Go lean for inventory-turn and lead-time cuts

It appears that like many Americans, drug company manufacturing ops are far from lean. In a long-term cross-industry study that uses inventory turns as an indicator, pharmaceutical companies hold the bottom spot. Johnson & Johnson, now struggling with a 50-million unit product recall and fighting DoJ kickback accusations, shines as one of just two drug companies adept at lean manufacturing.

The drug industry's "but we're different" excuse for avoiding lean, first espoused during far better economic times, no longer holds water, writes Robert Spector of Tunnell Consulting in Pharmaceutical Manufacturing. A history of corporate spending on the favored children--R&D and compliance--has left its mark on operational efficiency and production costs.

In a case history, the author shows how adoption of a manufacturing pull system produced lower inventories and reduced variability within the cost-challenged plant of a global manufacturer. Set-up reduction and other lean techniques also contributed to a work-in-progress inventory reduction of 35 percent and a 56 percent cut in production lead time, among other cost-saving improvements.

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