Some questions for you; what does LEXUS stand for? Who was Taiichi Ohno? And how are they connected.
Well, Taiichi Ohno (1912-1990) was a Japanese business man acknowledged as the father of the Toyota Production System. This was first described by Sugimori et al (Sugimori, Y., Kusunoki, K., Cho, F., Uchikawa, S. (1977) ‘Toyota production system and Kanban system Materialization of just-in-time and respect-for-human system’, International Journal of Production Research, 15 (6), pp. 553 – 564.), and established into Western culture through Womack, Jones and Roos’ (1991) ‘The Machine That Changed The World – The Story of Lean Production’
LEXUS as we all know is the luxury brand of Toyota and was established as a mechanism to demonstrate the cost and quality effectiveness of Toyota’s Production System to the United States, hence Lean EXport US, or LEXUS!
So 20 years on from ‘The Machine That Changed The World,’ how has lean impacted the Pharmaceutical Industry?
Well, to begin with it took our industry 10 years to get going; with movement towards change in the pharmaceutical industry to lean practices first being embraced by the generic manufacturers where margins are much lower. Frembes (Frembes, L. (2004) Teva Pharmaceuticals USA, Not so generic.) reports the case of Teva Pharmaceuticals in the USA where lean practices have been employed with great success since 2001. Next Generation Pharmaceutical Europe (2005) describe the extent to which the pharmaceutical industry is embracing these opportunities; specifically citing a 2001 report from the US Food and Drug Administration which estimates the saving to the pharmaceutical industry of adopting lean manufacturing practise to be US$90 billion per year.
Since this realization the pharmaceutical industry has made consistent attempt to trim the fat of its operations. The black belt population was increased exponentially and words such as Kaizan (improvement), Jidoka (intelligent automation), Heijunka (production smoothing) and Poka Yoke (error proofing) are now commonplace within our facilities and prevalent within our vocabulary. We have all seen 5s in operation and I suspect have our own views on the relative merit of such change.
For what it is worth I will share my opinion. It’s simple, I love lean, I really do and have been involved in several businesses that saw significant growth against their objectives and exceptional financial success from implementing lean practice. That being said and having read the test books and sat through all the training I think the pharmaceutical industry, with its precedent for detail orientation and rule following has somewhat over shot the mark sometimes and that when this occurs lean fails to hit the mark.
In explaining this I have two points to make.
The first point is to ensure you understand what is really important to make lean work. By this I mean move away from the textbook and apply the learnings from it to your specific problem/objective. I have found that here four key areas always seem important:
This is straight from the ‘Toyota textbook’ and is traditionally considered as rework, overproduction, conveyance, waiting, inventory, motion and over processing. Reducing these wastes from the workplace will reduce the money that is spent, increase the effective margin of operations and reduce the cash cycle for those operations. In terms of numbers Maddy, (Maddy, K. (2007) ‘Driving Changes with Lean Manufacturing’, SMT, April, pp 28-29.) quantifies the levels of non value added activity within manufacturing industry, stating that “nearly 95% of activities within the workplace can be attributed to waste”. He continues to define typical benefits from lean implementation and in this specific example cellular manufacture (realised within 12 – 36 months) as a gross margin increase of 10 – 300%, an increase in cash flow of >50% and step wise improvement in customer satisfaction.
If it doesn’t add value to your customer then don’t do it.
No really, try this, be brave it works. Don’t go crazy though you do still need to consider indirect value items like legal compliance etc, after all if you are not in business you cannot add value to your customer at all. However, for direct activities, the way that people spent their 40 hours per week, if they don’t add value then don’t do them. By way of example I once promoted someone to run a large Department, after a week or so I asked what they intended to change, their answer was that systems were in need of improvement and they had already established new time off and attendance tracking systems. Whilst being careful not to dampen their enthusiasm, I asked a simple question; how does that help our customer and in turn how does it make us more money? If you are able to think like this you will eliminate a lot of waste!
Understand your manufacturing constraints and focus on them.
OK, so you have to read ‘The Goal’ The Theory of Constraints, A Process of Ongoing Improvement by Goldratt and Cox, it is without exception the second best (see below for the best) book on lean manufacturing I have ever read. I once worked at a plant with a 6 stage manufacturing process. Step 4 was the rate limiting step. This meant and somehow it took us a long time to realize this that only two things mattered in our production. Firstly that we ran step 4 100% of the time without fail and that anytime step 4 was not running that became our sole priority. Secondly, that we maintained sufficient output from step 3 such as not to limit step 4. The realization of these 2 fundamental principals made for a lot of happy customers, significant business improvement and the ability to reduce a lot of waste. Also and consider my point on focussing on what is important; here therefore, Overall Equipment Efficiency (OEE) was despite the theory redundant in assessing our performance!
Realise that the only measure of efficiency that counts is how much product you ship.
This is so true yet I must have had this conversation a million times. So consider the above example, where the efficiency and optimization of step 4 was critical we weren’t paid for being efficient we were paid for shipping material at the end of stage 6. Realizing and acting upon this will drive a lot of positive behaviours. Take a classic pharmaceutical example, all companies measure manufacturing batch record right first time. I understand it’s important to have a true and accurate record of production; of course I do, but consider this….what is more important a batch record performance of 95% RFT but with a review cycle to closure of 30 days or a batch record performance of 75% RFT but with a review cycle to closure of 5 days? Which scenario allows you to close the item, ship the batch and invoice the work? Obvious isn’t it?
Oh! And the best book, I’ve ever read on lean manufacturing, “All I Need to Know About Lean Manufacturing I Learned in Joe’s Garage” by Miller and Schenk, this book is simply mind-blowing!
The second point, and a pet favourite subject of mine is the role of leadership in change, the impact of emotional intelligence, interpersonal skill and communication style, (and critically the ability to actively modify this to each and every situation) in the implementation of change. For this though, you’ll have to wait for Part II.leadership, Lean, manufacturing, opinion