Creating value while reducing financial investments with Operational Excellence
A bio-CDMO implements Operational Excellence and improves its efficiency in manufacturing and analytical operations, leading to CapEx needs reduction and margins improvements.
A bio CDMO's top management and its majority stakeholder asked Larka to perform an audit of its operations and to implement an Operational Excellence program to face the industry challenges and capacity bottleneck, and boost returns. Operational Excellence is indeed a good lever to create value and help the company face hardening quality standards, increasing cost pressure, rising competition and customer expectations.
Operational Excellence consists in the implementation of best practices that lead to efficient, flexible and compliant manufacturing processes.
During a nine-months mission, Larka's experts actively worked on this operational transformation to reach Excellence. Based on nearly 30 years of Operational Excellence experience within the Biopharma industry, we applied our methods and concepts which are designed to meet the highest industry standards and therefore to simplify, streamline and harmonize processes, optimize Overall Equipment Effectiveness - OEE -, improve products and services quality, rationalize supply chain and measure performance.
The mission was split in 3 major steps :
- Audit of the CDMO operations
- Implementation of the first operational excellence quick wins
- Set up operational excellence as an institution to sustain transformation
The first weeks of the mission consisted in a baseline assessment of the CDMO operations. Our senior consultants performed an on-site audit and gathered information on the client's current operations through observations, measurements and interviews, in order to identify areas of improvement. Our experts pointed out all the processes that could be optimized and all the issues that could be solutioned with Operational Excellence methods.
They notably evaluated our client's capacity utilization by calculating the Overall Equipment Effectiveness of each manufacturing step - DS upstream process, DS downstream process, DP fill & finish. They realized that the OEE was way lower than what our client had in mind - OEE of 35% against 90% announced by our client. This means that they were able to manufacture a lot more batches with their current facilities by improving their equipment availability and their processes performances.
Our client could rapidly free up some capacity and generate higher revenues with the existing capacities by implementing Operational Excellence, leading to higher margins.
Same work has been performed for analytical work. It was pointed out that QA, QC and batch release activities could be substantially optimized, especially with the implementation of a robust and well designed LIMS and IT systems, so the additional capacities that we freed up in manufacturing could be absorbed by the analytical testing department.
The second phase focused on implementing quick wins to demonstrate the program's bottom-line impact and build critical momentum. Our experts identified problems that could be solutioned quite rapidly and create immediate value for the company. They immediately tackled the OEE by developing and implementing action plans to reduce changeover timelines, reduce Batch Record Review and Batch release timelines. They also worked on removing non-value adding activities and established KPIs to monitor quick wins implementation results. The whole process from identification to the completion of quick wins implementation took a total of 12 weeks.
Reducing the timelines had provided numerous benefits. Our client could reduce operating costs by freeing up resources and capital - people and equipment - that they could allocate to more value-added work. It allowed to increase capacity and flexibility to respond to customer demand, increasing customer satisfaction at the same time.
Indeed, we were able to free substantial capacity to produce more batches and generate higher revenues thanks to operational excellence. This way, our client has been able absorb a larger business volume, while keeping flexibility for the clients, without resorting to CapEx.
The identification and removal of non-value adding activities - like unnecessary administrative processes or additional steps in daily routines - also allowed to reduce the burden for employees in production and in surrounding work areas involved in cross-divisional processes.
After observing the immediate improvements resulting from the quick wins, we proceeded to the last step of the mission consisting in setting-up operational excellence as an institution to sustain transformation.
This phase allowed to maintain the operational improvements already achieved, develop other optimization lines raised in the audit stage - like the implementation of a robust, modern and state-of-the-art IT system, the rationalization of the supply chain or the raw material purchasing process -, create a production system and procedures based on Excellence and build people commitment around Operational Excellence at all levels of the organization.
In order to ensure continuous improvement after the end of the optimization mission, it was crucial to train the people that will later on embed change and build a strong Operational Excellence leadership within the organization.
Our client has now completely integrated Operational Excellence in its organization and is able to sustain it durably and drive continuous improvement.
We were able to improve its efficiency and productivity while reducing financial investments. Indeed, thanks to our Operational Excellence program, we have helped our client gain substantial capacity and increase its revenues while avoiding a few millions euros CapEx in additional capacities. Process optimization offers huge benefits to overcome capacity bottleneck, hardening quality standards, increasing cost pressure, rising competition and customer expectations and will soon become a standard among leaders.
