Operational Excellence (OpEx) is an area that has been given significant attention in recent years, with management teams in the pharmaceutical sector looking to find new profit avenues by bringing their products to market both quicker and cheaper.
The aim of addressing OpEx is to streamline business processes and outgoings to find a balance between lowering costs while maintaining healthy profit margins. This is achieved through implementing an Operational Excellence Management System (OEMS) tailored to a specific business’ needs and processes in order to achieve Business Excellence (BE).
The ‘Continuous Improvement’ Culture
An effective OEMS, combined with the implementation of a continuous improvement culture, helps improve the productivity and effectiveness of a business, reducing waste and expenses, while maintaining the bottom line. As a welcome side-effect, this process of optimisation can also help reduce problems and issues within the workflow system. Nurturing a continuous improvement culture is vital when it comes to maintaining business excellence in the long term.
The rise of Business Excellence
Although the Life Science industry was a slow adopter of the continuous improvement culture when it began to grow in popularity in the 90s, it is now one of the pioneering industries in this area. Now that breakthrough drugs are becoming less common, pharmaceuticals companies are looking to focus internally on improving business processes to help increase revenue.
Some might give opposition to striving for business excellence using the mantra, “if it ain’t broke, don’t fix it”, but it is vital to understand that just because a business can bring a product to market, it does not necessarily mean they are using the most streamlined processes available to them.
The first step, when it comes to implementing an effective operational excellence strategy, is embracing the idea that every process has the potential to be improved. Pareto’s Law states that 80% of the problems that occur in a process originate from 20% of the problem initiators. This means that the best method for improving operational performance is to aim to find and address this concentrated 20%.
While traditional methods such as lean; which centers on customer value – and six sigma; which utilises data to streamline processes – focusing on processes as individual units, Business Excellence takes into account this traditional groundwork and goes one step further: addressing operations as a whole. This switch from a bottom-up outlook to a top-down perspective is about making efficiency intrinsic across the whole system. Operational excellence is a people-centric process and values the experience of the employees, which is then used to inform an analytical approach.
For a substantial period of time, the Life Sciences sector, and pharmaceuticals in particular, have looked outwards– now it is time for them to look inward. These businesses are beginning to reflect on how they can improve themselves and bring better, more cost-effective products to market by trimming the unnecessary excess from their processes and infrastructure.
What makes a good OEMS?
It is not enough to just implement an OEMS and hope that it brings a windfall. It is also about tailoring a strategy to the business and maintaining an awareness of how every area and process of operations can be improved.
7 Key Factors
There are seven important elements when it comes to building an infrastructure of operational excellence. These are:
Management of change
It is imperative to understand that an effective business excellence strategy is about more than just taking steps to making a business better; it is about implementing a change in company culture that alters how things are in the long-term.
OpEx in Practice
Research by Tefen Ltd, looking at OpEx programmes at 11 Life Sciences companies, found that the first wave of operational excellence projects had a success rate of between 75-90% when it came to achieving the desired benefits. This high success is, in part, due to the sheer enthusiasm of the team at the start of the project – businesses must ensure they implement processes that help maintain these values in the long-term.
The study revealed that some of the greatest barriers were: poor governance, inflexible leadership, and businesses ‘taking on more than they could chew’ – i.e. attempting initial projects too large in size and scope to be effective. Communication was cited by the participants as one of the most valuable tools when it came to ensuring the success of these programmes. With regards to creating a culture of continuous improvement, scalability is vital and this is an important consideration to make when implementing an OEMS.
Businesses must bear in mind that the process should be holistic – 65% of those surveyed said that no department should own the project outright. One of the keys to the success of an OpEx project was found to be defining and then measuring benefits. This includes capturing this information at the budgeting stage and continually reporting progress for each department.
What is the future of OPEX?
Most talent typically specialises in either manufacturing or process excellence. In order for BE in the pharmaceutical industry to develop, we are likely to see more people moving from the manufacturing side, where business excellence originated, to the non-manufacturing side – looking at areas such as Sales & Marketing and IT. We have seen this trend in our own work scope and think it is likely this will translate to the industry as a whole.
Whether the projects are part of standard operations or transactional operations, we are seeing a trend for candidates that want more autonomy when it comes to implementing business excellence. Candidates should be looking to diversify their skill set so that they can implement production systems or operation systems in an office environment; in particular, across non-manufacturing functions such as HR, IT, Sales & Marketing, Finance and Sourcing. It is in these areas that there is the most benefit to be gained.
In order for the industry to develop, it is likely we will see a lot of movement from manufacturing into processing as businesses look to apply these skills to the business as a whole. It is important that the industry is more open to non-pharma candidates too as they will be able to provide a fresh perspective, as well as ensuring there will not be a talent drought in this area in the coming years.
If you are working in OpEx and are looking for a new challenge, or you are hoping to streamline your business and need to take on talent with experience of implementing business excellence strategies, get in touch with DSJ Global today.