CASE REPORT

Analysis of the Implementation of Total Productive Maintenance,Total Quality Management, and Just-In-Time in PharmaceuticalManufacturing

Thomas Friedli & Matthias Goetzfried & Prabir Basu

Published online: 27 October 2010# Springer Science+Business Media, LLC 2010

Abstract In the pharmaceutical industry, systems forimproving operational effectiveness and efficiency arebecoming more and more popular. In this paper, develop-ments in the industry’s improvements in operationaleffectiveness and efficiency have been analyzed. A holisticmodel is presented which builds the basis for the presentedstudy results. The study includes data gathered frompharmaceutical production sites in surveys in 2004 and2009. The analysis is divided according to the four sub-systems: Total Productive Maintenance, Total QualityManagement, Just-in-Time, and the Management System.For each sub-system, key performance indicators andassociated elements (practices and instruments) from 2004to 2009 are investigated. The data indicates that theindustry did make continuous steps towards “Excellencein Operations” between 2004 and 2009. Pharmaceuticalcompanies took control over their former low assetutilization and managed to improve the efficiency of theirquality systems; however, they are still far away fromhaving any kind of “continuous flow”, smooth productionscheduling or make-to-order manufacturing. It can be saidthat most of the companies are still working on theeffectiveness side rather than focusing on the efficiencyside.

Keywords Pharmaceutical manufacturing . Operationalexcellence . Total quality management . Just-in-time .

Effective management system . Total productivemaintenance . Lean production

Background

The pharmaceutical industry is facing severe qualityproblems. The Food and Drug Administration (FDA) isreporting an increase by 309% from 426 drug recalls in2008 to 1,742 drug recalls in 2009 [1]. Some of the recallsmay be triggered by an increase of FDA inspections ofproduction facilities. But, the large majority of the issuesleading to the recalls of drugs on the global market can betraced back to shortcomings in supply and manufacturingsuch as poor quality of raw materials, incorrect packaging,and contamination of products. The incident with heparinthat resulted in 484 deaths in 2007 and 2008, was theoutcome of deviations from “current good manufacturingpractices” (cGMP) in the production and quality control ofthe drug’s active pharmaceutical ingredient, manufacturedby Chinese suppliers [2, 3]. Additionally, examples ofissues with production sites of established pharmaceuticalcompanies in the USA and Western Europe lead to theconclusion that poor quality is not only an issue for low-cost production countries. The cGMP and contaminationissues with the Genzyme facility in Allston Landing, oneof the largest cell-culture manufacturing plants in June2009 resulted in an expenditure of $184.2 million fordecontamination and fine and an estimated loss inrevenue of $1 billion [4].

Due to the recent incidents, pharmaceutical companieseither with in-house manufacturing or with externalcontract manufacturing are concerned with the capability

T. Friedli :M. Goetzfried (*)Institute of Technology Management, University of St. Gallen,Dufourstr. 40a,9000 St. Gallen, Switzerlande-mail: matthias.goetzfried@unisg.ch

P. BasuThe National Institute of Pharmaceutical Technology andEducation (NIPTE),1281 Win Hentschel Blvd,West Lafayette, IN 47906-4182, USAe-mail: pbasu@nipte.org

P. Basu (*)

J Pharm Innov (2010) 5:181–192DOI 10.1007/s12247-010-9095-x

of their processes to manufacture the drug according tospecifications while keeping manufacturing costs withinreasonable limits [5]. Although only few senior executivessee manufacturing as a competitive advantage, it isunderstood that lacking high quality management andcapability of pharmaceutical manufacturing can lead todisasters. Therefore, companies are forced to implementapproaches such as lean manufacturing which has proven tobe capable of improving effectiveness and efficiency ofproduction in a number of industries [6]. The term“Operational Excellence” (OPEX) as a target state for leanmanufacturing is used by the pharmaceutical industry todescribe their efforts in improving effectiveness andefficiency in operations [7].

Objectives

The main objective of this study was to assess and analyzethe implementation levels of “Operational Excellence”across the pharmaceutical industry. For this analysis, aresearch model is used showing an integrated “OperationalExcellence” model. It includes the major principles of TotalProductive Maintenance, Total Quality Management, andJust-in-Time as well as the “social principle” of theEffective Management System. The information frompharmaceutical companies gathered in surveys in 2004and 2009 was used in the analysis. The main objective canbe divided into the following sub-objectives:

– Gain a better understanding of the actual implementa-tion of Total Productive Maintenance, Total QualityManagement, Just-in-Time, and Effective ManagementSystem in the industry.

– Study the link between the implementation of thenamed systems and key performance indicators(KPIs).

– Explore the trend of KPIs and implementation levelsbetween 2004 and 2009 in the industry.

Methodology

The data used in this work were extracted from surveysconducted in 2004 to 2009 by the University of St. Gallen,Switzerland. The participating companies were brand-name, generics, and contract manufacturer companies bothfrom the pharmaceutical and the biologic businesses. Theresearch sample includes companies ranging from small- tomedium-sized to large corporations (Fig. 1). The surveywas completed by the representatives of the companies’production sites; therefore, the data received include figuresfor the entire production site.

Research Model

The survey’s questionnaire is derived from a model whichwas developed in 2004 [7]. The original non-industry-specific model [8] has been detailed in close cooperationwith pharmaceutical companies to meet the requirements ofpharmaceutical production. The research model is shown inFig. 2.

In the model, a distinction is made between four sub-systems in OPEX: Total Productive Maintenance (TPM),Total Quality Management (TQM), Just-in-Time (JIT), andthe Effective Management System (EMS). Each sub-systemrepresents in itself an important part which contributes tothe overall success. In fact, the included elements reinforceeach other. According to this model, manufacturing isviewed as a system in which single elements or interven-tions have a direct and indirect impact on other sub-systemsand elements.

TPM represents a system for the effective usage of processtechnology. TPM is designed to efficiently manage fixedassets such as machines, equipment, and property throughouttheir life cycle [9] and includes the following elements:

– Preventive maintenance– Housekeeping– Effective technology usage

It does not only focus on the technical aspects such asthe reliability of existing equipment and a careful selectionof new technologies, but also the engagement of allemployees in the production environment, from manage-ment level to shop-floor employees in maintenance-relatedactivities [10]. In OPEX programs, TPM is the basis forstable running machines and therefore forms the basis forfurther in-depth improvements in efficiency [7].

TQM describes a quality culture in companies thataddresses all direct and indirect employees, rather thansolely employees in Quality Control (QC) and QualityAssurance (QA) departments [11]. Consequently, TQMdoes not only affect manufacturing but several additionalfunctions, e.g., research and development (R&D) andsupplier management. It means people management, com-mitment from top to down, and strive for continuousimprovement across the entire organization. Sustainablyimproving the quality of products, processes, and overallcompany quality is the objective of TQM. The followingelements are part of TQM:

– Process management– Cross-functional product development– Customer involvement– Supplier quality management

JIT aims at continuously reducing all types of waste,especially by reducing inventory and unnecessary delays in

182 J Pharm Innov (2010) 5:181–192

production flow [11, 12]. JIT manufacturing has become acrucial element for most companies in the last years toincrease flexibility without building up huge inventories.The elements of JIT in the OPEX model are:

– Set-up time reduction– Planning adherence– Pull system– Layout optimization

The EMS is an essential requirement for achievingOPEX. Plant managers should provide the right frameworkfor OPEX. Various actions by managers are contributing tothe efficiency of operations [8]. The ultimate task of plantmanagement is leveraging employee potential by cleardirection setting, dedicated management commitment, andfunctional integration. Four elements of EMS were inves-tigated:

– Direction setting– Management commitment and company culture– Employee involvement and continuous improvement– Functional integration and qualification

Data Analysis

For each of the elements, several statements were listed inthe survey to be completed on a five-point Likert scale [13,14] by the participating pharmaceutical sites. For assessingthe performance, the definitions for the key performanceindicators were given in the survey (see Appendix).

To compare the data in the four sub-systems across thepharmaceutical companies in this survey, the median scoresof the extracted data were calculated for the implementationlevels and the key performance indicators. These medianscores were used for the analysis.

Standardized replenishmentStandardized equipment

High continuous improvement rates

Low absenteeismand fluctuation

Flexibleworkforce

Self-directed teams

Effective Management SystemDirection setting

Management commitment and company cultureEmployee involvement & continuous improvement

Functional integration & qualification

Op

eration

alP

erform

ance

TIJMQTMPT

Preventive maintenance

Effective technology

usage

Process management

Customer integration

Cross-funct.product

development

Supplier quality

management

Set-up time reductions

Pull system

Planningadherence

Layoutoptimization

House-keeping

Stable running machines

Stable processes

Low inventory1 2 3

Standardized processes

Fig. 2 Integrated operational excellence model

20%

Generics manufacturer

5%

Contract manufacturer

20%

Biotechnology company

22%

API manufacturer

33%

Brand-namecompany

6%

>1000employees

14%

501-1000 employees

24%301-500

employees

27%101-300employees

19%

0-100employees

Fig. 1 Company type and sizeof production site

J Pharm Innov (2010) 5:181–192 183

Assumptions and Limitations

The authors are dependent on the data reported by therepresentatives of the pharmaceutical sites. It is possiblethat representatives answered more positively in order toachieve better results in the survey. As the survey wascompleted by representatives on management level, it couldbe the case that answers by them do not reflect the overallopinion of the employees of different hierarchical levels atthe production site. For example, the elements of thesub-system EMS could be assessed more positivelybecause it is completed by a manager as this does notrepresent the overall opinion of the workers.

The analysis includes pharmaceutical and biotechnologicalproduction sites. Although both types of production processesinclude different sub-processes, e.g., biotechnological pro-duction includes purification; it is assumed that the coreprocedure to produce a drug is comparable: (1) APIproduction, (2) Formulation, and (3) Packaging. The analysisis limited to this “process level” and does not consider thedifferences between single process steps in pharmaceuticaland biotechnological production.

Key Observations

Total Productive Maintenance

The trend of the KPIs “Overall equipment effectiveness”and “Unplanned maintenance” as well as of the implemen-tation of techniques of preventive maintenance, technologyusage, and housekeeping is analyzed. The figures for 2004and 2009 are illustrated in Fig. 3.

An increase in overall equipment effectiveness (OEE) of15% from 36% in 2004 to 51% in 2009 could be observed.However, even then, an OEE of 51% (median) measured in2009 is not really outstanding when compared with other

process industries and their packaging processes. Variouscross-industry studies show an OEE of 60% for an averageproduction site in the food and beverages sector [15, 16].This means that pharmaceutical companies still have potentialwith regard to higher utilization in scheduled time, preventionof downtimes, and avoidance of quality losses.

In fact, the non-availability of equipment andmachines as a result of direct stoppages and breakdownsseems to be a problem for the industry. In 2004, theproportion of unplanned maintenance work as a percent-age of the overall time spent for maintenance workamounted to 25%. Five years later, the figure forunplanned maintenance increased by 8% to 33%. It canbe argued that this may be one of the reasons why mostpharmaceutical companies struggle with the establish-ment of stable running manufacturing processes.

Companies were able to slightly increase their level of“Preventive maintenance” from 2004 (industry median of71%) to 2009 (75%). In practice, companies have installedformal programs on operational levels for maintaining theirequipment and machines. Nonetheless, pharmaceuticalcompanies still reveal shortcomings in TPM which theyhave not addressed during these years. Practices especiallypointing to autonomous maintenance by empowering shop-floor employees are not very common. Maintenance tasksare still performed mainly by maintenance specialists ratherthan by machine operators. In summary, maintenancesystems and processes in the pharmaceutical companiesare still reactive rather than proactive such as planningmaintenance programs based on failure analyses.

The 2004 analysis revealed that the pharmaceuticalindustry is very restrictive when it comes to the implemen-tation of new production technologies. This might becaused by the fact that every change in the productionprocess, including the usage of new technologies, needed tobe approved by the regulatory authorities. The element“Technology Usage” points to the screening of the market

2009 75 %

2004 71 % +6%

Implementation levels

Preventive maintenance

2009 51 %

2004 36 %

+42%

Key performance indicators

Overall equipment ef fectiveness (OEE)

2009 33 %

2004 25 %

+32%Unplanned maintenance

2009 58 %

2004 57 % +2%

Technology usage

2009 80 %

2004 80 % 0%

Housekeeping

Mean Standard Deviation

43% 18%

48% 20%

Mean Standard Deviation

31% 20%

30% 18%

Mean Standard Deviation

72% 15%

75% 11%

Mean Standard Deviation

56% 16%

58% 14%

Mean Standard Deviation

77% 16%

77% 15%

Fig. 3 Total productive maintenance: key performance indicators and implementation levels

184 J Pharm Innov (2010) 5:181–192

for new production technologies and the assessment oftechnical and financial benefit. Moreover, it includes theeffective use of new technologies. With 58% in 2009compared with 57% in 2004, this element has notundergone any essential change. The authors believe thatthis can only change with extensive implementation ofQuality by Design where pharmaceutical companies will bepre-approved by the regulatory agencies to implementprocess changes within a specified range of critical processparameters also known as the “Design Space”.

A high score of 80% in 2004 could be re-observed in2009 for the element “Housekeeping”. Pharmaceuticalcompanies seem to do this well as good “Housekeeping”is seen as the first step getting regulatory approvals. Thevast majority of pharmaceutical companies have beholdentheir employees to keep their plant “neat and clean” andprovide tools such as housekeeping checklists.

Total Quality Management

A comparison between the performance indicators, assess-ing upstream quality (complaint rate supplier), internalprocess quality (rejected batches) and for downstreamquality (complaint rate customer), in 2004 and 2009 isdone. Furthermore, the implementation levels of factorssuch as “Process management”, “Cross-functional productdevelopment”, “Customer involvement”, and “Supplierquality management” are investigated (Fig. 4).

Only six out of 1,000 customer orders delivered resultedin a complaint by the customer in 2009, compared with tenout of 1,000 in 2004. Rejected batches as a percentage ofall batches produced, a core measure of the process quality,decreased from 1.00% in 2004 to 0.74% in 2009. More

transparent scale-up processes and teamwork of R&D,manufacturing, and QC/QA departments mainly caused thisresult.

Despite the fact that companies tried to build up strongerrelationships with their suppliers, they were not able toreduce the upstream complaint rate. Supplier complaint rateincreased from 1.0% in 2004 to 2.4% in 2009. Oneexplanation is the increase of requirements concerning thequality of supplies on the manufacturers’ side. Another,more alarming interpretation, is the decrease in supplierquality due to increased outsourcing and increase incomplexity of supply chains. It would be worthwhile tokeep a close eye on this factor as outsourcing seems to beon rise and the complexities of managing quality of globalsupply chains is putting increased pressure on pharmaceu-tical companies’ quality departments.

The implementation element “Process Management”includes the documentation, measurement, and improve-ment of processes. Comparing the results from 2004 to2009, a slight decrease from 70% to 68% in “ProcessManagement” implementation can be seen among theparticipating companies. Documentation and standardiza-tion based on cGMP in pharmaceutical manufacturing isestablished since decades and, consequently, very highscores regarding these practices are found. Of greaterconcern is the fact that measurement methods usingstatistical process control or process analytical technologyand assessment using root-cause analyses (e.g., DMAICcycle) are implemented only in some very advanced brand-name companies’ manufacturing sites.

A remarkable development from 2004 to 2009 could beobserved in the implementation of “Cross-functional prod-uct development”. Its value increased from 30% to 68%

Implementation levelsKey performance indicators

Complaint rate (customer)

Rejected batches

Complaint rate (supplier)

2009 0.55 %

2004 1.00 %

-45%

2009 0.74 %

2004 1.00 %-26%

2.4 %

2004

2009

1.0 % +140%

Cross-functional product development

Customer involvement

Supplier quality management

Process management

30 %2004

2009 68 %

+127%

73 %

2004

2009

48 % +52%

66 %

2004

2009

60 % +10%

2004

68 %2009

70 % -3%

Mean Standard Deviation

2.5% 4.2%

1.6% 2.3%

Mean Standard Deviation

3.5% 14.7%

1.1% 1.2%

Mean Standard Deviation

68% 18%

65% 13%

Mean Standard Deviation

62% 20%

67% 19%

Mean Standard Deviation

72% 16%

71% 14%

Mean Standard Deviation

1.6% 1.9%

3.5% 4.7%

Mean Standard Deviation

61% 14%

67% 9%

Fig. 4 Total quality management: key performance indicators and implementation levels

J Pharm Innov (2010) 5:181–192 185

during these 5 years. Generally, “Cross-functional productdevelopment” aims at the translation of customer require-ments (external and internal customers) into high qualityproducts. With focus on the manufacturing environment, itmeans the close link between development (product andprocess) and manufacturing. The increase in this categoryshows that pharmaceutical companies are concerned withthe separation of development and manufacturing and hasmade significant improvements. By 2009, companiesestablished a closer collaboration between the R&D andmanufacturing departments with the ultimate objective toshorten the time for scale-ups by moving from “quality byinspection” to “quality by design”. In 2009, manufacturingengineers are more involved in the development of productsand necessary production processes. It could also be areflection of headcount reduction in pharmaceutical R&D’snecessitating engineers in development and manufacturingto assume multiple roles.

Another improvement reveals the widespread under-standing that it is essential to know what customers want inorder to stay competitive by providing products that meettheir requirements. Pharmaceutical companies were able toincrease their implementation level in the category of“Customer Involvement” from 48% in 2004 to 73% in2009. Customers now frequently give feedback on qualityand delivery performance to pharmaceutical manufacturersleading to continuous improvement. Nonetheless, there isstill room for improvement regarding the assessment ofcustomer requirements and proactive management of keycustomers.

Starting with a higher median value of 60% in thecategory “Supplier Quality Management” compared with“Customer Involvement”, an increase to 66% could beobserved. The category addresses the integration ofsuppliers into the internal quality system to ensure highquality levels. The vast majority of the companies markquality as their number one criterion in selecting suppliersand not solely the product price. Furthermore, validationand qualification of suppliers play critical roles forpharmaceutical manufacturers. Yet, companies hesitate todeploy joint improvement programs with suppliers toincrease overall process quality.

Just-In-Time

JIT performance indicators pointing to time-to-customerand working capital are compared in Fig. 5. The level ofJIT implementation is analyzed by observation of fourcritical elements: “Set-up time reduction”, “Pull produc-tion”, “Layout optimization”, and “Planning adherence”(Fig. 5).

Times required for production process steps deterioratedbetween 2004 and 2009. Set-up times deteriorated from

79 min in 2004 to 93 min in 2009. This seems to besurprising due to the fact that pharmaceutical companies arelooking for learnings in other industries, e.g., moduleswhich can be maintained and set up without stopping theentire production process. However, as these approachesmainly focus on the packaging process, companies were notable to share such approaches across formulation andpackaging leading to the industry’s shortcoming in set-uptime reductions [17]. Similar to that, the trend for cycletimes shows that pharmaceutical companies are strugglingwith process optimization and synchronization which leadsto a negative impact on set up and cycle time. Time fromweighting to packaging (cycle time) did increase from22.0 days in 2004 to 22.7 days in 2009.

On the other hand, metrics concerning the managementof working capital could be improved. Companies wereable to increase raw material turns from four in 2004 to fivein 2009. It can be argued that companies were able to linktheir production to suppliers with the objective of creating a“pull” instead of the traditional “push” system [18]. Inaddition, finished goods turns increased from nine in 2004to 12 in 2009. After decades of building up hugeinventories, companies are now concerned with havingimmense stocks of final products. A re-thinking towards“producing only what the customer demands” contributedto the improvement in finished goods turns. With 95%order fulfillment on time, in the right quantity and rightquality, this figure stayed stable from 2004 to 2009.

With regard to practices and factors linked with “Set-uptime reduction”, companies were able to increase it slightlyfrom 52% in 2004 to 60% in 2009. Particularly, advance-ments are seen in the planning of set up and cleaning. Infact, companies managed to schedule a majority of theirsetups so that the regular uptime of machines andequipment is not affected. The corresponding documenta-tion and sharing of successful set up and cleaningprocedures are other aspects which were improved acrossthe pharmaceutical industry.

The low median score for the element “Pull production”of 44% in 2004 could be increased to 59% in 2009.Pharmaceutical companies built the basis for a pull systemof the supply chain, e.g., with long-term relationships withsuppliers. However, operational approaches such as a pullsystem for internal production processes (including Kanbancontainers and signals) and the demand-driven refill ofsupplies are still not very common in pharmaceuticalproduction.

For the two elements “Layout optimization” and “Plan-ning adherence”, alarming results could be revealed.Clearly, layout optimization has been neglected becauseits value of 68% in 2004 decreased to 57% in 2009. While“technical” parts of the production layout are optimized,elements impacting flow and takt (takt is used to match the

186 J Pharm Innov (2010) 5:181–192

pace of work to the average pace of customer demand)within production show a very low degree of implementa-tion. Processes and machines are located close togetherwith the objective to minimize material handling andstorage of parts. However, manufacturing processes arenot synchronized or managed by the customer’s takt.Additionally, the core process from raw material to finishedgoods still involves a number of interruptions and cantherefore not be described as a full continuous flow.

Another shortcoming can be seen in the category“Planning adherence”, showing a decrease from 76%(2004) to 67% (2009). As mentioned previously, pharma-ceutical companies did align the processes with suppliersbut struggle with the deployment in daily operations. Forinstance, they know the root causes of variance in theirproduction schedule and are trying to eliminate them.However, most companies do not share data continuouslyinternally as well as with customers and suppliers based ona “rolling production plan” to increase planning adherence.

Effective Management System

The performance indicators for EMS are pointing to themotivation and empowerment of employees working at theproduction site. Figure 6 shows that four elements and theircorresponding management practices and instruments areconsidered: “Direction setting”, “Management commitmentand company culture”, “Employee involvement and con-tinuous improvement”, and “Functional integration andqualification”.

While the total time of employees absent (e.g., sickleave) as a percentage of the total working time stayedconstant for 2004 and 2009, fluctuation (employee turnoveron site level) increased from 5.0% to 6.0%. The increase influctuation leads to a loss of knowledge at the productionsites. This “brain-drain” hinders the site organization tobuild on existing experiences by staff and management.Regarding the qualification among staff, a decrease (12% to10%) of the portion of “unskilled employees” as apercentage of the total employee on site level could beobserved. However, companies reduced the number oftraining days (all kinds of training off and on the job) thatwere offered to its employees from 4.0 days in 2004 to3.0 days in 2009.

In 2009, the overall objectives of the manufacturingunits are closely linked to team or personal objectives oftheir shop-floor teams and employees. One explanation canbe the clear breakdown of goals in the corporate strategyinto team and personal objectives in the years between2004 and 2009. Although the degree of satisfactionregarding communication of vision, mission, and strategydecreased, the industry was able to achieve a result in the80% range. Companies achieved a median score of 83% in2009 compared with 78% in 2004 for the element“Direction setting”.

The implementation of practices in the category“Management Commitment and Company Culture” stayedstable from 2004 to 2009 with a score of 73%. Companies stillstate an intensive involvement of plant management directlyin improvement projects and indirectly by empowering

Implementation levelsKey performance indicators

2009 93 min

79 min2004+18%

Set-up time

2004

52009

4

+25%Raw material turns

2004

122009

9 +33%

Finished goods turns

2004

22.7 days2009

22.0 days +3%

Cycle time

2004

95 %2009

95 % 0%

Service level

Set-up time reduction

Pull production

Layout optimization

Planning adherence

2009 60 %

2004 52 %+15%

2009 59 %

2004 44 %

+34%

57 %

2004

2009

68 %-16%

2009

76 %2004

67 %

-12%

Mean Standard Deviation

77.3 m 31.1 m

80.3 m 31.7 m

Mean Standard Deviation

6.7 9.7

13.7 29.7

Mean Standard Deviation

16%

62% 15%

Mean Standard Deviation

13%

58% 13%

Mean Standard Deviation

16%

61% 16%

Mean Standard Deviation

12.3 11.1

21.1 30.8

Mean Standard Deviation

15%

69% 12%

Mean Standard Deviation

23.2 d 11.7 d

24.4 d 13.4 d

Mean Standard Deviation

88% 20%

89% 12%

56%

50%

67%

73%

Fig. 5 Just-in-time: key performance indicators and implementation levels

J Pharm Innov (2010) 5:181–192 187

employees for it. The missing improvement concerning thiselement is mainly caused by a downward movement incommunication from corporate to site level and informationflow between departments and sites.

Starting at a very low level of 55% in 2004 for theelement “Employee Involvement and Continuous Improve-ment”, companies were able to increase the value to 69% in2009. In particular, support from plant management tocorporate level enables staff to continuously solve prob-lems. Leveraging full potential of practices can be startedwith “transferring” authority from supervisors to line staff.Objective is to give employees the authority to solveproblems on their own when they occur.

The element “Functional Integration and Qualification”experienced a slight decrease from 70% in 2004 to 68% in2009. In general, the degree of cross-trained employeesincreased in the last years. However, feedback on existingtrainings and job rotation is often not used to systematicallyadjust the qualification programs leading to this decrease.

Conclusions

The following conclusions can be drawn from the study:

– As expected, due to the amount of personnel andfinancial resources put into efficiency increase inoperations, the industry did make continuous stepsthroughout the systems TPM, TQM, JIT, and theunderlying EMS towards the desired state of “Opera-tional Excellence”, though there are no grand-scaledevelopments. It can be said that most of thecompanies are still working on the effectiveness side(TPM and TQM) rather than focusing on the efficiency

side (JIT). Taking the model presented in Fig. 2,pharmaceutical companies are trying to build stablerunning machines and stable processes before targetingthe objective of low inventory. It can be argued that theindustry average is not that advanced to already set anew focus on efficiency. Pharmaceutical companiestook control over their former low asset utilization,managed to improve the efficiency of their qualitysystems, but are still far away from having any kind of“continuous flow”, smooth production scheduling, ormake-to-order manufacturing.

– For TPM, one could argue that the industry is in a stateof stagnation concerning Total Productive Mainte-nance. The slight increase in implementing “Preventivemaintenance” linked with a significant increase ofUnplanned Maintenance (performance), leads to thedifficulties in deploying the TPM strategy in theindustry. For instance, a closer look at the element“Preventive Maintenance” showed that companies aresetting the focus on technical aspects (e.g., checklistsand documentation) rather than the empowerment ofshop-floor employees (machine operators). The objec-tive of enabling the employees to solve problemsoccurred at their machines by themselves as well asunderstanding and working on the root causes offailures is yet to be achieved by the pharmaceuticalindustry.

– For TQM, companies were able to increase theirimplementation levels regarding Total Quality Man-agement significantly. The internal “process thinking”and the management of the downstream interface tocustomers were especially improved. The end-to-endconsideration of the value-chain (suppliers–manufac-turer–customers) supports the steps to a higher quality

Implementation levelsKey performance indicators

2009 6.0 %

2004 5.0 %+20%

Fluctuation

4.0 %

2004

2009

4.0 % 0%

Absenteeism

3.0 days

2004

2009

4.0 days -25%

Training days

10 %

2004

2009

12 %-17%

Unskilled employees

2009 83 %

2004 78 % +6%

Direction setting

2009 73 %

2004 73 % 0%

Management Commitment and Company Culture

2009 69 %

2004 55 % +25%

Employee Involvement and Continuous Improvement

2009 68 %

2004 70 % -3%

Functional Integration and Qualif ication

Mean Standard Deviation

6.8% 5.1%

8.3% 7.6%

Mean Standard Deviation

4.7% 2.2%

4.4% 2.3%

Mean Standard Deviation

13%

82% 14%

Mean Standard Deviation

11%

75% 9%

Mean Standard Deviation

15%

70% 10%

Mean Standard Deviation

6.5 d 10.5 d

4.8 d 4.3 d

Mean Standard Deviation

17%

65% 15%

Mean Standard Deviation

15% 17%

17% 23%

77%

71%

55%

66%

Fig. 6 Effective management system: key performance indicators and implementation levels

188 J Pharm Innov (2010) 5:181–192

level. It can be argued that the industry is moving from acGMP-focused quality system towards a quality culture.

– For JIT, improvements in the indicators for workingcapital (e.g., finished goods turns) are mainly a result ofintensified “Pull Production”. Unfortunately, the sec-ond core measure in JIT “times” increased as well. Athreatening trend is the increase of times for set up andcleaning as well as for the production cycle fromweighing to packaging. Setbacks in layout optimizationand planning adherence could not be compensated byimproved implementation of pull-system practices andcaused the turn for the worse regarding the results ofsome performance indicators.

– For EMS, the decrease of training days from 2004 to2009 shows that most pharmaceutical sites made onestep backwards regarding the ultimate objective of“lean” to create a learning organization. This observa-tion is emphasized by the increase in fluctuation whichleads to a loss of knowledge. The results for theperformance indicators are confirmed by the analysis ofthe implementation. Besides “Employee involvementand continuous improvement”, which improved, allother categories in this system changed for the worse orstayed the same. Pharmaceutical companies were notable to re-design their existing management systems tofacilitate the implementation of a learning organizationwith the objective to leverage the potential of higheducational levels among employees.

Appendix A

Appendix B

Appendix C

Table 1 Measurement of TPM implementation

Preventivemaintenance

We have a formal program for maintaining ourmachines and equipment.

Maintenance plans and checklists are postedclosely to our machines, and maintenance jobsare documented.

We emphasize good maintenance as a strategyfor increasing quality and planning forcompliance.

All potential bottleneck machines are identifiedand supplied with additional spare parts.

We continuously optimize our maintenanceprogram based on a dedicated failure analysis.

Our maintenance department focuses onassisting machine operators perform their ownpreventive maintenance.

Our machine operators are actively involvedinto the decision-making process when wedecide to buy new machines.

Our machines are mainly maintained internally.We try to avoid external maintenance serviceas far as possible.

Housekeeping Our employees strive to keep our plant neat andclean.

Our plant procedures emphasize putting alltools and fixtures in their place.

We have a housekeeping checklist tocontinuously monitor the condition andcleanness of our machines and equipment.

Effectivetechnologyusage

Our plant is situated at the leading edge of newtechnology in our industry.

We are constantly screening the market for newproduction technology and assess newtechnology concerning its technical andfinancial benefit.

We are using new technology very effectively.

We rely on vendors for all of our equipment.

Part of our equipment is protected by the firm’spatents.

Proprietary process technology and equipmenthelps us gain a competitive advantage.

Table 2 Measurement of TPM performance

Key performanceindicator

Definition

Overall equipmenteffectiveness (OEE)

OEE=(OEE) Availability×(OEE)Performance×(OEE) Quality

(OEE) Availability=(Scheduled Time–Downtime)/Scheduled Time

(OEE) Performance=(Amount Produced×Ideal Cycle Time)/Available time

(OEE) Quality=(Input-Defects)/Input

Unplanned maintenance Proportion of unplanned maintenancework as a percentage of the overall timespent for maintenance (in percent).

Table 3 Measurement of TQM implementation

Process management In our company direct and indirectprocesses are well documented.

We continuously measure the quality ofour processes by using process measures(e.g., On-time-in-full delivery rate).

Our process measures are directly linked toour plant objectives.

In our company, there are dedicatedprocess owners who are responsible forplanning, management, and improvementof their processes.

Table 1 (continued)

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Appendix D

Appendix E

A large percentage of equipment on theshop floor is currently under statisticalprocess control.

We make use of statistical process controlto reduce variances in processes.

For root cause analysis, we havestandardized tools to get a deeperunderstanding of the influencing factors.

We operate with a high level of processanalytical technology implementation forreal time process monitoring andcontrolling.

Cross-functionalproduct development

Manufacturing engineers are involved to agreat extent in the development of a newdrug formulation and the development ofthe necessary production processes.

In our company product and processdevelopment are closely linked to eachother.

Due to close collaboration between theR&D and the manufacturing department,we could significantly shorten our time forproduct launches (“scale-ups”) in our plant.

For the last couple of years, we have not hadany delays in product launches at our plant.

For product and process transfers betweendifferent units or sites standardizedprocedures exist, which ensure a fast,stable, and complied knowledge transfer.

Customer involvement We are frequently in close contact with ourcustomers.

Our customers frequently give us feedbackon quality and delivery performance.

We regularly survey our customer’srequirements.

We regularly conduct customer satisfactionsurveys.

On-time delivery is our philosophy.

We jointly have improvement programswith our customers to increase ourperformance.

Supplier qualitymanagement

Quality is our number one criterion inselecting suppliers.

We rank our suppliers; therefore, weconduct supplier qualification and audits.

We use mostly suppliers that we havevalidated.

For a large percentage of suppliers, we donot perform any inspections of theincoming parts/materials.

Inspections of incoming materials areusually performed in proportion to the pastquality performance or type of supplier.

Basically, we inspect 100% of ourincoming shipments.

We jointly have improvement programswith our suppliers to increase ourperformance.

Table 3 (continued)

Table 4 Measurement of TQM performance

Key performanceindicator

Definition

Complaint rate(customer)

Number of complaints as a percentage of allcustomer orders delivered (in percent).

Rejected batches Number of rejected batches as a percentage ofall batches produced (in percent).

Complaint rate(supplier)

Number of complaints as a percentage of alldeliveries received (from your supplier; inpercent).

Table 5 Measurement of JIT implementation

Set-up timereduction

We are continuously working to lower set-up andcleaning times in our plant.

We have low set-up times for equipment in our plant.

Our crews practice setups regularly to reduce thetime required.

To increase the flexibility, we put high priority onreducing batch sizes in our plant.

We have managed to schedule a big portion of oursetups so that the regular up-time of ourmachines is usually not affected.

Optimized set-up and cleaning procedures aredocumented as best-practice process and rolled-out throughout the whole plant.

Pull production Our production schedule is designed to allow forcatching up, due to production stoppings becauseof problems (e.g., quality problems).

We use a pull system (kanban squares, containers,or signals) for production control.

We mainly produce according to forecasts.

Suppliers are integrated and vendors fill ourkanban containers, rather than filling ourpurchasing orders.

We value long-term associations with suppliersmore than frequent changes in suppliers.

We depend on on-time delivery from our suppliers.

We deliver to our customers in a demand-orientedJIT way instead of a stock-oriented approach.

We mainly produce one unit when the customerorders one. We normally do not produce to stock.

Layoutoptimization

Our processes are located close together so thatmaterial handling and part storage are minimized.

Products are classified into groups with similarprocessing requirements to reduce set-up times.

Products are classified into groups with similarrouting requirements to reduce transportationtime.

The layout of the shop floor facilitates lowinventories and fast throughput.

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Appendix F

Appendix G

As we have classified our products based on theirspecific requirements our shop floor layoutcan be characterized as separated into“mini-plants”.

Currently, our manufacturing processes are highlysynchronized over all steps by one takt.

Currently, our manufacturing processes from rawmaterial to finished goods involve almost nointerruptions and can be described as a fullcontinuous flow.

At the moment, we are strongly working to reachthe status of a full continuous flow with nointerruption between raw material to finishedgoods.

We use “Value Stream Mapping” as amethodology to visualize and optimizeprocesses.

Planningadherence

We usually meet our production plans every day.

We know the root causes of variance in ourproduction schedule and are continuously tryingto eliminate them.

To increase our planning adherence we share datawith customers and suppliers based on a rollingproduction plan.

We have smoothly leveled our production capacitythroughout the whole production process.

Our plant has flexible working shift models so thatwe can easily adjust our production capacityaccording to current demand changes.

A smoothly leveled production schedule ispreferred to a high level of capacityutilization.

Table 5 (continued)

Table 6 Measurement of JIT performance

Key performanceindicator

Definition

Set-up time The time for set up and cleaning in percentageof the scheduled time (in percent).

Raw materialturns

Annual outward raw material movementsdivided by average annual raw materialinventory stocks (number).

Finished goodsturns

Annual outward finished goods materialmovements divided by average annualfinished goods stocks (number).

Cycle time Time from weighing to packaging (in days).

Service level Perfect order fulfillment (percentage of ordersshipped in time from your site (max.±1 daysof the agreed shipment day) and in the rightquantity (max.±3% of the agreed quantity)and right quality) to your customer.

Table 7 Measurement of EMS implementation

Direction setting Our production site has an exposedsite vision and strategy that isclosely related to our corporatemission statement.

Our vision, mission, and strategy isbroadly communicated and lived byour employees.

Goals and objectives of themanufacturing unit are closelylinked and consistent with corporateobjectives. The production site hasa clear focus.

The overall objectives of theproduction site are closely linked tothe team or personal objectives ofour shop-floor teams and employees.

Our manufacturing managers (head ofmanufacturing, site leader, etc.)have a good understanding of howthe corporate/divisional strategy isformed.

Our manufacturing managers knowexactly what the most importantcriteria for manufacturing jobs are(i.e., low costs, delivery, quality, etc.).

Management commitmentand company culture

Plant management empowersemployees to continuously improvethe processes and to reduce failureand scrap rates.

Plant management is personallyinvolved in improvement projects.

There is too much competition andtoo little cooperation between thedepartments.

The communication is made viaofficial channels.

The company has an opencommunication culture. There is agood flow of information betweenthe departments and the differentmanagement levels.

About innovations we are informedearly enough.

Problems (e.g., reclamations, etc.) arealways traced back to their origin toidentify root causes and to preventdoing the same mistakes twice.

The achievement of high qualitystandards is primarily the task ofour QA/QC departments.

Our employees continuously strive toreduce any kind of waste in everyprocess (e.g., waste of time, wasteof production space, etc.).

Command and control is seen as themost effective leadership stylerather than open culture.

J Pharm Innov (2010) 5:181–192 191

Appendix H

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Employee involvement andcontinuous improvement

We have implemented tools andmethods to deploy a continuousimprovement process.

Our employees are involvedin writing policies andprocedures (concerning sitevision down to standardoperating procedures).

Shop-floor employees actively drivesuggestion programs.

Our work teams cannot takesignificant actions withoutsupervisors or middle managersapproval.

Our employees have the authorityto correct problems when theyoccur.

Occurring problems should be solvedby supervisors.

Supervisors include their employeesin solving problems.

Our plant forms cross-functionalproject teams to solve problems.

The company takes care of theemployees.

We have organized productionemployees into teams inproduction areas. For eachteam there is one dedicated teammember that is responsible forsupervisory tasks.

We have organized productionemployees into teams in productionareas. For team leadership we havean additional supervisory level inour organization.

Functional integration andqualification

Each of our employees within ourwork teams (in case workers areorganized as teams) is cross-trainedso that they can fill-in for otherswhen necessary.

At our plant, we have implemented aformal program to increase theflexibility of our productionworkers. Employees rotate tomaintain their qualification.

In our company there are monthlyopen feedback meetings.

The information of these officialfeedback meetings is usedsystematically in further training.

We continuously invest intraining and qualification ofour workers. We have adedicated developmentand qualification programfor our productionworkers.

Table 7 (continued)

Table 8 Measurement of EMS performance

Key performanceindicator

Definition

Fluctuation Employee turnover at your site (includes allkinds of fluctuations of employees:terminations, expired work contracts,retirements, etc.; in percent).

Absenteeism Total time of employees absent (e.g., sick leave)as a percentage of the total working time (inpercent).

Training days Number of training days per employee (allkinds of training off- and on the job; in daysof the year).

Unskilledemployees

Number of unskilled employees as a percentageof the total number of employees at your site(in percent).

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