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Lean Laggards: Exploring the State of Lean in Pharma

Clarkston Consulting Director Robert Spector published an article in Pharmaceutical Manufacturing on the challenges the pharmaceutical industry has faced in adopting lean manufacturing principles and processes. An excerpt of the article is below.

Pharma companies continue to face challenges of globalization, complex supply chains and hyper-competition – all while demand for treatments continues to increase. As a result, the need for greater throughput, higher quality and reduced costs has become a top priority.

Over the last two decades, lean programs have become a popular approach to addressing these challenges in the pharmaceutical industry, as evidenced by the number of published case studies, conferences devoted to the topic and published articles. Unfortunately, the industry has seen little overall progress in becoming more “lean,” as indicated by the lack of improvement in inventory turns performance. In recent years, performance across the industry has lagged that of the previous decade with gains not appearing to be sustainable due to a widespread lack of understanding of lean’s strategic value at the senior leadership level, and how it should be optimally applied.

Inventory Turns as a Lean Metric

Lean is a business improvement approach that focuses on process improvement in new product development, manufacturing and distribution in order to cut lead times, improve quality and customer responsiveness, resulting in enhanced revenues, reduced investment and costs. Pioneered by Toyota in the 1950s and widely adopted across industries, lean’s objectives include using less human effort, less inventory, less space and less time to produce high-quality products as efficiently and economically as possible while being highly responsive to customer demand.

Although there is no universally accepted measure of a company’s “leanness,” inventory turns are a reliable indicator. The trend of inventory turns over time indicates how well a company is progressing in terms of becoming more lean and improving its processes. Lower levels of inventory directly correlate to improvement in the competitive edge factors of speed, quality and cost. That’s why the companies that have successfully implemented lean have focused intently on reducing inventory, sometimes characterizing inventory as “evil.” Similarly, noted lean experts such as Richard Schonberger view inventory as a catch basin for a multitude of business ills.

To view the full article, visit Pharmaceutical Manufacturing’s original publication here.