Reduction of Setup Time through SMED Approach: A Case Study in the Pharmaceutical Industry

Reduction of Setup Time through SMED Approach: A Case Study in the Pharmaceutical Industry

Prabir Kumar Bandyopadhyay (Goa Institute of Management, Poriem, India), Sandeep Naik (Goa Institute of Management, Poriem, India) and Kunal K. Ganguly (Indian Institute of Management, Kashipur, India)
DOI: 10.4018/IJAMSE.2015070102
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This paper discusses various issues involved with process improvement in pharmaceutical manufacturing firms which creates impediment in introducing change in manufacturing process and refers to the initiatives taken by PAT (Process Analytical Technology) Framework, which encourages pharma companies to introduce change in manufacturing processes for productivity improvement. Setup time contributes a substantial amount of reduction in machine availability in pharma companies. Through a case study of a pharma manufacturing firm the paper explains how SMED can be implemented resulting substantial saving of down time without increasing the work load of the operators. It shows how the activities involved in machine setup can be divided in two classes—internal and external—and how ECRS (Eliminate, Combine, Rearrange and simplify) principles can be applied to reduce the activity time.
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1. Introduction

The Pharmaceutical companies drove the industry through large marketing budget and blockbuster strategy during the last decades. But this will not work today as many blockbuster drugs have gone generic. Generic producers are also facing their own challenges such as Generic Drug User Fee Amendments (GDUFA) fees, market consolidation, and formulary price control. So cost reduction in the whole supply chain of drug delivery without compromising quality has become paramount need for survival for pharmaceutical firms. This is also required to provide pharmaceutical products at affordable cost to the public in general.

The challenges facing pharmaceutical manufacturing have increased dramatically as well. Today’s pharmaceutical engineers and manufacturers face economic and regulatory pressures, accelerating costs and technological changes. Once manufacturers confirm or validate their processes as compliant, they traditionally have been very reluctant to change them. In other words pharmaceutical manufacturers, which historically have enjoyed consistently robust profit margins, have had little economic incentive to introduce change. The cost of noncompliance to the regulatory requirements is huge. This has also generated a resistant to make change in already established processes.

The industry’s focus on maintaining the status quo in its manufacturing environment has produced inefficiency and waste. According to some estimation improvement in efficiency in pharmaceutical manufacturing firms could result in cost having of about US$ 90 billion, world-wide. Research and Development (R&D) is generally perceived as a major cost centre for the pharmaceutical industry but manufacturing accounts for more than twice the expense of R&D—representing, on average, which comes to about 36 percent of a pharmaceutical manufacturer’s costs without considering non-value-added activities and waste involved in manufacturing which is 80 percent and 50 percent, respectively (Constantinou and Danese, 2014).

Quality has also suffered under the status quo. It is interesting to consider that the number of drug recalls has risen sharply in recent years—three-quarters of which are attributed to manufacturing defects. According to Dennis et al. “The reject percentage in the pharmaceutical industry ranges from 5 percent to 10 percent (<2 Sigma), compared to 0.0001 (6 Sigma) in the semiconductor industry. This reject-percentage costs the industry between US$ 4.5 billion and US$ 9 billion per year based on US$ 90 billion/year spent on manufacturing” (Constantinou and Danese, 2014). It is time to challenge the status quo and to focus on improving productivity, efficiency and quality.

Realizing the real and perceived barriers to bring improvement in pharmaceutical manufacturing Federal Drug Administration has brought a regulatory framework-PAT (Process Analytical Technology) which aims to foster improvements in manufacturing efficiency and quality analysis (FDA).

The PAT approach is to build in quality improvements on the factory floor through a deep understanding of how variable process attributes affect product quality at a fundamental level.

Innovation in setup time reduction play a vital role in reducing cost of production in pharmaceutical industry as in the pharmaceutical industry, the equipment is more complex and therefore more difficult to clean and maintain. Reduction in setup time also helps increase the overall equipment efficiency and operate (Duraccio et al., 2014).

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