Abbott’s Mike Douma Shares Lessons in Drug Supply Chain Excellence

Dec. 8, 2005
By integrating its supply network and implementing Lean and Six Sigma in its plants, Abbott Laboratories is transforming itself from within.
By Paul Thomas, Managing EditorPharmaceutical manufacturing trails other industries with respect to continuous improvement, and the current environment is “not a pretty picture,” admits Mike Douma, Abbott Laboratories’ director of Business Excellence. “But we painted it.”Douma made the remarks recently at Rockwell’s Automation Fair in St. Louis, in a talk he titled “Getting More from the Supply Chain . . . Continuous Improvement in Pharmaceutical Manufacturing.” There’s a “compelling need for change” in the industry, Douma adds. For its part, Abbott embarked upon a comprehensive Business Excellence (BEx) initiative four years ago — drawing largely from “The Oliver Wight Class A Checklist for Business Excellence.”The objectives for the initiative were threefold, Douma says:
  • To integrate all business processes
  • To use one set of numbers to manage business
  • To simplify crisis management.
Abbott has assembled a dedicated BEx team, as well as local task forces at individual sites and outside auditors to review the initiative’s progress.The area where Class A is having the greatest impact is the supply chain, says Douma. Abbott has used the BEx program to integrate information within the more than 100 of its international affiliates. Once a month, the company publishes production forecasts and supply needs for the next 24 months, allowing suppliers to anticipate well in advance shipments to and from Abbott. “We’re now focusing on months 5 through 24, rather than 1 to 3, as we used to,” Douma says. “So now, if you have a problem, you have adequate time to address it.”

'Drive the change . . .
or change the driver.'

Abbott has also improved its master production conformance levels and customer service, and maintains better control over backorder trends and inventory investments, Douma says. He notes that sustaining the program for four years has enabled the company to realize significant cultural change.To date, all of Abbott’s international sites have launched their own versions of Class A. Sixty-seven have been certified by Oliver Wight.The Business Excellence program is paying dividends in the manufacturing arena as well — through Lean initiatives such as that at Abbott’s Lake County, Ill. facility that have improved OEE and lowered reject rates, and now increasingly through Six Sigma efforts.Six Sigma is the final phase of the Business Excellence project, says Douma. The company has identified key products and sites with the potential for quality improvement. “We did this from the bottom up,” Douma notes. “We looked at our top 20 products to see where the opportunities were. We weren’t overly statistical about it.” The BEx team then presented these opportunities to senior leadership, which chose five products for Six Sigma implementations in 2005. More products and sites have been identified for 2006, and more Green and Black Belts are being trained.Douma shares some of Abbott’s keys to Business Excellence success:
  • Think big.
  • “This should drive a step change in performance,” he says.

  • Break down silos.
  • “Value Stream Mapping is a tool to look across operations for synergies,” Douma notes. “You can expand these beyond the plant to suppliers.”

  • Be ready to uncover things that you are not proud of when you examine your products and processes.
  • “But that’s okay,” says Douma.

  • Have local ownership, with centralized guidance.
  • “You always fight battles with standardization, but there has to be centralization,” he says.

  • Have a very clear message.
  • “Drive the change . . . or change the driver.”