and customer service at a market competitive cost. A sustainable continuous-improvement program helps the provider company continue to improve existing operations with long-term results and can lead to decreased cost for both companies. RCPS, Kaizen (this approach involves subject-matter experts mapping out a process and looking for improvement opportunities), and Six-Sigma approaches are integral to our overall business-partnership plan.

As part of our management-reporting process, Abbott holds regular meetings to review performance metrics and to discuss whether we are on track to meet the overall schedule and deliver according to customers' needs. If any KPIs are off track, we conduct an RCPS session.

We also seek feedback from our customers. For example, we ask, "What would make it easier for you when you're in our facility?" Based on feedback to this question, we installed a Customer Conference Room with a table, chairs, phone, overhead-projector screen, white boards, and wireless Internet access so that customers have a comfortable place to work while visiting our facility.

»Dixon (Baxter): Setting internal goals and metrics, in addition to the metrics we strive for with clients, and measuring those metrics is a crucial element of our work. We are not satisfied with merely meeting targets, but always strive for continuous improvement. This philosophy is based on Baxter's implementation of Lean manufacturing. We apply Lean methodologies to monitor and improve day-to-day performance at every level. We apply techniques from Lean, Six Sigma, and total quality disciplines to drive broader improvement efforts. Through these disciplines, we use standard review points or stage gates for our process-improvement efforts to ensure that individual projects are integrated into the overall company strategy.

In addition to internal scorecards, we use a tiered management-review system, which includes regular assessments of functional performance using visual display boards that help ensure productivity and identify outliers. These display boards showcase real-time data and outcomes for each team member and each process. On a less frequent basis, high-level meetings are held to review major projects and KPIs to ensure we are meeting customer needs as well as short- and long-term strategies.

»Kosko (Pfizer): As a sales/marketing organization, PfizerCentreSource does not have manufacturing assets but rather uses the Pfizer Global Manufacturing (PGM) network of sites. Within PGM, the Network Performance Organization focuses on the evaluation of internal performance. The Operational Excellence team within the Network Performance Organization is charged with building our Six-Sigma and Lean-improvement capability across the network and its functional groups to deliver high performance. By organizing this function centrally and focusing on effective knowledge management, sites can readily adopt best practices.

»Alberstetter (Vetter): Performance of processes is measured using SAP. After the data are graphed, project performance is presented and discussed at the operational steering committee meetings. Supply-chain performance evaluation is part of the sales and operations process.

Vetter has implemented—and is continuously improving—a company-wide program called Vetter Optimization System (VOS). It consists of three pillars, one of which is to maintain focus on statistics and to fully implement Six-Sigma methods. The other two pillars cover business process management and Kaizen.