Global quality operations: leveraging your QC network
27 October, 2022
Head of BINOCS marketing
In the last two decades, the life sciences industry has been consolidating faster than ever in a fierce battle for growth, time-to-market and profitability. Whether it’s because of organic growth, investment-driven expansion, or mergers and acquisitions, life science organizations have an expanding global manufacturing footprint.
This trend poses a question that is increasingly challenging to answer: if everything is becoming more global, how can business leaders make holistic decisions that support quality, profitability and efficiency across the entire network of entities? In other words: how can they make decisions that add value to the ‘whole’ rather than just benefitting the ‘parts’? While global capacity management is challenging in every aspect of the pharmaceutical supply chain, it’s particularly complex to do so across the quality control laboratory network (QC network).
Greater than the sum of its parts
It is increasingly common for complex corporate supply chain operations to be organized globally. In parallel, new investments and improvement initiatives (such as time-to-market optimization, new technology implementations, digitalization programs, new product introductions (NPIs), R&D projects, etc.) are all being approached as “global projects”.
As a result, operations have become increasingly interconnected and interdependent in a way that makes the overall system “greater than the sum of its parts”. This idea that the components of a system can combine in a more-than-additive fashion is the central concept of Network Theory, which has, in turn, spawned various business-specific frameworks exploring operational and organizational design. These have concluded that all large organizations are inherently networks of people, skills, systems and processes, organized around projects.
More and more, enterprise-level decision-makers are embracing the fact that they are at the helm of complex networks, not simply “businesses”, and that those networks can be harnessed and leveraged to enable their organizations to tap into and make more effective use of the internal competencies, resources and technologies that are globally available to them.
A global picture
A “network mindset” requires visibility. Business leaders need a bird’s-eye view across all resources and competencies, information streams, systems, inventories, and logistics. Likewise, operations managers want to be aware of the dynamics across the entire supply chain network so they can rapidly absorb the impact of changes. Therefore, more and more global life science organizations (LSO) are starting to realize the value of utilizing a common global platform across multiple regions and products.
As a result, in a world of high-value products, it is common to manufacture items in one region and ship samples elsewhere for quality control testing. This necessarily means that, to remain competitive and agile, QC capacity must be managed globally, with a global aggregate view of demand and supply. Though challenging, most leading LSOs have made significant steps toward holistic decision-making based on data aggregated across an ever-maturing technology stack. This started with the proliferation of global ERP (Enterprise Resource Planning) systems and many supply chain leaders now extend this with digital supply chain twins that allow them to fully leverage optimizations and intelligent decisions.
Quality Operations, however, have been running behind in terms of digital transformation and are typically not (entirely) integrated into holistic decision-making. Having assessed their supply chain performance, many leading LSOs have identified a systematically unreliable Good Receipt Processing Time (GRPT) as a root cause for excess inventories and locked working capital; the underlying reason is the disintegration of quality operations and supply chain operations. If the COVID-19 pandemic taught us anything about global LSO operations, it’s that accurate and timely decision-making that captures all supply chain constraints – including QC capacity – is absolutely critical.
Obviously, just because a manufacturing function can handle expanded production and the impact of NPIs, it doesn’t mean that the relevant QC lab(s) will be able to accommodate the increased workload. Thus, a LSO’s global VP of Quality must be able to readily and factually verify production plans or any other strategic decisions proposed by the supply chain. Such verification should be based upon a real-time, up-to-date, and global picture of the QC network capacity – only then can Quality operations fully and credibly weigh-in on strategic decisions.
Sailing in the dark
Unfortunately, the VP of quality is all-too often still sailing in the dark. That’s because, more than in other areas of the supply chain, QC labs still plan their work primarily using Excel spreadsheets and scattered regional systems. This results in disconnected information silos and makes it challenging to get an aggregated view of the global QC capacity utilization. The closest many quality leaders get to true oversight is a manual aggregation of what’s reported by the local lab managers; however, this is rarely a reliable and timely representation of reality.
On the one hand, a lack of standardization across the abundance of different local planning processes, practices, and priorities means that lab managers aren’t consistently reporting based on the same objective metrics. Manually reconciling the discrepancies between those systems and models is highly inefficient and time consuming, while managing data across separate frameworks (e.g. importing/exporting between systems) leaves processes extremely prone to errors.
Beyond this, measuring performance is often inextricably connected with highly localized (e.g. functional) indicators, while what actually matters for the company is the global bottom line. Trying to force everything into one integrated, unified view from many sources adds significantly to the non-value added planning effort and can dramatically increase overhead costs.
Although manual aggregation can offer some guidance, it’s insufficient to make high-stakes decisions with confidence, leading to strategic decisions being delayed, made prematurely, or not made at all. Ultimately, if strategic decision-makers cannot understand the trade-offs involved in various QC capacity allocation scenarios, the resulting decisions will likely be less-than-optimal.
This can result in an unleveled workload across the QC network, in which some QC labs are over-resourced, while others are under-resourced. In practice, this scenario represents a significant missed opportunity to fully utilize the global capacity, with an unrealized, bottom-line return on investment, lower overall service levels, higher inventory levels tying up scarce capital and reduced profitability overall. In addition, over- or under-utilizing analysts can rapidly result in stressful working environments that are focused more on constant firefighting and juggling conflicting priorities than on the technical specialisms in which team members are trained; ultimately, employee turnover can be severely impacted.
Shining a light on QC network capability
Today, global stakeholders are largely limited to making decisions in a top-down fashion. For example, production plans are often signed-off with a limited understanding of the impact on the individual QC laboratories. This can lead those labs to feel as though their input and requirements are, at best, an afterthought and forces them to try and reactively make sense of the top-down plan. They can struggle to analyze, formulate and implement an effective strategy that complies with that plan and typically lack a channel for providing feedback on the global planning process, therefore perpetuating the disconnect.
This unidirectional approach is, however, entirely inconsistent with the idea of organizations as complex networks and fails to fully exploit the benefits of data-rich systems used for day-to-day operational management. By harnessing the power of a connected QC network, decision-making can, instead, be informed from the bottom up, enabling global stakeholders to make planning decisions based upon the realities of the individual QC laboratories.
While a global VP of Quality does not require a granular insight into all site-level activities, they do need a reliable understanding of how the different elements of their network fit together. This means accessing a data layer that connects all global QC sites, labs and teams in one single source of truth to enable full representation and accountability of the QC network in the planning cycle.
Utilizing the power of the QC network
Decision-makers therefore need a system that leverages their QC network and the data it contains to provide the visibility required for developing efficient capacity plans beyond the scope of site-level operators and for capturing the real-world performance across the network as a whole.
A unified view of global QC demand and capacity allows enterprise-level stakeholders to:
- Verify production plans by anticipating bottlenecks, simulating how the picture is impacted by NPIs, new R&D projects, etc., and thus enable global workload leveling for optimized resource utilization;
- Diagnose capacity issues by zooming-in on the status of demand at both the local level and across the broader network, helping to understand where bottlenecks originate and to hypothesize a better, global resource allocation strategy;
- Resolve capacity problems by simulating solutions in different ‘what-if’ scenarios and significantly enhancing strategic or tactical implementations by factually verifying the bottom-line impact across the entire network in advance.
A unified view of commonly shared metrics allows enterprise-level stakeholders to:
- Focus on reliable, global QC performance KPIs, providing much-needed ammunition to weigh-in on global strategic decisions and confidently defend their position;
- Manage adaptively, directing energy towards the specific sites, labs or teams with the greatest performance issues;
- Measure the impact of decisions taken on the global performance of the QC network using synchronized service-oriented KPIs;
- Continuously improve by comparing performance across the network and identifying the best practices that can be shared across the different QC labs.
Real world value
Implementing a system to harness the full capability of your QC network is by no means a simple goal and undoubtedly falls beyond the scope of even a complex Excel workbook. Nevertheless, with more and more mature software solutions available, it’s becoming increasingly difficult for businesses to ignore the value of investing in such a system. And we’re not just saying that for the sake of it: not only have we seen a significant increase in questions on this topic but we’re already started implementing the QC network approach for some of our clients.
For instance, one top 20 Big Pharma company has commissioned BINOCS specifically to develop its QC network capability across 27 of its local QC sites. Rather than deploying day-to-day scheduling functionality, their primary objective has been to capture the local data to provide critical oversights that will enable effective global management. Another of our large clients who has been using BINOCS for QC scheduling for several years has recently aggregated the data from across 8 of their sites into a global picture of lab capacity and performance. This has already allowed decision makers to report on global QC KPIs, verify strategic decisions based on what-if scenarios, and more effectively level workload across their network.
Beyond the direct benefits for capacity and performance management, our clients also report that harnessing their QC network can generate value in 4 broader business areas:
- Agility: improved overall strategic and tactical agility helps to prepare decision makers for the upcoming VUCA environment (volatile, uncertain, complex & ambiguous), supporting top-line growth that would otherwise be constrained;
- Opportunity: better oversight facilitates inventory optimization, reductions in hidden factory time, resource use efficiency, and overtime minimization;
- Service level improvement: limiting delays across the QC network, driving a service level-oriented culture and eventually improving OTIF (on-time In-full) performance;
- Employee morale: from providing greater transparency and improved capacity management results in less firefighting, stress, and turnover on the QC shop floor.
Your organization is greater than the sum of its parts and embracing this network mindset can result in cascading benefits across all operational levels that can optimize efficiency and reveal hidden value. By implementing a unifying layer to aggregate data and strategy across global quality operations, you can highlight, refine, and effectively utilize the full potential of your QC network.
If you’re interested in exploring how BINOCS could help you to get the most out of your network, why not get in touch to discuss a demo today?