Operational Excellence Initiatives Lead to Competitive Advantage, Report Says

According to a new report published by Informance International (Chicago, IL, www.informance.com/pharmstudy, registration required), high performance pharmaceutical manufacturers outpace their peers in operational metrics such as asset utilization, overall equipment effectiveness, and operational availability by identifying and measuring key performance indicators in and across facilities on an ongoing basis.

Informance studied international pharmaceutical lines over six months, from January to June 2007. Their results revealed that best-in-class pharmaceutical enterprises outpaced their peers in operational availability by 77%, overall equipment effectiveness by 73%, and equipment failure by more than triple, keeping equipment loss at 7% of capacity versus 26% for their peers.

The study also showed that overall equipment effectiveness (OEE) in the pharmaceutical industry is significantly lower than in other manufacturing sectors. The average pharmaceutical OEE level was 29%, compared to 44% in the food and beverage sector. The report says that equipment availability is the primary cause of the OEE lag.

The study also examined downtime from the “big six” categories: shutdown losses; operational downtime; changeover downtime; equipment failures; process failures; and production adjustment losses (from time spent on changes in supply and demand). Best-in-class performers kept downtime from these categories to 33%, compared to 46% at average performers and 62% at laggard companies.

The key characteristics that differentiate the best-in-class companies from the rest are visibility of key metrics, more frequent measurement of those metrics, and an understanding of the financial impacts of change (both positive and negative). And even the best performers can achieve further improvements by increasing the granularity of their measurements and data, for example, from days to hours and hours to minutes).