Lead time variability management in pharmaceutical supply chains: Case Orion Oyj

This study examines process lead time variability management in a pharmaceutical supply chain environment. Motivation for the study stems from exceptional structure and regulation of pharmaceutical supply chains as well as current trends reforming the cornerstones of industry's business model. When the historical focus in pharmaceutical business has been in R&D and patent protection, this industry is today facing increasing requirements related to operational excellence development. One significant measure related to operational excellence is the lead time variability. When most of the manufacturing industries have adopted production philosophies supporting variability management already decades ago, pharmaceutical industry has failed to implement these practices such as Lean and Six Sigma. The central goal of this study is to find out how pharmaceutical supply chain characteristics prevent lead time variability performance optimization. The research method is a descriptive case study which is based on theoretical framework combining concepts of lead time variability management and pharmaceutical supply chains. Case study target organization is a Finnish pharmaceutical manufacturer Orion where the study was conducted during year 2013. Research utilizes both quantitative ERP-data and qualitative data gathered from interviews. The main research questions from theoretical perspective are: What are the features contributing to lead time variability in a pharmaceutical supply chain environment and how those characteristics complicate variability management efforts. From practical perspective study aims to assess what is the current lead time performance level of a case company and what are the most potential processes for variability optimization. The most central research results prove that especially regulatory environment of pharmaceutical supply chains prevents effective lead time variability management actions. Independent role of quality-related functions and low emphasis on process-thinking on supply chain level creates fragmented supply chain network where variability challenges cumulate from a process to another. When most of the improvement focus in pharmaceutical supply chains is on complex manufacturing and quality processes, this case study showed that support processes can hide real potential for lead time optimization without significant costs