Over approximately the past decade, the pharmaceutical industry has haltingly attempted to embrace lean manufacturing.  A manufacturing philosophy with the goals of reducing waste and boosting productivity would certainly seem to be a good partner for this industry.  But the results, so far, have been less than dazzling—although this doesn't have to be the case.

Up until fairly recently, the pharmaceutical industry has enjoyed healthy profit margins. That and the burden of meeting regulatory mandates have led the industry to resist change and concentrate on maintaining the status quo.  But with cost pressure increasing (especially with respect to regulatory compliance), product pipelines dwindling, and competition from generics growing, the picture is changing.

Even with a focus on quality, the pharmaceutical industry has failed to keep up with other sectors in improving manufacturing efficiency and productivity. So the time for an ardent, unreserved commitment to successfully implementing lean manufacturing techniques appears to be now.

A 2006 study involving more than 1,500 pharmaceutical manufacturers yielded some eye-opening results. More than 50% of the respondents indicated that their companies have implemented, to some degree or other, lean manufacturing solutions. But less than 50% of those have been satisfied with the results. The chief impediment to a successful and thoroughgoing adoption of lean practices was a perception that efficiency- and productivity-boosting techniques developed in the auto industry can't really be implemented in the pharmaceutical industry.

Now, it is true that lean manufacturing has been more widely implemented in the industry during the past few years. Evidence of this can be seen in the growing number of case studies, articles, and conferences focusing on lean manufacturing. But, overall, the pharmaceutical industry has shown few signs of substantial progress.

Inventory turns can be a reliable indicator of a company's success in implementing lean manufacturing. If a company is improving processes, then the trend of inventory turns over time should reflect that. The data, however, seems to indicate that over last decade there hasn't been any significant improvement in this area.

Consider this, though. In the 1980's the electronics sector in the US appeared to be moribund. But now, owing in large part to the adoption of lean manufacturing solutions, IBM, HP, and Dell have re-assumed their former role of global leadership in the industry. As evidence, HP's inventory turns improved at an average rate of 6.9% from 2000 to 2009.

Obviously, a lean manufacturing system does work. And it can work in the pharmaceutical industry with the right implementation.

The task for the pharmaceutical industry, then, is to effect an industry-wide adoption of lean manufacturing coupled with consistent application of lean manufacturing techniques. Up to now, consistent, committed adoption has been sporadic and isolated.

Next, companies need to take a comprehensive view of lean manufacturing implementation and look at the supply chain as a whole and not concentrate solely on improved manufacturing operations. Without this broader focus, improvements will continue to be limited.

Finally, it's critical that management call on the expertise of pharmaceutical consultants with experience in and knowledge of lean manufacturing. This way a host of failure factors can be avoided, including lack of leadership buy-in, imprudent cost-cutting, poor product selection, and less-than-optimal execution.

The fact that the pharmaceutical industry has lagged behind others in a thoroughly successful implementation of lean manufacturing solutions can, played right, prove to be a huge plus. That's because the opportunity now exists for us to learn from the mistakes and assimilate the successes of other industries.

We can help you build your cost cutting lean manufacturing strategies with a free 30 minute consultation.  To schedule your strategy session visit www.smart-lean-manufacturing.com

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