Eluding the OpEx Black Hole

When it comes to operational excellence initiatives, middle managers are often seen as the problem—a black hole, if you will—but can be the solution.

By Paul Thomas, Senior Editor

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 Operational Excellence
 

Manufacturer X wants to increase production capacity. Senior management gets on board and hires a Lean Six Sigma expert to conduct a Value Stream Analysis to identify areas where there is production waste. Shop-floor personnel are trained in fundamental tools of Lean production and begin the task of rooting out waste and increasing efficiency.

It’s a typical scenario, says Tim Whitmore, Vice President of Simpler Consulting, specialists in Toyota and Lean methodologies. And yet absent from the process are middle managers, who play the role of casual bystanders. Whitmore refers to these people as the “frozen middle.”

Bryan Winship, Principal of Tunnell Consulting, calls this the “black hole effect” (see box below). Top leaders of the company sponsor the initiative. But the initiative is implemented at the grass-roots level. Middle management is left in the void.

No matter what metaphor you choose, when things go wrong with OpEx, middle managers often take the blame (Figure 7). There’s irony here. The whole idea of operational excellence initiatives is not to lay blame but to focus on opportunities and how such initiatives can empower all parties and serve as opportunities for cross-functional communication and camaraderie. 

“There’s a need to more fully engage all stakeholders,” says Winship.

Chalk it up to immaturity. Operational excellence as a formal process is still in its nascent period within the pharmaceutical industry.

Pharmaceutical Manufacturing’s 2009 Operational Excellence survey reveals a gradual increase in implementation of key tools and methodologies of Lean Six Sigma (and regulation-driven practices such as Quality by Design) over previous years (Figures 1 and 2), but most experts agree there is much development still to occur. 

As the era of high margins and low competition has disappeared, “there’s been a heightened awareness of the importance of operational excellence in pharma” says Pascal Dennis of Lean Partnerships, Inc., and author of “Getting the Right Things Done: A Leader’s Guide to Planning and Execution” (available at www.lean.org). Still, says Dennis, “it’s early in the game for pharma companies” and as a result, operational excellence programs are bound to experience growing pains.

One such pain, ironically, might be Quality by Design. As Figure 2 suggests, Quality by Design is becoming the major OpEx priority of many companies. (This has not been so apparent in our previous surveys.) Not surprising, since it is being actively promulgated by FDA. A conundrum arises. With QbD such a focus of drug manufacturers’ efforts in 2009, will other operational excellence initiatives get pushed aside, though they may overlap or complement QbD? More on this to follow.

A Hole in the Middle?

No matter how well-conceived operational excellence programs may be, some will struggle. As Figures 3 and 4 indicate, a good segment of companies pay lip service to operational excellence and can be preoccupied with fire fighting or the bottom line. 

As Figure 7 suggests, upper management as well as regulators (and to a lesser degree line operators) can hinder success. But right up there as well is middle management.

 “Middle managers are not the problem,” Dennis says. They’re often accused of dragging their feet and causing bureaucracy, but this is more often a failure of top management to clearly articulate objectives related to operational excellence. “What is required is communication rather than scapegoating,” he says.

Figure 1 illustrates some of the key organizational objectives at your companies. They’re admirable goals, but will work only if  they have C-level support. “If something is not a companywide initiative with strong executive sponsorship, it’s like a car with little gas,” says Arvindh Balakrishnan, Oracles’ VP of its life sciences business unit. “It takes a level of executive sponsorship that middle management cannot provide.”

If upper management fails in its responsibility to fully support an initiative, or lacks competence in communicating it and involving the rest of the organization, the black hole is inevitable. Middle management, plant and lab professionals, administrators, and everyone else in the organization will be caught in the vortex.

Management by Objectives (a term coined by Peter Drucker) is one way to avoid this pitfall, Balakrishnan says. MBO is a process whereby management and employees agree upon corporate objectives. “Invariably, middle management will have significant operational issues ongoing,” says Balakrishnan. Unless there’s a mechanism in place such as an MBO, then middle management will not be fully on board. “If they’re judged only by their own operational metrics, that’s what they’ll focus on.”

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