Operational Excellence has often been ambiguously defined: “excellence in everything we do,” “world-class operations,” or “the best of the best.” However, there is a practical, hands-on definition of Operational Excellence that, when achieved, can enable operations to run without management and enable company leadership to spend its time on streamlining product development, researching new markets, working with customers on their needs, and other activities focused on business growth.
That definition of Operational Excellence is when, “Each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.”SM Reaching this state creates a “self-healing” flow of products to the customer where employees who build the products know whether the flow is normal or abnormal, and know how to fix abnormalities in the flow without the need for management intervention.
While this process may sound simple and straightforward, when organizations try to apply these concepts to real-life pharmaceutical environments, it can get complex quickly. Difficult questions often arise, such as: How do we handle processes or machines that are shared across different product lines? What do we do when many, or perhaps even all, of our parts pass through every process in the operation? How do we create a “self-healing” flow if we process in batch and have long changeover times?
The answers to these questions lie in an organization’s approach to continuous improvement. Instead of management setting goals, forming teams, and running Kaizen (rapid improvement) events, the key is to set a destination of Operational Excellence (previously defined) and reach it by applying a specific set of technical guidelines and principles for designing flow.
Product Families and Process Families
While the concepts of product families and process families are not new, the application of them to create flow is. Product families are a group of products that go through similar processing steps and have similar work content. They are created from the point where an organization can dedicate equipment downstream to the customer. Process families are groups of products that go through similar upstream, or shared, equipment. These are formed in the upstream, or shared, equipment area of the operation.
The logic behind creating product families is to group parts together according to shared similarities in the way they are made, not shared similarities in the way they are sold, marketed, catalogued, or utilized by end customers. If the process content and total work times are too similar to yield any meaningful groupings, parts can be organized by changeover time, perhaps, grouping them together so they are processed at each machine in such a way as to minimize changeover times between “changeover families.”
Process families are designed to dedicate a group of upstream processes that serve many downstream processes by “locking” certain products to a certain group of machines, even though they will flow to different areas once completed. The benefit of these families comes from standardizing setup, cleaning, and sterilization methods used, and always knowing which product will be made on which group of machines, even when the equipment is shared.
Once product families and process families are created, the next step is follow eight guidelines to create end-to-end flow through the operation. The first guideline is a variant on takt called takt capability. Normally, takt tells the rate at which an operation needs to produce in order to meet customer demand, e.g., 500 pieces per hour. Sometimes, however, customer demand can be erratic, hard to know or predict, or even truly variable.
In those situations, takt capability tells how much an operation is able to produce over a given time period in terms of both volume and mix. The incorporation of product mix in the demand calculation is important because the different products an organization produces could have significantly different completion times, even if they are in the same product family.
Once an organization understands what level of demand it is capable of satisfying by knowing what volume and mix can be handled within a set amount of time, it can apply the rest of the guidelines in the order listed below to each product family to create end-to-end flow through the operation.
1. Takt or takt capability
2. Finished goods strategy
3. Continuous flow
5. Supermarket pull systems
6. Single-point scheduling
The Key for the Pharmaceutical Industry: the Interval
In addition to determining takt capability, another guideline that often proves difficult to implement is developing a deep and robust understanding of interval, the size of which directly relates to batch size and heavily influences the flexibility of an operation.
The interval at a process or machine tells how quickly it can cycle through all the parts it is responsible for producing in a product family. For example, if the interval at a process is calculated to be three days, that means the process is able to produce all the part numbers in the product family within three days. It also means that the batch size for each part number in the product family must be three days worth of parts for there to be enough on hand to meet demand until the part is produced again.
Since the length of the interval is the same as the size of the batch, a longer interval means a larger batch size and a shorter interval means a smaller batch size. Having a smaller interval means an operation can process more parts faster than with a larger interval. In terms of competitiveness, that means the operation has more flexibility to meet changing customer demand while enabling more frequent deliveries and smaller ship windows.
A common objection to shortening intervals is that doing so will entail more setups, ultimately negating any gains from lower batch sizes and increased ship frequency. Knowing the interval, however, also means knowing exactly how many setups are needed to produce the parts in the product family within the given timeframe and still meet customer demand. Rather than simply lowering setup times and then seeing what interval they can support, an operation must know what the interval needs to be in order to have a competitive advantage, and determine what setup times have to be to achieve the target interval.
One of the key benefits of establishing an interval at each process in the flow is the creation of a guaranteed turnaround time, both for the processes individually and also for the operation as a whole. This guaranteed turnaround time tells the organization that if there is a part in the queue for a shared process, even if there are different parts in queue as well, it will be delivered to the next process within a certain amount of time, guaranteed. Again, this is done by establishing the interval, which tells us how long it will take for a process to produce all part numbers in the product family.
Once the interval is established and the last guideline (pitch) is applied, the next step is to implement flow and organize it through the operation’s processes, especially those that are shared between multiple product families. One technique to accomplish this task is sequenced FIFO, or multiple FIFO lanes, where products coming into a process are segregated by product family or some other criteria and then processed according to a standard, predetermined sequence. Sequenced FIFO injects regularity and predictability into resources that are traditionally difficult to manage and schedule and helps establish a guaranteed turnaround time at each process.
Once an operation ensures the timeliness and predictability of flow, it has to make the timing of the flow visual so that employees can see it without relying on computer reports, printouts, or questions. To accomplish this, the first step is analyzing the operation in order to understand what constitutes normal and abnormal flow, since arbitrarily picking thresholds is insufficient. After the organization determines what normal flow is and what abnormal flow is, this distinction needs to be made visual so that anyone can understand it simply by looking at the process in question.
There are many ways to do this. If an organization knows how many parts a machine can process in one shift, for example, then it can draw a line or mark off a zone in the FIFO lane supplying this machine. Crossing this line or entering this zone would indicate the presence of more parts than the machine would be able to process in one shift. If parts have not accumulated in the FIFO lane beyond this line or zone, then everyone in the organization would know the flow is normal. If parts have accumulated beyond this area, everyone would know the flow is abnormal.
Once employees are able to see normal and abnormal flow, the next step is to create standard work that allows them to fix the abnormal condition and get the flow back on track on their own without the intervention of management. When the operation has created this “self-healing” flow, management can free itself from running the day-to-day operation.
Unlike other continuous improvement initiatives that are employed to lower costs and increase productivity, the goal of Operational Excellence is business growth. When an organization achieves it, management can spend the majority of its time working on “offense” – activities that grow the business.
Management now has the time to become deeply integrated into guiding innovation and product development by providing equipment specifications as well as supply chain, manufacturing, and technical capabilities. The result is that more new products can be released to market, and they’ll need little time for debugging because operational experts will have been involved in their development from the beginning.
Though the destination of Operational Excellence is clear, the complexities of the pharmaceutical industry can make implementation challenging. The solution lies in the technical design of flow throughout the operation, followed by instruction to employees on how to make that flow become “seal-healing.” This self-healing flow drives Operational Excellence, not just in manufacturing but in office areas as well, including Engineering, Purchasing, Finance, Human Resources, Product Development, and anywhere else where there is a flow of information. The end result of applying this thinking is a company where the only meetings that exist are the ones focused on growing the business.