The importance of production capacity and strategic planning in pharmaceutical manufacturing

The ongoing development of manufacturing sites is essential to provide future state readiness of a continually evolving business environment. Site Master Planning (SMP) is one common approach but is often misused. Site Master Plans should be reviewed regularly, at least annually, as part of business planning and future CapEx and cash flow forecasting.

The business environment will only change more rapidly in the future, and SMP plays an important part in realizing strategic plans for manufacturing-based organizations.

Site readiness evaluations should be carried out regularly and assessed against foreseeable future changes within the business landscape, underpinning a site’s future competitiveness.  Consequently, SMP processes should consider growth aspirations and product portfolios that can be delivered competitively. 

Failing to fully understand capacity drivers of existing operations will prevent senior leadership teams from defining development programmes with optimal capital employed.  By optimal capital employed, we're referring to allocating funding for asset improvement projects before first demonstrating that existing capacity utilization has been fully optimized.

It is important to be able to demonstrate answers to questions such as:

• How well will current manufacturing assets and supporting infrastructure cope with expected step changes?
• How much additional capacity can be generated from manufacturing and operational efficiency gains of existing manufacturing and operational assets?
• At what points in the future are the real demand and capacity trigger points for initiating new improvement projects?

High-level business planning spreadsheets are an easy way of kicking off such longer-term development reviews. However, we have often found that their general level of granularity is insufficient when trying to demonstrate how robust the underlying operational infrastructure and support systems are.

Without a reliable understanding of overall capacity, investment appraisal can be reduced to an argument for spend on subsidising inefficiency rather than genuinely providing growth-based ROI - the risk of investing in the right improvements at the right time is higher than it needs to be.  The resulting opportunity cost of conservative over-investment does not generally sit well with business owners or main shareholders.

Being able to adequately model modern-day complexities then becomes increasingly important for demonstrating the adequacy of existing systems, ensuring that the right improvements will be carried out at the right time and for the right reasons within an SMP exercise or review.

How to avoid mistakes, delays and data disasters

Every production manager working in the pharmaceuticals industry knows how costly mistakes and delays in the manufacturing process can be, both financially and reputationally.

Problems in planning and scheduling can leave them with no choice but to scrap entire batches and start again, wasting valuable raw materials, not to mention production time. Not only that, but they could also fall short of their contractual obligations, failing to deliver on-time, in-full (OTIF) and damaging their reputation as a result. 

Assuming drug development is always going to stretch budgets, manufacturers must look for other ways to keep expenditure down while ensuring compliance and quality standards.

Production managers need a data-driven Advanced Planning and Scheduling (APS) system. Unlike spreadsheets, these systems allow them to manage complex and interdependent processes and evaluate capacity quickly and easily. 

An APS system should have a 360-degree view of what is happening across the facility - raw materials can be ordered to arrive just-in-time, therefore reducing inventory costs, avoiding production delays and improving cash flow.

Data is key to streamlining and adding value to processes, and making this available on the cloud makes it accessible to everyone; there is no doubt that some CEOs and senior managers are nervous about storing data off-site, but they should be reassured to know that best in class cloud hosting platforms are highly secure, compliant with accreditations such as ISO27001 and often come with a data recovery service in place.

Elevate your progress after SMP reviews

APS models should not be resigned to the top shelf after completing an SMP exercise; planning and scheduling software can be consulted when assessing potential changes of direction in the SMP.

A high-level model should become the blueprint of the site’s production and operational activities and should be controlled and maintained so that it is always current and representative of how things are done; just as one would maintain updated as-installed records of the capital assets within the site.

With an accurate model of operational capacity, all members of the management team including finance, operations, sales, logistics and production, can make better and more transparent decisions working from a common understanding of why an investment is made, when and where. 

Having a planning and scheduling software solution that can display high level manufacturing plans over a 5 to 10-year period is a good visual way of demonstrating how strategic aspirations can be tested, as having a full view of past investments in existing assets can support identifying the trigger points for the optimised capital investment needed to deliver the plan. 

The workflow associated with developing models is also a productive way to bring people to a consensus on how operations are actually undertaken day to day.

Shareholders and executive leadership teams would expect those needing to invest in growth or to meet increased market demand to have already optimised existing capacity.