The key paradigm shift required to improve both reliability and output simultaneously in this environment is to opt for a more dynamic approach to manufacturing, one which does not need to depend on sales forecasts or monthly planning. However, a competitive edge awaits companies that are bold enough to challenge the status quo and make a paradigm change in operations. Most pharma organizations have resigned themselves to these challenges because many others in their industry follow similar practices and suffer from the same problems. Frequent instances of discounts, air freight, and write-offs can significantly impact the bottom line. Disposing of excess inventory involves offering deep discounts or incinerating and writing off expired stock. However, if demand doesn't meet expectations, excess inventory accumulates in warehouses, sometimes up to six to eight months' worth for certain SKUs. Frequent such instances compel companies to forecast demand aggressively. So, to meet commitments, the manufacturer is often forced to send the shipment by air, resulting in additional expenses. High FG inventory and High airfreight expensesĭelay in the delivery of orders could lead to sales loss (as there is usually more than one generic for a drug). The more the plant dispenses batches, the worse are the traffic jams in the plant, and poorer is the output. When a pharma manufacturing unit experiences repeated on-time failures, and plant managers face the wrath of irate customers, they inevitably feel the pressure to dispense orders to the shop floor as early as possible (an attempt to finish sooner). Decreasing outputs lead to a decline in the plant's on-time order performance. Empty routes naturally yield low output, while overloaded routes drop output due to unplanned changeovers to prevent deviations. New batches tend to be dispensed according to the monthly plan regardless of emerging overload or underload downstream, worsening the situation. Lower output and poor On-Time In-Full (OTIF) Conversely, some batches may finish faster than expected at some departments, or orders might be delayed upstream, causing underload situations in downstream departments. ![]() However, due to fixed routes and intersecting paths, multiple batches might converge at downstream departments, causing overload. Initial departments handle batches smoothly. Once procurement and QC secure raw materials, batches are dispensed according to the monthly plan. Overload and Underload of production routes When capacity, already under pressure, is wasted on these tasks, it heightens urgencies and stress in the department. In such an environment of frequently changing priorities, the chances of human error increase, precipitating Out-Of-Specification (OOS) or Out-Of-Trend (OOT) instances, which in turn automatically trigger time-consuming investigations with attendant paperwork. ![]() When WIP is high and ‘what production is asking for today’ is a priority, the availability of raw materials for subsequent orders becomes more uncertain. QC capacity is diverted to accommodate new testing, increasing open cases (WIP). The monthly plan changes spur demand for unplanned QC-tested raw materials, disrupting planned QC campaigns. Consequently, in addition to incurring expediting expenses, the firm’s existing stockpiles may remain unused for months, resulting in excess inventory and write-offs. This prompts procurement to expedite materials per the new plan, sometimes resorting to costly air shipments for high lead-time items. However, fluctuations in material availability or market urgencies often require plan adjustments. To ensure timely raw material availability, procurement aligns orders with sales forecasts and monthly production plans. Procurement, QC and release/dispensing are expected to align with this plan. ![]() The monthly manufacturing plan includes campaigns of batches, which have to be released and produced one after the other, formed by clubbing requirements across the month. Operational challenges due to monthly rolling plans Therefore, to extract proper efficiencies while also allowing for some course correction in operations most companies use a monthly rolling plan method with some agreement on a freezing period. A pursuit of agility in this environment might endanger the much-needed cost efficiency. Companies are under increasing pricing pressure (especially in the primary market - the US, due to intensifying competition and distributor consolidation).
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