Lean earns Lundbeck big prize, cost cuts

Lundbeck has succeeded in cutting production costs by 25% for products made in-house. The savings are relative to 2006, when it began practicing lean production principles, the company said in an announcement.

The savings stem from the training of production managers to elicit improvement ideas from employees and then put the ideas into practice, said Lars Bang, senior VP for supply operations and engineering, according to the FT. In addition, video cameras aided workflow analysis, leading to further improvements.

The company did away with its small box packaging, which had caused four-hour production delays during product changeovers, in favor of large bags, according to the report. The substitution cut changeover time to less than an hour, the story said.

Other stats from the effort, as reported by FT: Production rose to 700,000 drug packs per employee per year, up from 380,000 in 2006. That change alone was enough for the company to bring back in house the two-thirds of its packaging work that had been farmed out to contractors. In addition, the story said, Lundbeck's API plants in Denmark and Italy are "producing in competition with companies in China," Bang said.

Production costs now amount to 20% of sales, the company said in the report, versus 25% across the industry.

The improvements were made at a production plant in Valby, a few miles west of Lundbeck's HQ in Copenhagen, and a plant in Lumsås, about 60 miles northwest.

- see the announcement
- here's the Financial Times story