how the pharmaceutical industry can benefit from the ... · akqdip_141023_01_dip_how the...

How the pharmaceutical industry can benefit from the automotive sector

PDA Europe – Parenterals 2014

D. Pfitzer, Porsche Consulting GmbH

Munich, November 4 - 5, 2014

Pharmaceuticals are not exactly automotive …

Source: Photos: Istockphoto; Porsche AG

AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 2

… but we are all striving for the same operational excellence

Operational excellence is the desire and ability of an organization and its employees to consistently deliver top performance, time and again.

Porsche Consulting 3

Source: Porsche Consulting; photo: Porsche AG

AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx

1992 was the start of a new era for Porsche

Porsche Consulting Source: Porsche Consulting, Porsche AG; photo: Porsche AG AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 4

Survey of the top 20 pharmaceutical companies: None of the companies surveyed focused on operational excellence before the year 2000

Source: Porsche Consulting, Study 2013; photo: Istockphoto AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 5

In what year did you start structured programs to achieve operational excellence? 44%

33%

0%0%

1995 - 2000 > 2010

23%

2006 - 2010 2001 - 2005 < 1995

Implementation from 2000

Porsche Consulting

Porsche has rigorously implemented operational excellence since 1992

Source: Porsche Consulting, Porsche AG; photo: Porsche AG AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 6

The key to a sustainable increase in productivity lies in the combination of continuous improvement and new concepts

-74% Model change 964 à 993

Model change 993 à 996




Source: Porsche Consulting, Porsche AG; photo: Porsche AG

50%

100%

0%

25%

75%

Production time Porsche 911

Year 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 91 09 10 11 12 13

Continuous improvement New concept

OEEs are an indicator of high productivity: It is generally known that OEEs are higher in the automotive sector – but why?

90%

40% AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 8

* OEE = Utilization rate in % (machine utilization = 100%) x Performance coefficient in % x First-time-right rate in %

Source: Porsche Consulting; photo: Porsche AG, Fotolia

At Porsche, cross-series assembly concepts are one of the reasons for the high OEEs


Result

Imple-mentation

Customer relevance

§ The same modules are used in different products

§Modules are assembled in the same way

§The focus is on assembly processes and thus on reducing production times

§ Individual design and distinguishing characteristics "in the rear view mirror"

To summarize: 6% increase in productivity year over year due to operational excellence

* Porsche Zwischenholding GmbH ** Calendar year 2010 Source: Porsche AG, Annual Report


89.123

105.162101.844102.602

73.284

55.78248.815

45.119

38.00732.390

20.79119.34815.082

23.23427.525

165 .808

17.50215.30713.15912.72212.65212.20211.57111.38411.87811.66810.69910.1439.7529.3208.7128.1517.9597.1076.8476.9708.4319.005

19.456

0

20.000

40.000

60.000

80.000

100.000

120.000

140.000

160.000

180.000

2013 2012

151.999

2011

127.793

2010**

95.564

09/10* 08/09

76.739

07/08 06/07 05/06 04/05

90.954

03/04

81.531

02/03 01/02

55.050

00/01 99/00 98/99 97/98 96/97 95/96

20.242

94/95 93/94 92/93

7.133

91/92 90/91

Employees Production

In the pharmaceutical industry also, expectations from introducing of operational excellence have been met – overachievement, however, is rarely the case

Source: Porsche Consulting, Study 2013; photo: Fotolia AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 11

0%

0%

11%

89%

Results not recorded/evaluated

Expectations not met

Expectations exceeded

Expectations met

How satisfied are you with the results achieved?

Porsche has defined an annual increase in productivity of 6% as one of its goals – the greatest contribution now comes from outside Production*


28% of 100% potential through

operational excellence

72% of

100% potential through operational excellence

Development 28% Sales 23% Finance 13% Personnel 8%

* FY 07/08 - 09/10 Source: Porsche AG, R. Kallenberg, October 2010; photo: Fotolia, Porsche AG

What potentials have you already achieved/planned through operational excellence?

Looking ahead: 75% of pharmaceutical companies strive for an increase in productivity of 5% to 10% within a period of 2 years

Source: Porsche Consulting, Study 2013; photo: Fotolia AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 13

0%

75%

25%

0%

> 20% 11 – 20 % 5 – 10 % < 5%

25%

50%

25%

0%

In the past 2 years

In the next 2 years

Increase in productivity

Porsche has optimized its supply chain – transparency makes the greatest contribution to efficiency and inventory reductions


Order management

Program planning

Resource planning

Demand

Capacity/ restrictions

Balance between capacity and demand

Customer

Order book

Local markets/sales

Model & option planning

Factories Suppliers

Source: Porsche Consulting, Porsche AG

By implementing a new logistics concept, Porsche further reduced its inventory at the Leipzig plant

Porsche Consulting Evaluation of Porsche Leipzig October 2012 (6-monthly average goods receipt to installation location) Source: Porsche Consulting; photo: Porsche AG


Example of internal logistics

Source: Porsche Consulting, Porsche AG


Example of process chain for assembly part from logistics hub to installation …

"That's quite a logistical feat: I don't know of any other factory in the world where the principles of lean production have been implemented as consistently as here in Leipzig"

Dr. Michael Macht, former production member of the Board of Management of Volkswagen AG

Hub Receiving area

Staging Picking

Picking in the warehouse

Delivery at the line

Installation in the vehicle

09:15 14:15 14:20 14:30 09:10 06:00

Inventories are at < 1 days range with 22% lower logistics costs

* Evaluation of Porsche Leipzig October 2012 (6-monthly average goods receipt to installation location) Source: Porsche Consulting

-22%

Internal logistics

Transport

Result NLC

Target value for planning


Inventory Costs

-62%

Actual*

< 1 day

Start (2007)

2.1

In the pharmaceutical industry, there are high inventory coverages in API, bulk and packaged finished products

Source: Porsche Consulting, Study 2013; photo: Istockphoto AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 18

0%

25%

0%

38%38%

< 50 days

> 200 days

151 - 200 days

101 - 150 days

50 - 100 days

13%25%

13%

38%

13%

25%

50%

0%13%13%

API

Bulk

Packaged finished products

How high are the average inventory coverages in your company?

Optimization of the end-to-end supply chain is also one of the most important starting points for increasing efficiency in the pharmaceutical industry in the future

* Miscellaneous: Standardization, quality improvements in production and sales Source: Porsche Consulting, Study 2013; photo: Istockphoto, Panthermedia, Fotolia


22%

33%

67%

89%

Outsourcing

Miscellaneous*

Supplier management/ integration

Optimizing the end-to-end supply chain

On what areas will you concentrate in the next 2 years to counter increasing cost pressures? (multiple answers possible)

Due to the low real net output ratio, professional supplier management is an important success factor at Porsche – the complexity is enormous

§Approx. 10,000 individual parts §Approx. 3,000 item numbers §Approx. 1,000 purchase items §Approx. 300 suppliers per vehicle §Approx. 150 key components over €20

Source: Porsche Consulting empirical values (average values across several OEMs); photo: Porsche AG AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 20

Example: The steering wheel is one of 150 assemblies



The steering wheel can again be differentiated in seven sub-assemblies …

Base carrier

Crest

Airbag

Trim

Switches

Wood/ carbon

Leather covering



… which are procured through an international supplier network

Installation

Installation

Assembly

Crest

Leather

Blind cover Finish

Sports cover Leather covering

Molding, foaming Leather covering Basic cover

Y-shaped trim Magnetic ring Light guide Scroll wheel Circuit board Assembly

Veneer PU milling Veneering Covering Painting Polishing Assembly

Finish

Airbag Cartridge Assembly

Cover Button Paddle Finish

Container

Switch mat

Leather covering

Role of Porsche

§ Specification

§ Integration

§Quality management



Porsche maintains long-term supplier partnerships – already in the early stages of development


Product development phase

Supplier assessment

Supplier development in PDP

Program readiness Task force

Supplier optimization program

Series phase

Support for concept

development

Preventative supplier

integration

Preventative start-up assurance

(purchased part mgt.)

Reactive start-up assurance

(purchased part mgt.)

POLE- position

Supplier management and integration will play an important role in the pharmaceutical industry in the future

* e.g. replenishment time, weekly capacities, delivery accuracy, quality Source: Porsche Consulting, Study 2013; photo: PantherMedia


What tools do you use or plan to use in the area of supplier management? (multiple answers possible)

A suppliers B suppliers C suppliers

2244

3311 2211

11

56

2233

0

33

11

67

11

44

0

44

Present Planned

11

67

2222 1122

Continuous assessment of supplier performance

Transparent costing (open book)

Target agreements*

Supplier assessment


Can Porsche do everything better?

No. Porsche just focuses better on the core competencies

What does "core competence" actually mean?

Prevents the potential for imitation

Allows access to markets

Differentiation

Cannot be imitated

Customer benefits

Diversification

Contribution to customer benefits

Differentiates from the competition

Porsche Consulting Source: Prahalad/Hamel “Core competencies of the organization”, photo: Fotolia AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 27

Example: At Porsche, the focus is on "driving dynamics" as a core competence

Fast follower

First mover

Late follower

Non follower

§Valve drive control

§Braking technology

§Turbo technology

§Communication systems

§Comfort equipment

§Hydrogen technology

§Best in Class

§Best in Class

§Best in Class

§State-of-the-art

§State-of-the-art

§–

Market strategy Objectives



67% consider production as a core competence – although the companies surveyed were exclusively research-based pharmaceutical companies

* Miscellaneous: Pricing & access Source: Porsche Consulting, Study 2013; photo: Fotolia


What areas in your company do you view as core competencies? (multiple answers possible)

11%

89%

67%

33%

67%

56%

56%

89%

Miscellaneous*

Sales & Marketing

Manufacturing/ production

Licensing

Phases I - III

Phase 0

Preclinical phase

Research

And in production also, almost all production steps are declared as core competences

* Active pharmaceutical Ingredient ** Contract manufacturer (CMO) Source: Porsche Consulting, Study 2013; photo: Istockphoto


What areas within production do you view as core competencies? (multiple answers possible)

67%

67%

78%

89%

78%

Packaging of sterile products

Packaging of solids

Bulk/finished medicinal products

Sterile products

Bulk/finished medicinal products

Solids

API*/ active pharmaceutical

ingredients

Conclusion

Operational excellence is not industry-specific

No company has core competence in all areas – recognizing this fact extends the horizon

Porsche Consulting Source: Porsche Consulting; photo: Fotolia AKQDIP_141023_01_DIP_How the pharmaceutical industry can benefit from the automotive sector.pptx 31

Operational excellence does not happen by itself, but is a result of hard work

D. Pfitzer Tel.: 0170 911 3376 E-mail: [email protected]


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