Have you ever thought about how drugs get made? Not your Walter-White kind of drugs but proper ethical pharmaceuticals. As the Wall Street Journal tells it, major players in the industry like Novartis and Johnson & Johnson are taking new approach to producing drugs (Drug Making Breaks Away From Its Old Ways, Feb 8).
For decades, drug makers have used cutting-edge science to discover medicines but have manufactured them using techniques dating to the days of the steam engine. …
Under the new approach, raw materials are fed into a single, continuously running process. Many other industries adopted such a “continuous-manufacturing” approach years ago, because quality can be checked without interrupting production—with weeks shaved off production times and operating expenses cut by as much as 50%.
Until recently, pharmaceutical companies have been stuck making drugs the old-fashioned way, mixing ingredients in large vats and in separate steps, often at separate plants and with no way to check for quality until after each step is finished. Any desire to modernize was partly blunted, industry officials say, by the high margins netted on the industry’s string of billion-dollar-selling drugs.
To give you an idea of the scope of what is happening, the article reports that J&J is aiming to have 70% of its highest volume products produced under a continuous-manufacturing approach within eight years. (more…)
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Sustaining manufacturing in the US (or any high wage location) has been one of the recurring themes in this blog. Manufacturing has long meant well-paying jobs for those without advanced education. The loss of manufacturing jobs consequently causes much hand wringing as policy makers and workers about how a large number of people will achieve a modicum of middle-class financial security. Consequently, firms that are finding away to compete with US-based manufacturing are interesting.
That brings us to Zuzii, an LA-based firm producing made-to-order shoes that retail for $90. Here is a video from Marketplace about the company (A visit to LA-based shoe company Zuzii, Feb 16).
Here is the accompanying radio report that has some additional information.
So what is it about Zuzii that lets them succeed? (more…)
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What can a major company learn from the sports world? I am not thinking here about inspirational speeches from a coach or anything like that. Rather, can people with a background in sports competition actually offer ways of improving business processes?
It turns out the answer to that question is yes as the Financial Times reports in discussing McClaren Applied Technologies relationship with GlaxoSmithKline (McLaren speeds up GSK with racetrack expertise, Dec 10). That’s McClaren as in Formula 1 racing and they have turned their expertise in organizing pit crews and monitoring racing cars into a side consulting business. In the case of GSK, they have produced some interesting results.
Perhaps the clearest dividend of the partnership so far has come not in drug development but in GSK’s consumer healthcare business. McLaren was asked to scrutinise a toothpaste manufacturing facility in Maidenhead and work out how to boost efficiency.
“We noticed that they were making lots of small batches of different products with a lot of down time in between,” says Mr McGrath. “They said: ‘If you can change four tyres on a racing car in two seconds why does it take us two hours to do a changeover?’”
Within a year, lost time had been cut by 60 per cent, using principles similar to those that govern the pit-stops for Mr Button’s racing car. “It’s about everyone knowing their job and doing it well,” says Mr McGrath. “Afterwards, we analyse every detail — what went well, what didn’t and how we can improve.”
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The history of manufacturing is to some extent the history of substituting capital for labor. Devising a way of making things that is more reliant on equipment (or an organizing principle like the Ford assembly line) allows workers to be more productive and generate more output per hour worked. But capital requires, you know, capital. Adding new equipment like robots requires an upfront investment and having that investment payoff depends on scale at which the business operates. Big firms like Roger-&-Me era GM can afford robots even if they have limited capabilities but smaller firms have a harder time taking the plunge. Until now that is, if the Wall Street Journal is to be believed (Robots Work Their Way Into Small Factories, Sep 17).
Robots have been on factory floors for decades. But they were mostly big machines that cost hundreds of thousands of dollars and had to be caged off to keep them from smashing into humans. Such machines could only do one thing over and over, albeit extremely fast and precisely. As a result, they were neither affordable nor practical for small businesses.
Collaborative robots can be set to do one task one day—such as picking pieces off an assembly line and putting them in a box—and a different task the next. …
Small businesses often need flexibility “because they’re not just packaging cookies endlessly,” says Dan Kara, a robotics expert at ABI research, a market-research firm in Oyster Bay, N.Y.
Here is a graphic of describing some of the machines discussed in the article.
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Reshoring — moving manufacturing from far-flung global locations back to the US — has been a popular topic both in the general press and on this blog. What’s not to like about it? As long as manufacturing allows average humans without extreme degrees of education or super rare skills to make a decent wage, new employment opportunities in manufacturing are always going to create a buzz.
But just what kind of firms are bringing work back to the States? According to the Wall Street Journal, we are mostly talking about smaller enterprises (Bringing Jobs Back to U.S. Is Bruising Task, Jun 25).
More than 80% of companies bringing work back to the U.S. have $200 million or less in sales, according to the Reshoring Initiative, a nonprofit that encourages companies to return production to the U.S. Many supply parts to bigger companies or, if they sell directly to consumers, are seeking to cut out lengthy supply chains from Asia.
But big companies have the resources and experience to hopscotch around the globe. It’s harder and riskier for small firms to do the same.
So for every General Electric moving appliance manufacturing back to Kentucky, you have lots of firms like Chesapeake Bay Candle dealing with much smaller product lines. To some extent this is not too surprising. Whether you are GE or Chesapeake Bay Candle, managing a long supply chain or navigating cultural differences is nontrivial. One of those firms, however, can much more easily absorb the cost of having in country staff or can resort to throwing around its sizable weight to get a good deal. Further, a multinational like GE can also have ambitions of growing in China that may not be a priority for a small player like Chesapeake Bay Candle.
While it is not surprising that smaller firms play a big role in reshoring, that is also a problem. (more…)
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Today’s Wall Street Journal has a special section on “Unleashing Innovation in Manufacturing”. Among the more interesting pieces is a report on Roland DG, a Japanese manufacturer of industrial goods like wide format printers, milling machines and vinyl cutters. These all sound like boxes of metal filled with electrical components that should be built up by a team of workers as they move down an assembly line. But that is not how Roland DG rolls. Instead, they have each machine built by one person guided by a computer that displays instructions, makes sure the correct hardware is presented, and monitors what is done through a networked screwdriver (Japanese Firm Uses a Single-Worker System to Make Its Products, Jun 1).
On a recent day in Roland DG’s factory in Hamamatsu, a city in central Japan, one employee was assembling from scratch an industrial printer that ultimately would be more than twice her size and weigh almost 900 pounds. Another worker who had just joined the company’s fleet of part-timers was making a prototype milling machine. Yet another was assembling the dental-crown milling machine.
A computer monitor displays step-by-step instructions along with 3-D drawings: “Turn Screw A in these eight locations” or “Secure Part B using Bracket C.” At the same time, the rotating parts rack turns to show which of the dozens of parts to use. Meanwhile, a digital screwdriver keeps track of how many times screws are turned and how tightly. Until the correct screws are turned the correct number of times, the instructions on the computer screen don’t advance to the next step.
Workers are rarely confused, but when they are, there’s a button to press that will bring the floor manager running to help.
This video gives an idea of the system in actions.
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When you thing of the auto industry, you likely focus on big players like Ford, General Motors, Toyota and Mercedes. Names like Magna International and Denso may not mean a whole lot to you. But you should know those names. They likely make more of your car than you realize. “Mega suppliers” like Magna and Denso have been growing for years and in the process have been sifting the balance of power in the industry (Age of mega supplier heralds danger for carmakers, Financial Times, May 18).
There are now 16 major car manufacturers that sell more than 1m vehicles a year. But those cars are built from parts supplied by just 10 major component makers – meaning that under the individually styled bodywork, cars are sharing more parts.
Whether a driver chooses to buy a BMW, an Audi or a Mercedes-Benz five-door saloon, the chances are high that the anti-lock brakes will be built by Continental, the battery will come from Johnson Controls, and Denso will have provided the exhaust
Bosch, the world’s largest automotive supplier by revenue, reckons that at least one of its parts is built into almost every new car sold anywhere in the world – regardless of brand, market, price point or geography.
The article goes on to note that the top ten suppliers capture 60% of the revenue generated by the top 100 suppliers.
Given this situation, two questions seem relevant. First, how did automakers find themselves in this situation? Second, what are the implications for how the industry functions? (more…)
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