Novartis Goes Lean

A bold initiative at the drug manufacturer's Suffern, N.Y. plant aims to reduce cycle times by 70% and cut spending by 40%. The program, a pilot for all Novartis sites worldwide, has been "risky and nerve racking, but necessary."

By Agnes Shanley, Editor in Chief

Under increasing pressure to reduce costs, and improve the quality of their products, more pharmaceutical companies are adopting techniques well established in other industries--Lean manufacturing, Six Sigma, process teams--to drugmaking. Many of the techniques, first developed for discrete manufacturing, can't simply be "dropped in" to the more complex pharmaceutical plant. Nevertheless, their adoption reflects the industry's increased emphasis on manufacturing optimization.

At its Suffern, N.Y. plant, Novartis is now in the final stretch of a transformation involving process reengineering and Lean manufacturing principles. Launched in November 2002, the initiative aims to reduce cycle times by 70% and reduce spending by 40%. The facility's management and workers have scrutinized and are reengineering every process and role at the site, leveraging IT and other new technologies, and creating process-oriented teams without first line supervisors. The Suffern program is a pilot for all Novartis sites worldwide.

It's not an effort for the faint of heart, for control freaks, or those averse to change. The journey so far has been "risky and nerve racking, but necessary," says Tom Van Laar, vice president of pharmaceutical operations at the facility. "We could just opt not to do the radical reengineering, which will affect some jobs, and then wait and risk all jobs," he says. "This is all about becoming more competitive for the future."

For site operator Michael Pidgeon, buying into the lean concept was the most difficult part about the program. "Most of us have been doing our jobs a certain way for a long time, and to accept that business won't be as usual isn't always easy," he says. "However, as we see the benefits, it has become easier to handle."

Novartis' Suffern program will improve all major work processes, from overall supply chain management and cycle time to validation, lab processes and change control. "We map the way they're handled now, design a blue-sky vision of how they could be handled in the future, then conduct a gap analysis of how to get there," Van Laar says. This process involves everyone from the operators on up. "In every case, we've seen at least a 40 to 50 percent reduction in the work required for each area, because that work was non-value added," he says.

The effort has brought more focus to day-to-day jobs. "Before the program started, we were measuring all kinds of key performance indicators (KPI) across the site, from attendance by shift/team, to batch record errors, both minor and major," says John Micheline, coordinator for the facility team charged with producing the facility's major product, the hypertension treatment, Diovan. "These broad KPIs caused our focus to be all over the map. Now we concentrate on issues that are important to the end users, such as customer service levels and cycle times."

Flatter Organizational Structure

In the past, the facility was structured like most pharmaceutical manufacturing operations, with very traditional, vertically-focused departments. Last November, it adopted a product-based team approach, eliminating the supervisor role so that engineers, operators, and support staff such as IT, mechanics and maintenance, report directly to one team leader.

Currently, 80 people across functional disciplines work on the Diovan team, which was the pilot Lean team for the site. There are no longer any departmental supervisors, and all members report to team leader, Brian Hanifin (photo). Three other teams at the 500 person facility focus on various mixes of other products at the plant. 

 "Lots of companies say they have teams, but, more often than not, they're still taking a vertical approach--you need to take an end-to-end approach to team building, from when raw materials come in through the door, through to when product leaves," Hanifin says. "Any time you have a handoff, you add complexity," he says.

Before the plant took this new approach, Hanifin says, if he needed a process engineer, a planner and a packaging engineer, he had to go to three different bosses to try and coordinate work. "I'd have to convince them that my priority was their priority," he says.

One of the biggest changes that the new program has brought is eliminating the front-end supervisory role, and adding the new role of "coordinator," designed to optimize use of resources and to transfer more supervisory skills to the operators. The coordinator role was loosely defined, at first--intentionally, Hanifin says, because Novartis wasn't sure how the team, and the role, would evolve.

In some cases, former supervisors went on to coordinator jobs. However, this introduced some role uncertainty. "Operators immediately treated them like supervisors and would go to the coordinators for everything," Hanifin says.

Those supervisors who were used to traditional top-down roles weren't comfortable as coordinators and couldn't adjust to the change, Van Laar says, and some left the company. For those who have been able to adapt, he says, the change has been positive. He was especially pleased when, at a recent meeting, a supervisor-turned-coordinator admitted that, as a supervisor, he used to feel he had to lean on people to get things done. "All of a sudden, I'm not leaning on people and they're getting things done," he said. That unprompted statement was an affirmation for Van Laar. "That's the kind of cultural change we're aiming for," he says.

To help ease adjustment, for both operators and former supervisors, Van Laar and others have worked hard to delineate coordinator and operator roles and deliverables more clearly. Coaching sessions with an outside consultant have helped this process.

At this point, coordinators are still playing a "stopgap" supervisory role. Although they're not handling discipline or performance reviews, as supervisors did, they're still closing out batch records. This will stop at the end of the year, when the facility completes the rollout of an electronic batch record system. The program will streamline and automate batch record closings, allowing operators to handle the process themselves. At this point, the paper-based process would add too many additional responsibilities. "We want to empower operators, not inundate them," Hanifin says.

Ultimately, operators will go directly to planners, IT specialists or mechanics on the team when they need something. Coordinators will serve as facilitators--coaching operators, developing the team's soft and technical skills, providing training for scheduling and compliance, and ensuring that goals and objectives are visible and measurable out on the floor.

Problem Solving Prioritized

They'll also coordinate efforts between the team's subgroups, each of which is charged with achieving key objectives. Cycle-time reduction subgroup members, for example, examine each process function, for example, dispensing, roller compaction and compression, to determine how to speed up changeover and get equipment to run faster and more efficiently.

The team solicits ideas at regular meetings and via email. The ideas are then rated from 1 to 10 based on "bang for the buck" to reduce cycle time, and on how difficult they would be to achieve--e.g., whether they will require validation or prior FDA approval. Instead of having periodic meetings to solicit random suggestions, cycle-time improvement and cost reduction direct the effort, and prioritize which ideas to implement first.

What could be a complex process is thus reduced to simple math, and the results are posted on a spreadsheet. "Ideas are coming directly from team members physically doing the work," Hanifin says. Egos aren't hurt, either, he says, because people understand it when ideas that are too complex or will not make a big enough impact, are set aside or not pursued.

Keeping up with all the great ideas that are surfacing is one of the biggest challenges now facing Diovan team coordinator Micheline. And the operators effecting many of these changes appreciate the results.

For example, team suggestions led to a change in the way that components are issued to the plant's packaging lines. In the past, says operator Michael Pidgeon, one designated operator would request components from the warehouse, issue the material to an order and stage it all until that order was ready to run on a line. Today, a process is in place that allows the packaging team to issue material directly to the line. "Our department's more flexible because it has material that can be used on any line, rather than being designated to a specific order that may not run for days," he says. "We can also accommodate the planning schedule, since the time needed to prepare for orders has decreased."

No Sacred Cows

For Diovan team coordinator Micheline, Suffern's Lean program has meant that "the gloves are off." "We can look at any operation, site policy or task that in the past was deemed sacred and question its value," he says.

The facility is moving toward better management of overtime. Although a mainstay for most plants, reliance on overtime is guaranteed to introduce inefficiencies into the manufacturing process. "Overtime hogs generally volunteer, you don't get the best alignment between resources and needs, and you wind up chasing your tail, running short of what you need," Van Laar says.

A few months ago, the plant's packaging operations were challenged to keep up with aggressive demand targets. In the past, the unit would have resorted to overtime on a voluntary basis. This time, Van Laar told operators they'd be "sharing the pain," and that everyone would work 10 hours from Monday through Friday to address the problem. There were meetings with the teams to figure out how it would work.

He'd expected it to take over a month to see improvement, but, within two weeks the department was meeting its goals and the 10 hours of daily work per shift were reduced. "That's what I call forcing empowerment. If they don't hear from guys like me it won't start, but I didn't get in there and tell them how to do it. They figured it out," he says.

More Communication, Better Understanding

While the changes challenge individual workers, they also offer them new training and career opportunities. A flatter organizational structure exposes workers to different facets of manufacturing, opening up career paths and improving communication.

"You need to take an end-to-end approach to team building, from when raw materials come in through the door, through to when product leaves."
--Brian Hanifin, Diovan Team Leader

Hanifin says that for example, in the past, packaging operators usually didn't move over into manufacturing. Now, people from packaging can go to manufacturing and vice versa, and when nothing's happening in the lab, lab staff can come and help out in other functions. "This cross-functional skills development process has a way to go, but it is beginning to happen," he says. "We are reassessing our multi-skill training process in order to support more of this."

"The program has significantly affected the way I interact with coworkers," says Micheline. "First, the sheer number of people I deal with now is higher than ever. I communicate with people from warehousing through distribution regularly," he says. "Prior to Lean, I rarely interacted with laboratory or compliance areas. Now, such interactions occur weekly," he says. "I understand the business much better than before, since I deal with each and every step in the process."

Being accessible to all team members has made communication and visibility essential, says Diovan team leader Hanifin. "A lot of face time, and an open door policy are critical," he says.

Transparent Performance Management

Developing objective performance metrics and a standard, transparent performance-management system for employees at the site has been another goal for the program. "How often have you been at any company where you hear people complain about a coworker: 'How in the world has that person managed to survive all these years?'" Van Laar asks. "There's almost a halo effect around people who don't have the right skills, values and behaviors--and that results in inefficiencies all over the place."

The key to solid appraisals, he says, is getting perspectives from people across the organization. "We set up meetings with groups of people. Ratings agreed to by the team manager are posted, then people from across the organization are invited to comment on, or challenge, these ratings. The process is set up to be unbiased, he says, to ensure that multiple perspectives are heard, and to ensure that people aren't put on the defensive.

Transparency has led to more honest, genuine reviews, Van Laar says. "A manager may think that one person is walking on water, but when he or she hears input from the others, that manager often realizes that the star performer is really a nightmare to work with," Van Laar says. When an employee receives a less than acceptable cumulative grade on either skills, values or behaviors, input is solicited on how these can be improved. "If we can provide the help, we do."

Employees are generally reacting well to the new approach, Van Laar says. Although some people don't take feedback well, in other cases, honest appraisals have led to dramatic performance improvement. "Just the other day, I was talking to an operator on the floor," Van Laar says. "The operators know who carries their weight and who doesn't. This operator said, point-blank, 'I don't know what happened to so-and-so, but the change has been unbelievable.' One way or another, it's going to get better. Everybody needs to exhibit the right values and behaviors in the opinion of their manager and team members," he says.

The final, and most daunting part of the program has been helping people adjust to the massive organizational changes going on at the plant. Coaching and teambuilding activities are helping here. "Change can be difficult to deal with, and people expect it to go away," says Hanifin, "We need to get them to understand and accept that change will be constant." The future will not be as dramatic as the transformation of 2003 and 2004, but we will always be looking for ways to stay competitive.

Lean Approaches Leverage Technology

Novartis' Suffern, N.Y. plant is turning to technology to help it better allocate resources. Corporate initiatives, including pilot tests of process analytical technologies (PAT) and use of radio frequency identification (RFID) tags may also help improve efficiency.

The facility will roll out a new ERP platform from SAP by the fall. It began installing its manufacturing execution system (MES) 18 months ago, replacing paper-based processes, and is now extending that system to its packaging operations, a process that Richard Lemire, business process champion, manufacturing scheduling & execution, expects to be completed by August.

Before the MES, paper processes were used to generate orders and instructions. With the new system, the entire process, from the time that master batch records are programmed to the time that they're issued to the shop floor and processed/approved, will be handled electronically, Lemire says.

"The system is letting us work more efficiently and effectively using more robust processes that are repeatable," says Lemire.

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