SAP Life Sciences Perfect Plant

Introduction

When surveying the landscape within the pharmaceutical industry we can see that it is one that is in a state of change. In fact, it could almost be said that the past is not necessarily the prologue to the future within this one industry.

Large, broadly marketed blockbuster drugs such as Lipitor, Plavix, Nexium, and Advair have served the industry well over the past ten to twenty years. However, due to the changing nature of the market as well as constriction within the new drug development pipeline the industry is moving inexorably toward a niche, targeted therapeutics model coming to be known as Personalized Medicine^[1].

To demonstrate this point we can point to the fact that in 2000 more than 80 new molecular entities had been approved by the FDA, while in 2007 that number had contracted to 22. With spending at between $800 million and $2 billion to create a single new molecular entity, it is apparent that companies are investing heavily on new drugs—many of which may never make it to market—placing severe constraints on revenues and margins.

In addition, the manufacturing supply chain is now increasingly outsourced and fragmented in the same way as other “globalized” industries. The current reality is that a significant proportion of manufacturers in the Life Sciences industry are redistributing manufacturing resources and/or outsourcing much of their manufacturing to lower cost, contract manufacturers around the world.

With this global shift in manufacturing resources has come the recognition that, by virtue of historically high margins as compared to other industries, there has not been as big a push for increased efficiency as in other industries. In the wake of the era of blockbuster drugs companies in the Life Sciences industry such as Novartis and Wyeth are recognizing that the old economics don’t work anymore. They are embracing operational efficiency in the same manner that Toyota mastered Lean Manufacturing by adapting these business practices and embracing a business model commonly referred to as Compliant Manufacturing.

In all, these companies are recognizing that they not only need to spark innovation in new drug development, but also in their operations. Companies must be better able to track work in progress across a distributed manufacturing landscape as well as track communication along an extended global supply chain all while maintaining and improving on the standards of quality and compliance in a complex regulatory environment.

Therefore, Compliant Manufacturing supported by the SAP for Life Sciences solution portfolio provides companies with the ability to obtain visibility into all of their far-flung manufacturing operations in order to consistently attain a single version of the truth. Further, this information will be captured in real-time and placed into the hands of the people actually involved at the forefront of manufacturing—the VP of manufacturing operations and the plant manager—so as to drive efficiency, quality, compliance, documentation, and the holy grail of all manufacturing operations, being able to continuously improve on people, processes, assets, and plants.

In addition, SAP is not only committed to providing the best-in-class Compliant Manufacturing solution to this one industry, but is dedicated to being a strong partner to its customers. To this end, SAP has partnered with Tata Consultancy Services and Werum Software & Systems to create the Perfect Plant Center of Excellence in order to help SAP customers envision the realm of the possible.

Perfect Plant Center of Excellence

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Located in Newtown Square, Pa., the Perfect Plant recreates the plant floor environment in order to allow users to test drive end-to-end, real-world manufacturing business processes through SAP solutions and partner composite applications. Acting as something of a flight simulator the Center uses role-specific user dashboards and scenarios to help manufacturers visualize performance outcomes.

The Problem

When looking at why manufacturers within the Life Sciences industry are beginning to embrace efforts to achieve operational excellence via a Compliant Manufacturing model, we see one overarching challenge broadly faced by the industry—the inability to deliver high quality products to customers consistently and complying with GxP requirements at the lowest cost of operations, compliance and ownership.

We can further break this general explanation down into three categories of pain points and add to each their associated manifestation within the industry and their relative impact:

Pain Point I

Many companies face the inability to consistently deliver high quality products to customers, while meeting manufacturing budgets with their distributed manufacturing operations.

Manifestation – Most manufacturing plants in the Life Sciences industry operate at 40 to 70 percent of capacity with significant quality issues, inefficiencies and high inventory levels. This is primarily due to a lack of real-time visibility into manufacturing and quality issues, resulting in:

·         Customer due dates violated

·         Customer orders and revenue opportunities lost

·         Time and resources consumed with firefighting and expedites due to quality issues

·         And lack of sufficient capacity in-house or with contract manufacturers

Impact – The associated impacts include:

·         Low order fill rates and missed customer shipments (5-20 percent)

·         Higher operational expenses (5-15 percent)

·         High frequency of firefighting and expedites (7-20 percent)

·         And higher cost of quality and maintenance (5-15 percent) from rejects, rework and waste.

Pain Point II

Many manufacturers face the inability to document, validate and therefore comply with GxP requirements at the lowest cost and with minimal risks.

Manifestation – many manufacturers lack an automated, exception-based, replicable, and paperless system for accessing, monitoring, documenting, measuring, reporting and validating people, equipment and processes across the manufacturing lifecycle resulting in:

·         Warning letters from the FDA and other regulatory agencies, plant shutdowns and high penalties

·         Excessively high cost of compliance

·         Very high risk of non-compliance

·         And loss of revenues from delays in bringing products to customers.

Impact – The associated impacts include:

·         High penalties and fines from GxP non-compliance (5-25 percent)

·         Cost of compliance can be as much as 25 percent of the operating budget for a medium to large manufacturing facility

·         And the cost of compliance is 5 to 30 percent higher than industry benchmarks

Pain Point III 

Many manufacturers have not yet bridged the disconnect between the plant floor and the enterprise at the lowest total cost of ownership (TCO).

Manifestation -- Less than 2 percent of all Life Sciences manufacturers have any kind of automated, enterprise-wide integration between their ERP and plant floor systems. In many instances, manufacturers lack integration between the numerous systems located within individual facilities. Together, these two issues have led to:

·       Astronomical TCO with regard to plant IT

·       Avoidable and costly manual entry of plant data into the backend ERP system

·       Lack of real-time visibility into manufacturing exceptions or deviations as well as root causes

·       And the inability to benchmark or replicate best practices across multiple plants.

Impact – The associated impacts include:

·         Prohibitive TCO of integrating plant floor IT systems with ERP using in-house resources

·         Extended time to integration of systems

·         And very high (5-10 people per plant) and avoidable cost of Full Time Equivalents (FTEs) engaged in manual entry of plant data into ERP.

Pain Points by Role

It is also important to break these challenges down by role. In particular, we should look at the two roles that comprise the forefront of manufacturing operations—the VP of manufacturing/operations operations and the plant manager.

VP of Manufacturing/Operations – The primary role of the VP of manufacturing/operations is to manage manufacturing performance across multiple plants in multiple locations. This role, perhaps more than many others, is reliant on data gathered, determined and stored in the ERP system, such as demand forecasts and production volume. However, due to the disconnect between the plant floor and the enterprise, what is actually happening within particular plants and how events impact the ability of this person to make correct and right-time decisions is severely limited.

Without a holistic and integrated system to provide and manage unified, real-time data, this person faces a number of challenges that include:

·         Inability to deliver high customer service and improve on margins

·         Inability to monitor, measure, analyze and control performance deviations of people, processes, plants and assets

·         And the inability to compare and benchmark performance across multiple plants.

Plant Manager – Individual plant managers face similar challenges brought about by the lack of integration between the plant floor and the backend ERP system. However, they are often also impacted by a lack of integration among in-house systems or disconnects created by a lack of homogeneity due to myriad homegrown, legacy and point applications from multiple vendors with differing architecture platforms.

For example, lack of integration or disconnects, created by a heterogeneous environment, between the Manufacturing Execution systems, which detail what is happening on each line, and the Shop Floor Automation and Control Systems, which detail what is happening during each shift, present significant challenges to plant managers. These include a lack of visibility into:

·         Exceptions as they are occurring

·         Alerts pertaining to missed orders

·         And actual performance as compared to performance targets.

These issues result in:

·         Inability to deliver high customer service levels and improved profitability

·         Lack of actionable insights for right-time decision making, which lowers operational performance

·         And the inability to monitor, measure, analyze and control performance deviations among people, processes and assets.

Further, similar challenges and related impacts could be delineated for numerous other roles such as those of quality inspector, production planner and production supervisor.

How SAP Enables Operational Excellence in Compliant Manufacturing Operations

Only SAP via its Life Sciences solution portfolio—SAP ERP, SAP MII (Manufacturing Integration and Intelligence), SAP VIP (Visual Information for Plants), the SAP NetWeaver technology platform, and the Perfect Plant Center of Excellence—provides a comprehensive for manufacturing quality products compliant with GxP regulations at the lowest cost of operations, compliance and ownership. In short, only SAP provides the portfolio of systems and resources to enable customers to take one very big step toward embracing the principles of operational excellence as defined by Compliant Manufacturing.

In particular, only SAP consistently delivers high quality products to customers at the lowest cost of operations. SAP customers will experience:

·         Comprehensive manufacturing planning, execution and quality management capabilities in a single solution lowers operational expenses by 5 to 30 percent

·         Rich, unified, real-time visibility to alerts, KPIs and reports for superior performance of people, assets, processes and plants

·         And plug-in complimentary capabilities for Weigh & Dispense from SAP partners such as Werum, Camstar, as well as other PBNM (Policy Based Network Management) systems suppliers at a lower TCO.

SAP customers will also be able to manage GxP compliance requirements, by exception, at the lowest cost of compliance. Customers will be able to:

·         Manage and validate GxP compliance requirements across people, equipment and processes on a single solution through EBR and manage these by exception at a lower risk of non-compliance

·         And integrate with SAP’s Governance, Risk and Compliance (GRC) solution to enable financial (SOX, Basel II), environmental, global trade and operational compliance on a global scale across the enterprise. This single solution will lower to total cost of compliance for most companies by 10 to 30 percent.

SAP customers will also be able to bridge the disconnect between the plant floor and the enterprise at the lowest TCO:

·         Pre-built connectivity from SAP ERP to real-time plant floor systems enables integration in 2 to 16 weeks per plant, at the lowest TCO (2 to 5X)

·         The SAP solution enables true and scalable plant to enterprise business process interoperability using ISA S-95 standards.

·         And enables real-time visibility into manufacturing exceptions and performance deviations as well as root causes, lowering the cost of expedites and firefighting.

In all, the SAP for Life Sciences solution portfolio addresses today’s—and due to its interoperability and scalability—tomorrow’s challenges faced by Life Sciences manufacturers.

Why SAP is Your Partner of Choice for Operational Excellence

SAP is more than just a provider of leading edge IT solutions for manufacturers in the Life Sciences industry; it is a partner fully capable of helping provide the resources to facilitate a high level of innovation as your company moves toward operational excellence.

In particular, the Perfect Plant Center of Excellence provides a virtual view of a Life Sciences plant floor environment in order to allow SAP customers to test drive end-to-end, real-world manufacturing business processes through SAP solutions and partner composite applications. By breaking down manufacturing operations by specific role, the Perfect Plant Center of Excellence is a testing ground for SAP clients to visualize specific performance outcomes via role-specific dashboards in a way that matches their unique needs, concerns and environments.

One could think of the Perfect Plant Center of Excellence as a flight simulator for Life Sciences manufacturers intended to initiate rich, data-centered discussions on the real of the possible and how SAP can support customers as they strive for operational excellence.

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Role Based Scenarios

The following scenarios outline how life would change—for the better—within an SAP for Life Sciences solution portfolio enabled Compliant Manufacturing system:

VP of Manufacturing/Operations

The VP of manufacturing/operations can achieve a multi-site operational view to assess how well one plant is running vis-ŕ-vis another in terms of people, processes and resources to monitor, measure and improve operational performance. One possible scenario supported by the Perfect Plant Center of Excellence is as follows:

• The SAP MII dashboard presents the VP of manufacturing/operations with KPIs across multiple plants. Additionally, a global view of KPIs is provided in SAP MII for the VP of manufacturing/operations.
• The VP of manufacturing/operations observes that service levels are going down at a global level. In this case, the service levels are computed based on the number of on-time orders against total orders processed at various plants.
• In order to investigate further, the VP drills down from the global view to each plant-specific view of service levels. The VP observes, for example, that a bulk plant is under-performing and s/he can drill down further to view the orders per material at the bulk plant.
• In a similar manner, the VP gets a global view of stock value and OEE parameters and can drill down further at the local plant level to view details.
• Thus, the VP has overall visibility into exceptions and performance deviations. The VP can monitor the KPIs across multiple plants with a global view as well as a plant level view, which assist him/her in benchmarking and key decision making.

Plant Manager

Plant managers have a plant-wide view of system performance and resource utilization to ensure thay are meeting KPIs, sense and respond to exceptions when they happen and enable continuous improvement of assets, processes and people. One possible scenario supported by the Perfect Plant Center of Excellence is as follows:

• The plant manager is able to see the batch status in the Plant Manager “Quality Level” view. There, s/he sees the value of the last rejected batches as well as historic quality KPIs.
• The KPIs that the plant manager monitors are supplier service levels such as first pass quality, return deliveries, and write-offs. The KPI definitions are explained via linked pop-ups.
• In the plant manager “Capital Lockup” view the plant manager can monitor the stock values of the material types (raw materials, WIP and bulk stock) as well as work-in-progress and capture the shelf-life of the product batches.
• Batches based on “minimum shelf-life remaining” can be viewed in SAP MII to assist the plant manager in scheduling, for example, the packaging plant.
• The plant manager is also able to monitor the on-time completion and on-time delivery of orders along with available days of supply (current inventory levels) and stock-outs.

The plant manage can also observe the OEE (Overall Equipment Effectiveness) dashboards and focus on equipment that display degrading performance. The plant manager can then drill down to view the performance parameters (downtime and utilization) of the equipment over the past few months to assess the need for scheduling preventative maintenance.

The Best Run Companies Run SAP

Working toward operational excellence via Compliant Manufacturing is the right thing for manufacturers in the Life Sciences industry to do. And relying on SAP’s unique ability to support and facilitate the journey is the best means for these companies to proceed.

In short, the best run companies run SAP.

We say this not just because we believe it to be true, but because real-world companies—leaders in the Life Sciences industry—have come to rely on the SAP for Life Sciences solution portfolio and have achieved quantifiable results and have experienced tangible benefits from their relationship with SAP.

Success Stories

In particular, we can point to the experiences of the following companies:

Novartis

Novartis, headquartered in Basel, Switzerland, is one of the top five pharmaceutical manufacturers globally with more than 90,000 employees in 140 countries and revenues in 2005 of U.S. $32.2 billion.

Further, Novatis is said to be well on its way of becoming the Toyota of the pharmaceuticals industry by using the Lean Manufacturing processes enabled by SAP solutions. Recently, SAP joined Novartis in order to help the company:

·       Achieve a vision of becoming the leader in Compliant Manufacturing in the Life Sciences industry while also maintaining compliance

·       Extend Lean Manufacturing from the supply chain to the plant floor using SAP

·       And manage Lean Manufacturing by exception

Novartis chose SAP as its partner in this project due to SAP’s:

·         Ability to implement transactional integration between SAP ERP and plant floor systems enabled in weeks per plant at lower TCO

·         Rich, unified visualization of manufacturing data, metrics, exceptions, and performance delivered in real-time via role-based dashboards

·         And SAP’s ability to support extending manufacturing processes beyond the plant floor (i.e. supply chain) and vice versa.

The key projected benefits include:

·         Real-time data, metrics, exceptions, reports and performance delivered to managers and production personnel

·         KPI driven exception-based management of Lean Manufacturing across plants

·         And protection and leverage of investments in current plant IT infrastructure and integration with SAP ERP at lower TCO

Wyeth

Wyeth Pharmaceuticals is one of the world’s largest research driven pharmaceutical and health care products companies. The company operates in more than 100 companies with approximately 50,000 employees worldwide and sales in 2007 of U.S. $22.4 billion.

Therefore, when they began an initiative to drive continuous process improvement via a Compliant Manufacturing model, Wyeth sought out SAP as its key partner. In particular, Wyeth wanted to:

·         Increase process and operational effectiveness

·         Close coordination between manufacturing and research in order to support the R&D productivity model

·         Create standard business processes

·         Achieve consistent and sustainable compliance

·         Employ standard metrics to realize true ROI

·         And reduce costs and increase utilization of assets.

To achieve these goals Wyeth began an initiative to move to standard business processes and integrate business systems as well as promote operational excellence across the enterprise. This meant integrating the company’s ERP, MES, LIMS (Laboratory Information Management System), and its EDMS (Electronic Document Management System).

Further, to accelerate operational excellence Wyeth realized it needed to leverage investments in its current systems so as to develop the capability to retrieve information from an authoritative source and the ability to aggregate data from multiple sources to a specified business context. Basically, Wyeth needed to integrate its R&D and production systems with its quality and compliance systems into a unified and seamless operational system.

The means to achieve the company’s goals was the integration of a Data Analysis & Reporting Tool (DART). Underlying the ability of Wyeth to integrate these many disparate systems into the DART is the SAP for Life Sciences solution portfolio.

When integrated with the company’s existing systems the DART enabled:

·         Real-time data retrieval

·         Data analysis and visualization

·         And process capability improvements and fact-based current Good Manufacturing Practices (cGMP) decisions.

In all, Wyeth expects to save between U.S. $1.3 and $7.4 million per year, per plant.

Conclusion

The shift toward a model of operational excellence as defined by Compliant Manufacturing within the Life Sciences industry is inexorable. Given the constriction in the new drug pipeline, increased regulation and related costs, and significantly high R&D costs within this one industry, the fact is that margins are being squeezed as never before.

It is incumbent upon CEOs and other leaders within this one industry to seek out and embrace a system for operational excellence in order to begin the process of weeding out waste and inefficiencies so as to support continued growth in margins.

Only the SAP for Life Sciences solution portfolio—with the support of the Perfect Plant Center of Excellence—provides a comprehensive solution for manufacturing quality products compliant with GxP at the lowest cost of operations, compliance and ownership.