Managing the Aches and Pains of Long Cycle Times: Automating Controls for Pharmaceutical Manufacturers

One of the biggest challenges (or business pain points) for pharmaceutical manufacturers (or life sciences companies) is the long cycles that are required for research and development (R&D) and product approval. This is particularly a challenge for manufacturers of generic drugs, for which cycle times can average 20 months or more (and the full time-to-market period upwards of 12 years).

Why are long cycles a problem?

Simply put, it comes down to the familiar equation that “time = money.” More time needed means more capital spent, and manufacturers watch their bottom lines slip farther and farther away. To begin to formulate a plan to address the issue of long cycle times, it’s important to understand the factors that contribute to this challenge.

Long R&D cycles happen for a number of reasons. One is that there has been increasing need to comply with regulations, including the Food and Drug Administration’s (FDA’s) Title 21 Code of Federal Regulations (CFR) Part 11, for pharmaceutical manufacturers that are employing methods for electronic record-keeping and electronic and digital signatures.

This increasing need often means that additional administrative time must be spent on ensuring that the technical and procedural protocols are set up correctly and doing what they are supposed to do.

Another reason for long cycle times has to do with the need to ensure that all stages of product development are adequately documented for audits. Whether a manufacturer is using paper or electronic methods of data storage, there must be a reliable, consistent, secure, and accessible method of storing all documents related to the research, development, manufacture, and release of all drugs.

Every change to a document must be retained, and the integrity of the versions kept intact. For manufacturers straddling the line between paper-based and electronic methods, all paper-based documents need to be transferred and saved in digital form, a process that can require considerable time for scanning or manually entering data.

What are the business risks involved in longer R&D cycles and product approval?

Fewer products can be developed or manufactured concurrently, which means fewer products get to market. And fewer products to market can mean a decrease in the company’s in-coming cash flow (i.e. decreased profits). Additional worry may come from the fact that with this increase in time-to-market, other competing manufacturers may develop a similar drug and release it sooner, thereby further diminishing profits due to lost market share and a shortened product life cycle. A delayed or lengthened cycle time can seriously affect the return on investment (ROI) for a given new drug or product.

ETO Manufacturers Issue a Challenge to ERP Vendors

Perhaps you may have not heard the term engineer-to-order (ETO) before, but perhaps your business is one of thousands that designs and builds custom equipment that is very precise, adheres to very specific tolerances, is highly technical, and produces low volume and, generally speaking, expensive products. Some examples of such products include ships, aircraft, production machinery, etc.

The typical ETO organization reflects a unique style of manufacturing—they design products to customer specifications, using a unique set of item numbers, bill of materials (BOM), and routings. Business is usually awarded to an ETO manufacturer based on estimates and quotations. Products can be complex, with long lead times and requiring a number of complex subassemblies to build.

Recently a paradigm shift has occurred in the realm of manufacturing, and ETO organizations are leading a call to change as a means of business survival.

ETO Manufacturing Challenges
Unlike standard manufacturing products, in ETO manufacturing environments, the customer is heavily involved throughout the design and manufacturing process. Constraints in the ETO manufacturing process include frequent engineering changes and long lead times from purchasing vendors that can span months—even years. Raw materials themselves are not purchased for inventory purposes, but for a specific phase of the overall manufacturing cycle. Because ETO manufacturers treat each job as a project, all costs and materials are reported to the actual work order and are further compared to the original estimate and quotation. In many cases, once the production phase is complete, the product is shipped to and assembled at the client’s site. Also in many cases, aftermarket sales services continue throughout the life of the product.

Requirements Differ between ETO Manufacturers and Discrete Manufacturers
The ETO manufacturer is faced with maintaining a business model that requires skilled, experienced, and knowledgeable tradespeople who are able to design innovative solutions to complex problems. According to a report by the National Association of Manufacturing in November of 2005, a generation of tradespeople is slated for imminent retirement, and the fewer numbers of young people enrolling in trade schools represents a challenge heading into the post-boomer economy of the early 21st century.