Pharma Takes the Prize

The Shingo Prize has been referred to as the Nobel Prize in manufacturing, but you won’t see much glitz or glamour at its annual ceremony in Florida. Like its namesake, Shigeo Shingo, the Toyota engineer who brought so many Japanese phrases into the U.S. manufacturing lexicon, this prize focuses on the nitty-gritty shop-floor issues, the details that are still taken far more seriously by the average aerospace or automotive manufacturer than the typical drug maker. Examples include “visual” and mistake-proofing systems, often simple devices that improve efficiency and reduce waste, and help keep operators focused on areas for improvement.

One does not “win,” but receives this prize, emphasizes Ross Robson, a self-described “pracademic,” who has directed the Shingo Prize for 18 of the 19 years that it has been in existence. Most Shingo recipients have been aerospace and automotive companies.

Baxter’s North Cove 2,100-person manufacturing facility in Marion, N.C. (a 2005 Pharmaceutical Manufacturing Team of the Year) became the first drug manufacturer to win this award seven years ago, and this year became the first-ever “two time recipient,” Robson says. But Baxter’s 1,000-person Cuernavaca facility in Jiutepec Morelos, 45 miles south of Mexico City, also received a Shingo this year, the first Mexican drug manufacturing plant to be thus honored.

Both facilities are noteworthy for product flow, and Cuernavaca showed major continuous improvement in just a few months, Robson says. “Employees at both facilities clearly have a sound understanding of Lean principles, tools and culture, and North Cove has raised the bar considerably since it won its first award,” he says. The results that these teams have achieved so far speak for themselves.

Applying for the prize is not for the lazy or unfocused. Applicants must complete a 100-page, four-section achievement report, a process that took a team of 10 people at North Cove some 18 months to complete, says manufacturing director Beverly Smith. “It takes three months just to gather all the data,” says Ivonne Nogueira Flores, who led the Cuernavaca team’s improvement efforts.

Click chart for larger image.

However, even preparing the submission is a learning experience and provides focus, says Baxter North Cove plant manager Tony Johnson, who has become one of the company’s operational excellence gurus and a “go to” guy for questions about Lean and Six Sigma implementations.

Judges check what’s in the report against Prize criteria. Applicants are graded, with 1,000 points being a perfect score and 765 the cutoff point. “We look for inconsistencies across various categories, or holes in thinking, where actions we see within the plant don’t appear to match up with what they’re saying in the report,” explains Prize examiner (and 2006 winner) Gwendolyn Galsworth.

Often, reports are very uneven, Galsworth says, showing that the facility may excel in one area, but is weak in another. It’s also important that the report reflects reality. Companies that hire a consultant to write the report miss out on an extremely valuable learning experience, she says. “Have a consultant review your report, but get the people involved — who are doing the work — to write it.”

Those 15 facilities whose applications have the highest scores must then agree to a one-and-a-half-day site audit conducted by a team of five or six experts from the Shingo Prize Board of Examiners in Lean, Six Sigma and Op Ex from various industries. After a presentation by the project leader at the host facility, reviewers split up for plant audits, each covering a different area, to “verify, clarify and amplify” what’s in the written report.

The auditing team then usually meets briefly to decide what to pursue and whether “deep data dives” are needed into financials, HR and turnover, delivery or on-time schedules, Galsworth says. After a few hours, the auditors submit a list of documents they want to examine. Security is ensured because all reviewers sign strict nondisclosure agreements, but they must be given full access to any nonproprietary documents they request.

Then the actual assessment begins, based on what the team sees at the site.

One critical yet often overlooked ingredient for a successful plant audit is the presence of effective visual devices on the plant floor — boards and other tools that convey to employees the information that’s needed, when and where they need it. “This may not show up all that prominently in the report application, but it is very important in scoring the facility,” Galsworth says.

Politics are kept out of the judging process, and prize recipients are selected by consensus. The team leader, Galsworth says, is critical in discussing “outlier” results, starting open discussion and ensuring that nobody just gives up and says, “Okay, I have to catch a plane.”

Baxter’s Cuernavaca team members in action. Since the team members couldn’t all go to the award program, special celebrations were held at the Cuernavaca and North Cove facilities.