From Lean to Continuous Manufacturing
Courtesy of MIT Industrial Liaison Program
October 30, 2009
The idea started with a plane ride. While seated on a long-distance flight, Tom van Laar, Head of Global Technical Operations at Novartis Pharmaceuticals, had a chance conversation with the company’s CEO about manufacturing limitations. The question raised was, "Why does manufacturing have to be batch oriented and discontinuous?" Van Laar took that as a challenge and the results of his ideas are transforming the pharmaceutical giant’s manufacturing system to a streamlined, ultra-efficient process utilizing novel technology and equipment not presently available to the pharmaceutical industry.
"The pressures on reducing health care costs globally are enormous," says van Laar. "It requires pharmaceutical companies – including their manufacturing capabilities – to find ways to lower the costs to produce the drug to lower the cost to the market and patient without sacrificing compliance." Additionally, manufacturing needs to adapt to the larger issues facing global pharma companies by improving speed to market times to support new product launches and shortening patent lives.
Lean: Optimizing the Existing
The first step in Novartis’ manufacturing transformation began in 2003 when it shifted to Lean manufacturing – a highly-efficient, optimized, process-oriented manufacturing system and culture.
Lean manufacturing is synonymous with just-in-time manufacturing. "Other industries have been doing it since the 80s and 90s but the pharma industry, for various reasons, including the issues related to our regulatory requirements, never embraced it." That changed in 2002 when van Laar joined Novartis and set in motion the global evolution of the company’s manufacturing facilities and supply chain into a Lean operation. Today, the majority of the company’s 23 global major manufacturing sites have gone lean. "It’s not 100% done yet," explains van Laar, "but we’re basically transformed from a traditional to a Lean organization." Today, most of the pharmaceutical industry continues to follow a traditional hierarchical and functionally oriented manufacturing system.
Elimination of Waste
The first component to Lean manufacturing is elimination of non-valued added work or waste at every step in the manufacturing process. "Because we manufacture across a long supply chain that includes chemical operations, pharmaceutical operations, transportation, warehouse, and distribution, we needed to synchronize the reengineered process so that it goes in a more predictable flow, almost a rhythm," explains van Laar.
As a result, the company has improved throughput time by as much as 70%. "By reducing throughput time, it allows us to lower inventory levels without compromising customer service," he says.
When Lean was first introduced many people were skeptical, even resistant, to the change. Van Laar explains that the pharmaceutical industry is on heightened alert because of concern that Lean may force people to do things faster and compromise compliance with regulations. His response: "The truth is that if you do it right it should improve your ability to be compliant and improve quality."
The second requirement for successful Lean manufacturing is a cultural shift. "It required a mindset change," recalls van Laar. "If you just eliminate the waste and synchronize the supply chain but you keep high levels of management and functional silos you still can’t gain the benefits of LEAN." So as part of the LEAN transformation, Novartis radically changed the organizational structure and culture by eliminating functions and levels of management. "Somewhat similar to marketing franchises, we reorganized manufacturing by putting people into team with their leader being aligned with a product," he says.
Understandably, until people understood the new process, they were wary. But the results are real, measurable, and encouraging. Novartis has performed global surveys to measure LEAN improvements in a quantifiable and qualitative way. "All of those measures have shown significant, dramatic improvement at all locations and our major product lines." And he says the company has seen a cultural improvement globally where people feel better about their work. "If you have a lot of levels of management and isolated functional silos, people tend to be frustrated because they don’t feel empowered," he explains. "We see dramatic improvements across 17 different qualitative criteria reflective of how people feel about their work."
Continuous Manufacturing Next
But van Laar isn’t calling it a day. "Continuous manufacturing is the next step change we’ll see in our global manufacturing sites," he says. Lean was a change optimization of existing technology and equipment. "In contrast, continuous is creating new technology and equipment that doesn’t exist today to get to an even more efficient way of manufacturing," says van Laar. "This will take longer to implement because we are literally creating something totally different."
Right now, drug manufacturing involves many separate, isolated steps – even under Lean. "Continuous will instead be something like an imagined wide pipe where you would be injecting things along the pipe and in comes materials and out comes tablets," says van Laar. "Everything physically changes radically."
"The first step towards continuous will be technology-oriented," says van Laar. This is where Novartis and MIT have decided to formally partner. They are two years into a program – the Novartis-MIT Center for Continuous Manufacturing—to research and design the needed technology. About 50 people at Novartis and MIT are part of this joint effort, including MIT engineers, scientists and professors. "MIT works with our people in development and technical operations to design the technology that will allow us to go purely continuous," explains van Laar who works closely with MIT’s Bernhardt Trout, PhD, Professor of Chemical Engineering to design this novel technology.
"When the technology becomes available, the benefits will be huge," says van Laar. "We will no longer have a separation between chemical operations and pharmaceutical operations. With continuous, the physical facility will be so much smaller and producing much more flexible, tailored quantities that we can probably afford to have it in more geographic locations and closer to the market but at a much lower cost." This will allow the company to address a global change in the company’s expanding marketplace. "Several other emerging countries, including Russia, China, India, Turkey, and Brazil, are becoming a bigger part of our business and we have to adapt to that."
As with Lean, continuous manufacturing will require substantial organizational and cultural changes. "The organizational structure will be something totally different than today," he says. In that regard, Novartis has begun working with the MIT Sloan School of Management and MIT’s Leaders for Global Operations (LGO) Program to talk about how all of these areas – quality, HR – have to change radically again from Lean to the continuous manufacturing model. The company has already sponsored several LGO internships to support the move to continuous manufacturing.
Van Laar will be addressing the MIT community on the concept of continuous manufacturing at the "New Visions for Global Operations: From Product Development Through Delivery and Recycling" Conference on December 2 cosponsored by MIT’s Industrial Liaison Program, LGO, System Design and Management Program, and the Forum for Supply Chain Innovation. "We don’t have all the answers yet," says van Laar. "But this new process will be transformative in a way we have never seen before."