Six Sigma: Panacea for the Biopharmaceutical Industry?

Table of Contents Title Abstract Introduction What is Six Sigma? Focus on Causes of Variation Primary Goal of Six Sigma: Process Improvement Exposing the “Hidden Factory” Is Six Sigma Strictly for Manufacturing? What is the key to Six Sigma? How does a Business Benefit from Six Sigma? Belts in Six Sigma Is Six Sigma embraced by the Biopharmaceutical Industry? How does a company implement Six Sigma? Managing Six Sigma projects Sustaining Six Sigma Six Sigma: Panacea for the Biopharmaceutical Industry? References 18 12 15 15 16 10 11 5 9 Page 2 3 3 3 4 4 5

Abstract Six Sigma is a process solving methodology based on statistics aimed at reducing variation in a process to 3.4 defects per million defect opportunities. It has the ability to detect critical underlining variables that lead to lost revenue, failure to meet customer expectations and finally exposing a company’s “Hidden Factory”. To convert practical problem into a statistical problem, generate a statistical solution and then convert that back into a practical solution, Six Sigma uses the DMAIC process. DMAIC is an acronym for Define, Measure, Analyze, Improve, and Control. DMAIC defines projects goals and deliverables to meet customer’s expectations, obtains a baseline of the performance of the process, determines the root cause (s) of the defects, develops steps for the elimination or reduction of defects and instils control the performance of the process. The benefits of Six Sigma include clear value proposition and return on investment, top commitment and accountability, customer focus, business metrics, process orientation, project focus, and a complete culture change that evolves in systematic approach to problem solving and a pro-active attitude among employees. Biopharmaceutical companies today face increasing demands to demonstrate continuous revenue growth, a growing demand from the public to control the rising cost of therapeutics and increasing demand from regulatory agencies such as United States Food and Drug Administration to prove they (the company) understand their manufacturing processes. To meet these challenges companies who adopt Six Sigma programs are able to improve their profit margins and well as developing an intimate understanding of their process. The true challenge of a Biopharmaceutical company is deciding whether or not to challenge the status quo and expose their “Hidden Factory” by implementing a Six Sigma program. This requires a long-term commitment from senior management and the ability to assess their current capability and needs. After implementing a Six Sigma program a company is able to sustain the program by ensuring the program simple to use, allowing employees to be innovative, provide motivation, and ensuring that the process is speedy. As to the question “Six Sigma: Panacea for the Biopharmaceutical Industry?” Six Sigmadoes not promise to be the Panacea for all the company’s problems. It is however, a powerful tool that directly impacts on process improvements and a potentially provides huge financial return on a business bottom line. Introduction Before we can answer the question “Is Six Sigma the panacea for the Biopharmaceutical Industry?” we must first answer the questions “What is Six Sigma?”, “What are the benefits of Six Sigma?” and “How does it relate to the Biopharmaceutical Industry?. There are several other questions that could also be asked abut the subject is so vast that a person could literally write a book. This paper is designed only to open a dialogue on Six Sigma and whether or not the Biopharmaceutical Industry should embrace it. What is Six Sigma? First we should discuss what Six Sigma is not. It is not a quality management system, such as ISO-9001, or a quality certification system. Rather the best definition I have found to date was from a paper entitled “Introduction to Six Sigma” published by Mekong Capital Ltd.1

Six Sigma is a statistically-based process improvement methodology that aims to reduce defects to a rate of 3.4 defects per million defect opportunities by identifying and eliminating causes of variation in business processes. In defining defects, Six Sigma focuses on developing a very clear understanding of customer requirements and is therefore very customer focused. At its core, it is a methodology used to minimize mistakes and maximize value by identifying underlying variation of a process and eliminating them. Or at the very least minimize them. Focus on Causes of Variation One of the key strengths of Six Sigma is that it is a process improvement methodology that is based on statistics. For example in a manufacturer setting there are subject matter experts (SME) who’s functionsinclude addressing manufacturing issues. Quite often their most common issue is defective products, how to minimize these and still meet deadlines and customer expectations. Since production is always seemingly under pressure to meet deadlines the SME is forced to initiate a fix or series of fixes, that deal with reoccurring issues. The resulting pressure usually forces the SME to make decisions based on limited information or gut feelings. The end result is a series of band aid solutions to reoccurring variances in production that have never been addressed properly and continue to periodically produce defective products. To ensure that decisions are made properly to deal with underlying variance Six Sigma uses statistics to justify changes. From the Six Sigma view, a process is normally represented in terms of Y=f(X’s), in which the Outputs (Y) are determined by some Input variables (X’s). Initially we ask “What are the possible causes (X’s) that may influence the outcome Y?”. Once we believe we have a list of potential X’s we start collecting and analyzing data using Six Sigma testing tools. When able to isolate which X(s) have the greatest impact on the output we initiate controls. The benefits become immediately apparent: We gain greater knowledge about the process so we can now begin to predict outcomes based on critical inputs. The focus then shifts towards identifying and controlling the causes rather than checking the outcomes. Otherwise, we have to focus our effort on Non Value-Added Activities such as inspection, tests and rework Primary Goal of Six Sigma: Process Improvement Once again we quickly see that one of Six Sigma primary goals is process improvement. It looks at improving underlying variation instead of short term fixes to problems. A couple of examples from “Introduction to Six Sigma” published by Mekong Capital Ltd.1 best illustrate this. For example, if a wood product manufacturer in Vietnam is experiencing slow cycle time at the semi finishing assembly quality checking station because they are getting defective parts from sanding and grinding workshops and have to rework them: • Typical Solution: Rebalance the line by allocating more workers to do checking and reprocessing. • Six Sigma Solution: Investigate and control key inputs to prevent defects from occurring in the first place. This may include unclear machine calibration procedures, unclear sanding-grinding quality working instructions, insufficient

supervision skills of team leaders, lack of wood quality checking process at the cutting workshop, etc. In another example, if a plastics company is producing products that don’t consistently meet the customers’ specifications on the color of the product: • Typical Solution: Adjust the color mixing formulas in use by using a trial-and-error effort. • Six Sigma Solution: Determine mixing process inputs which result in incorrect colors in finished products and then control those. These inputs might include raw material supplier, clarity of the formula instructions, system for generating and testing the mixing formulas, calibration of mixing equipment, ability of operators to follow instructions, etc. As you can see from these examples to improve results the company must start asking questions that identify variations and not create temporary solutions that amount to non value added activities. When it is time to address these questions a new measurement system (metrics) must be developed to collect data and to analyze statistically. These statistical results then raise new questions about the sources of quality problems relating to its products, services, and processes. The cycle of process improvement continues. Exposing the “Hidden Factory” When studying variation in the name of process improvement you are exposing the “Hidden Factory”. You are uncovering the rework and cover ups, the hours and days of wasted time in a company of people who constantly correct mistakes. Every time a corrective action is taken or a machine is rerun, or a warranty claim is processes, you are incurring unnecessary rework. When you accept these events as “that just the way it is”, you have mentally hidden all these activities from your improvement potential. The Hidden Factory is one runs in the back ground of every organization. It is the factory that fixes problems, corrects mistakes and otherwise wastes both time and money a company’s two most precious commodities. Six Sigma exposes the Hidden Factory and returns time and money back to the company. Is Six Sigma Strictly for Manufacturing? When a researching Six Sigma you will mostly find references for manufacturing. But in a larger sense Six Sigma focuses on improving processes and it can be applied to any aspect of a business such as: Improve on-time-delivery; Reduce cycle time for hiring and training new employees; Improve sales forecasting ability; Reduce quality or delivery problems with suppliers; Improve logistics; Improve quality of customer service; etc. Six Sigma is a versatile tool that can be used to improve any process within an organization while developing best practices. What is the key to Six Sigma? Six Sigma strengthis its ability to turn a practical problem into a statistical problem, generate a statistical solution and then convert that back into a practical solution.

How is this accomplished a person may ask. By using what is called DMAIC process. DMAIC is an acronym for Define, Measure, Analyze, Improve, and Control. Once again the best description that I have found to date was from a paper entitled “Introduction to Six Sigma” published by Mekong Capital Ltd.1 Define (D) The purpose of the Define phase is to clearly identify the problem, the requirements of the project and the objectives of the project. The objectives of the project should focus on critical issues which are aligned with the company’s business strategy and the customer’s requirements. The Define phase includes: • Define customer requirements as they relate to this project. Explicit customer requirements are called Critical-to-Quality (CTQ) characteristics; • Develop defect definitions as precisely as possible; • Perform a baseline study (a general measure of the level of performance before the improvement project commences); • Create a team charter and Champion; • Estimate the financial impact of the problem; and • Obtain senior management approval of the project Key questions: What matters to the customers? What Defect are we trying to reduce? By how much? By when? What is the current Cost of defects? Who will be in the project team? Who will support us to implement this project? The most applicable tools at this phase are the following: Project Charter - this document is intended to clearly describe problems, defect definitions, team information and deliverables for a proposed project and to obtain agreement from key stakeholders. Trend Chart - to see (visually) the trend of defect occurrence over a period of time. Pareto Chart - to see (visually) how critical each input is in contributing negatively or positively to total output or defects. Process Flow Chart - to understand how the current process functions and the flow of steps in current process. Measure (M) The purpose of the Measure phase is to fully understand the current performance by identifying how to best measure current performance and to start measuring it. The measurements used should be useful and relevant to identifying and measuring the source of variation. This phase includes: identify the specific performance requirements of relevant Critical-to-Quality (CTQ) characteristics; map relevant processes with identified Inputs and Outputs so that at each process step, the relevant Outputs and all the potential Inputs (X) that might impact each Output are connected to each other; generate list of potential measurements

analyze measurement system capability and establish process capability baseline; identify where errors in measurements can occur; start measuring the inputs, processes and outputs and collecting the data; validate that the problem exists based on the measurements; refine the problem or objective (from the Analysis phase) Key questions: What is the Process? How does it function? Which Outputs affect CTQ’s most? Which Inputs affect Outputs (CTQ’s) most? Is our ability to measure/detect sufficient? How is our current process performing? What is the best that the process was designed to do? The most applicable tools at this phase include the following: Fishbone Diagram – to demonstrate the relationships between inputs and outputs Process Mapping - to understand the current processes and enable the team to define the hidden causes of waste. Cause & Effect Matrix - to quantify how significant each input is for causing variation of outputs. preliminary Failure Mode & Effect Analysis (FMEA) - using this in the Measure phase helps to identify and implement obvious fixes in order to reduce defects and save costs as soon as possible. Gauge Repeatability & Reproducibility (GR&R) - used to analyze the variation of components of measurement systems so minimize any unreliability in the measurement systems. Analyze (A) In the Analyze phase, the measurements collected in the Measure phase are analyzed so that hypotheses about the root causes of variations in the measurements can be generated and the hypothesis subsequently validated. It is at this stage that practical business problems are turned into statistical problems and analyzed as statistical problems. This includes: generate hypotheses about possible root causes of variation and potential critical Inputs (X’s); identify the vital few root causes and critical inputs that have the most significant impact; and validate these hypotheses by performing Multivariate analysis. Key questions: Which Inputs actually affect our CTQ’s most (based on actual data)? By how much? Do combinations of variables affect outputs? If an input is changed, does the output really change in the desired way? How many observations are required to draw conclusions? What is the level of confidence? The Analyze phase offers specific statistical methods and tools to isolate the key factors that are critical for a comprehensive understanding of the causes of defects: Five Why’s - use this tool to understand the root causes of defects in a proce

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