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In the era of manufacturing capacity rationalizaton, tighter return on assets, and re-alignment of manufacturing assets to meet changing product demand, strategies for cost-effectively managing manufacturing and other facilities become ever-more crucial. A Q&A with UMS Advisory.
Effective management of manufacturing facilities is an important consideration for pharmaceutical/biopharmaceutical companies, particularly in an era of plant consolidation, restructuring, and a need to maintain of achieve higher returns on capital. Patricia Van Arnum, executive editor of Pharmaceutical Technology and editor of Sourcing and Management, recently spoke to Rakesh Kishan and Eric Grey, senior consultant, both at UMS Advisory to gain a perspective on best practices in facilities management.
PharmTech: The pharmaceutical industry as a whole has undergone and continues to undergo restructuring, including manufacturing plant rationalization. In managing an evolving manufacturing and supply network, what would you identify as the key requisites in facilities management to facilitate product transfer and potential ownership changes in a given facility. What are some of the main pitfalls arising in facilities management that may impede those changes in product transfer and ownership changes?
Kishan: A key priority for facilities management in today’s changing manufacturing supply network is to shift to variable cost and a flexible structure. Flexibility in the workforce and contracts are vital in a manufacturing environment characterized by product transfer and ownership changes. These changes can be impeded by a fixed cost structure that offers little variability.
As plants rationalize or reposition their missions, facilities management should align facilities-management asset-management strategy in light of the manufacturing strategy. Today, it is still possible to find facilities-management asset-maintenance strategiesthat are designed around redundancy for assets whose criticality to production has been downgraded. As plant strategies change, facilities management needs to re-align its approach and the delivery model and risk-acceptance profile that needs to filter right through to facilities-management standards and procedures.
A key area for facilities-management contribution to the business will be through strategic portfolio planning. As plant networks change, facilities management can offer strategic space and capacity-planning solutions through new “site of the future” concept models, different asset-ownership structures, and new, flexible delivery models based on analytic visibility into lifecycle costs. Although portfolio planning is important, facilities management also needs to address the important requirements of the site heads and other site stakeholders. This they can do by engaging stakeholders in site master planning to further hone and refine the site- level strategy for facilities-management operations. In sum, facilities management needs to align the portfolio strategy both financially and operationally with the business while keeping a clear site-level focus on asset strategy, workplace services, as well as site master planning.
PharmTech:The pharmaceutical industry is intensifying its product development in biologic-based drugs. Given the higher capital costs associated with biopharmaceutical manufacturing facilities, what would you identify as some best practices inoptimizing facilities management at a biopharmaceutical manufacturing facility? What are some of the unique considerations that need to be taken into account?
Kishan: Facilities-management equipment and systems are more closely connected with product in biologic facilities. High-purity systems and their operations and maintenance are far more closely linked to production in a biologic facility. Consequently, biologic-based drug-manufacturing facilities-management organizations need to have very strong planning and scheduling processes that are tightly integrated into production planning and scheduling.
The yield-driven biologics production environment can be by far very dynamic when compared with a fixed-schedule pharmaceutical manufacturing environment. Consequently, facilities-management can create value by ensuring effective interfaces with manufacturing and shifting their maintenance and engineering support based on real-time information. Facilities management’s ability to provide reliable utilities and operational solutions for advanced cleaning and maintenance technologies designed specifically for sterile and high-corrosion environments is a source of value in biologics sites. Facilities management’s should also become operationally more cross-functional and flexible to enable quicker equipment shifts across multiple product-recipe trains while maintaining production environment integrity.
PharmTech: With the pharmaceutical industry facing increased cost pressures, what metrics do you think best evaluate plant performance and operation? Can you be specific in terms of either traditional or new metrics relating to return on capital and asset optimization?
Grey: Most companies use several measures to gauge plant performance and operations. Any time one thinks about measurement, one has to be mindful of three key facts: No single measure is perfect; not everything important can be measured (for example, shop floor leadership is a strong predictor of plant uptime); and hence, it’s a balance of measures that count the most. Too many measures typically suggest a lack of focus on what truly matters. The measures we typically see are:
• Cost/unit: A bottom-line efficiency metric, important particularly in light of competition from low-cost countries;
• Yield: A measure of production-material effectiveness and waste
• Inventory turns: Measures working-capital effectiveness
• Right-first-time: Measures transactional waste
• Overall equipment effectiveness (OEE): Measures equipment utilization, productivity, and effectiveness.
It is very important to recognize interdependencies across the measures. A single- minded focus on solving for a particular measure can end up creating problems in other parts of the operation. For example, a site that may focus on cost/unit may reduce the expertise required to solve problems both on the floor and in the offices, which in turn creates more material and transactional waste.Or a site may use inventory to buffer against operational issues at the expense of working capital rather than address root causes. Alternatively, a site may add labor to improve right-first-time but drive up the cost/unit, which may also be influenced by the regulatory environment at the site.
But there are instances where a single overarching measure can drive improvements in another hierarchy of metrics. For example a site focused on improving OEE found it had to also get the right-first-time improved to prevent paperwork delaying production and also reduce its inventory (increasing inventory turns) in order to achieve sustained results. OEE drove maintenance and facilities groups to work more closely together in order to ensure the assets were available for production when needed.
PharmTech: Emerging markets are a growth area for the pharmaceutical industry, where pharmaceutical companies may partner with domestically domiciled companies or seek to build their own manufacturing base in a country. What are some of the buy/partner decision points that a company should take into consideration?
Kishan: Overseas manufacturing and laboratories are being positioned as the “lab of the future” or as the “manufacturing plant of the future,” as new sites are designed and configured in emerging markets. In these environments, facilities-management services and delivery models can be designed and configured to offer flexible, high-performing solutions without facing legacy constraints. Facilities management has the opportunity to pursue different “make or buy,” “partner/own” choices in their delivery models from the outset.
For example, one pharmaceutical site elected to bring in an operating facilities-management supplier during the design phase to ensure that operability and maintenance perspectives were incorporated into the design phase of the facility. As the facility started to come on line, the site also then purchased a new service solution from the supplier to provide an integrated set of facilities-management services at the site, where the supplier could leverage their knowledge and input from the design, commissioning, and equipment warrantees into their maintenance and service delivery solution.