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.

Provia Tackles RFID in a Twofold Manner Part Four: Global Availability

These days when radio frequency identification (RFID) is constantly on everyone's lips, and when every relevant enterprise application vendor is hedging its bets towards becoming RFID-ready or is even convincing the market that its RFID-compliant solution is exactly what the doctor (such as Wal-Mart, Target, Albertsons, and the US Department of Defense [DoD]) ordered, the typically quiet Provia Software (www.provia.com), a privately-held provider of supply chain execution (SCE) software solutions, naturally feels the time has come for it to be more vocal about its RFID endeavors, albeit after it has already put so much effort in terms of the proof of concept in the field.

Most recently, at the end of May, Provia announced at the Distribution/Computer Expo 2004 in Chicago, Illinois (US) that its ViaView event/alert management and decision support product plays a key role in offering visibility to supply chain data for companies supplying RFID-tagged products to Wal-Mart and other retailers.

Moreover, at the end of March, Provia announced that it has aligned itself with its parent company of over fifteen years, Viastore Systems, a leading provider of automated storage and retrieval systems (AS/RS), and material handling control systems, with over 3,000 cranes installed worldwide.

However, RFID has not been the only focus in Provia's recent partnership and product enhancements endeavors. Provia might also stand apart from its peers in the enterprise applications industry by claiming that behind every one of its installations is a satisfied client. The company touts that its number one asset is that it keeps its commitments and delivers on time and within budget, and thus, 98 percent of its clients renew their 24/7 support contracts with the vendor every year. Aiding Provia on the implementation front are several integration partners, including general consulting houses like former PricewaterhouseCoopers (now IBM Global Services), Deloitte Consulting, and smaller system integration services firms like former Digiterra (now ciber), St. Onge, and Q4 Logistics.

Equipped with a direct sales force in North America supported by regional teams, Provia also reports strong presence and sales in South America. It has particularly been successful selling in South America's third party logistics (3PL) market, through its partnership with system integrator Tecsys Latin America (TLA), with offices in Chile, Colombia, and Venezuela. At the beginning of 2004, Provia further announced that its SCE solutions ViaWare and FourSite are now available as logistics software solutions to leading Caribbean companies through an expanded relationship with Provia's Latin American distributor, TLA. The initiative into the Caribbean region involved the collaboration and support of Provia, TLA, and also Roger Marshall, a supply chain service provider with over nineteen years of supply chain experience in the Caribbean region.

Discrete ERP 101

Process manufacturers (AKA continuous manufacturers), on the other hand, make products that cannot be disassembled into their component elements (ex: spray paint, whiskey, talcum powder…).

Both process and discrete ERP software aim at full integration of management, staff, and equipment. This integration provides a way for information from any area of the enterprise to be communicated to any other area, in real time.

However, a discrete manufacturer who decides to select a process ERP solution to run the business is headed for a world of workaround pain.

TEC analyst Alex Hankewicz, in his recent article on ERP solutions for “mixed-mode” manufacturers, summed up some of the differences nicely:

“[In general,] discrete manufacturing uses bills of materials (BOMs); process manufacturing uses formulations, also known as recipes.

A discrete manufacturer assembles products along a production sequence routing, whereas a process manufacturer blends in a batch.

In discrete manufacturing, a multi-level BOM is used to produce a finished good, indicating the base unit of measure with all the lower level assemblies and subassemblies featured below. In process manufacturing, all sequential steps are held within the product formula, including all relative secondary products. Batch sizes are based on specific units of measure and vary according to the formula and product yields.”

Discrete ERP software also focuses on the automation of such business processes as materials sourcing, resource scheduling, and customer order management. Potential benefits include improved workstation use and scheduling (leading to reduction of assembly line downtime), just-in-time (JIT) inventory management (thus reducing carrying costs), and a reduction in overtime. (Note, however, that JIT can be applied to process manufacturing as well.)

See TEC’s Discrete ERP Evaluation Center for more on the business benefits of discrete ERP applications.

If you are a discrete manufacturer burdened with a process ERP solution, you will be unable to properly allocate items to specific orders. Traceability thus becomes a major headache.

Furthermore, the overriding consideration for process manufacturers is quality. For discrete manufacturers, it’s quantity (with, naturally, a measure of quality control). A discrete manufacturer with a process ERP system will run into difficulties when trying to determine work station (resource) scheduling.

What Does the “P” in PLM Really Mean?

Undoubtedly, PLM was cradled in the manufacturing sector. From the manufacturing point of view, a product is something that has either an assembly structure, a recipe, or both. The major purposes of PLM are to help determine what raw materials are needed and how to convert these raw materials into finished goods. The added value that a manufacturer creates is associated with the physical or chemical changes from raw material to finished goods; the task of PLM is to facilitate these changes.

“In retailing, products are called merchandise.”

More recently, people started to realize the benefits of utilizing PLM outside of the manufacturing domain. The retail industry is one such example. The reason retailers have adopted PLM is because product information is a critical component when it comes to making decisions on what to buy, who to buy from, and how to sell. Some PLM vendors now provide well-tuned solutions for retailers to manage their merchandise from a life cycle standpoint.

“In marketing, a product is anything that can be offered to a market that might satisfy a want or need.”

Will PLM keep expanding to other areas? It seems likely. From a marketing perspective, service is also included in a broader definition of product. A service also has a life cycle, and managing the life cycle of a service has similarities with managing the life cycle of a product—although they too have their differences. The intangible nature of services makes the development, production and delivery of services (not all kinds of services but at least a few of them) easier to take place in the digital world than those of tangible products (e.g., even surgeries can be done through the Internet now). This might provide a hint that managing services from their birth to death using PLM principles is not only advisable, but also has the potential to reach a new height that PLM has not achieved in the manufacturing sector.

What Does the “P” in PLM Really Mean?

Undoubtedly, PLM was cradled in the manufacturing sector. From the manufacturing point of view, a product is something that has either an assembly structure, a recipe, or both. The major purposes of PLM are to help determine what raw materials are needed and how to convert these raw materials into finished goods. The added value that a manufacturer creates is associated with the physical or chemical changes from raw material to finished goods; the task of PLM is to facilitate these changes.

“In retailing, products are called merchandise.”

More recently, people started to realize the benefits of utilizing PLM outside of the manufacturing domain. The retail industry is one such example. The reason retailers have adopted PLM is because product information is a critical component when it comes to making decisions on what to buy, who to buy from, and how to sell. Some PLM vendors now provide well-tuned solutions for retailers to manage their merchandise from a life cycle standpoint.

“In marketing, a product is anything that can be offered to a market that might satisfy a want or need.”

Will PLM keep expanding to other areas? It seems likely. From a marketing perspective, service is also included in a broader definition of product. A service also has a life cycle, and managing the life cycle of a service has similarities with managing the life cycle of a product—although they too have their differences. The intangible nature of services makes the development, production and delivery of services (not all kinds of services but at least a few of them) easier to take place in the digital world than those of tangible products (e.g., even surgeries can be done through the Internet now). This might provide a hint that managing services from their birth to death using PLM principles is not only advisable, but also has the potential to reach a new height that PLM has not achieved in the manufacturing sector.

Hence, the meaning of “product” within “product lifecycle management” is changing over time with the process of more industries adopting the PLM methodology. In fact, as long as you offer something that “might satisfy a want or need”, you should think about the life cycle of your offering.

So, I hope you have a better idea about what the “P” in PLM really means.

Now, I am going to throw you another question. As I write this blog, I’m facing an Acer monitor. It has a model number and a serial number. The model number represents all Acer monitors that have exactly the same product structure and specifications; the serial number specifically refers to the one monitor in front of me. Which number (the product as a model or the product as a concrete piece) should be managed within a PLM system?

Discrete ERP 101

Discrete manufacturers assemble products from component parts. These products are made to order and can, in theory, be disassembled (ex: cars, computers, tables…).

Process manufacturers (AKA continuous manufacturers), on the other hand, make products that cannot be disassembled into their component elements (ex: spray paint, whiskey, talcum powder…).

Both process and discrete ERP software aim at full integration of management, staff, and equipment. This integration provides a way for information from any area of the enterprise to be communicated to any other area, in real time.

However, a discrete manufacturer who decides to select a process ERP solution to run the business is headed for a world of workaround pain.

TEC analyst Alex Hankewicz, in his recent article on ERP solutions for “mixed-mode” manufacturers, summed up some of the differences nicely:

“[In general,] discrete manufacturing uses bills of materials (BOMs); process manufacturing uses formulations, also known as recipes.

A discrete manufacturer assembles products along a production sequence routing, whereas a process manufacturer blends in a batch.

In discrete manufacturing, a multi-level BOM is used to produce a finished good, indicating the base unit of measure with all the lower level assemblies and subassemblies featured below. In process manufacturing, all sequential steps are held within the product formula, including all relative secondary products. Batch sizes are based on specific units of measure and vary according to the formula and product yields.”

Discrete ERP software also focuses on the automation of such business processes as materials sourcing, resource scheduling, and customer order management. Potential benefits include improved workstation use and scheduling (leading to reduction of assembly line downtime), just-in-time (JIT) inventory management (thus reducing carrying costs), and a reduction in overtime. (Note, however, that JIT can be applied to process manufacturing as well.)