Magazine Article | October 4, 2013

Pharmaceutical OPEX — The Next Generation

Source: Life Science Leader

By Thomas Friedli, head of the chair of production management,  and Daniel Bellm, group coordinator, University of St.Gallen (HSG)

The history of operational excellence (OPEX) in the pharma industry is short. Since the first serious initiatives were launched at the beginning of the 21st century, OPEX gained momentum and became a priority at all hierarchies in pharma manufacturers all over the world.

Simultaneously, the science of pharmaceutical manufacturing appeared on the agenda of the FDA. As a reaction to a continuously rising number of post-approval changes, the FDA started to push the industry toward developing a scientific understanding of pharmaceutical manufacturing processes and encouraged manufacturers to use innovative technologies like PAT (process analytical technology) for better process control. As a result, quality and productivity appeared on the agency’s agenda, providing the industry with new opportunities and opening the way for OPEX. The incremental introduction of OPEX in the pharmaceutical industry happened in three major stages.

To date, there is no clear-cut definition of the term operational excellence. In fact, the term itself is often used for newly launched improvement activities or as a proxy for cost-cutting programs, Six Sigma, and Lean initiatives, all of which contribute to its dilution over time.

OPEX should be understood as the balanced management of cost, quality, and time while at the same time focusing on the customers’ needs. To achieve these ends, OPEX comprises structural and behavioral changes thought to optimally support necessary activities. In order to maintain sustainability in changing or volatile environments, OPEX has to be pushed by top management and has to be designed to engage every employee. Obviously, OPEX is not only concerned with performance. It also encompasses the way leading to superior performance and to practices that allow an organization to continuously improve itself.

Launching and Maintaining OPEX
The focus of managing an OPEX initiative has to change over time. Awareness of critical success factors and barriers in managing OPEX can provide guidelines as to how to design, review, and adapt an excellence program. Obviously, launching an initiative and introducing a company to continuous improvement addresses another set of managerial capabilities rather than maintains a system in a steady state. After the effective launch of an OPEX initiative, management will need to change. However, this does not imply disregard for the factors that were once relevant for the initiative’s successful take-off. They should be further stressed but complemented by paying attention to new challenges and utilizing upcoming opportunities.

An OPEX initiative has to be aligned with a company’s overall manufacturing and supply strategy. Consequently, in accordance with a constantly changing environment that an organization is exposed to as well as with changing maturity levels of manufacturing sites and the initiative itself, a time-based adaption of OPEX programs along with their focused priorities is required.

Professionalizing and Embedding OPEX
Just as an organization changes over time, so too must the embedded OPEX organizational structure be developed and revised. Organizational subdimensions will require an adjustment at the right time in order to accelerate the sustainable implementation of OPEX.

Literature lacks evidence of the right structure and a guideline for practitioners as to how to optimally staff an OPEX initiative either on its launch or in its maintaining phase. Every company, however, needs to develop its own specific organizational model, including the right structures, in order to ensure a reasonable division of labor and to facilitate productivity and efficiency gains.

Despite the pharmaceutical industry discussing product and process optimization for more than a decade, predominately these discussions are still following a single plant perspective. The coordination of pharmaceutical manufacturing sites on a network level holds enormous potential. Therefore, the industry will have to follow the example of other more advanced manufacturing industries and systematically address production optimization from a true network perspective in the near future.