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Operational Excellence In Pharmaceuticals -A Case Study On Factors

Influencing Operational Excellence And Their Importance

Article · May 2020

DOI: 10.1729/Journal.19940

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© 2019 IJRAR March 2019, Volume 6, Issue 1 www.ijrar.org (E-ISSN 23481269, P- ISSN 2349-5138)

Operational Excellence In Pharmaceuticals – A

Case Study On Factors Influencing Operational
Excellence And Their Importance
*1VENKATESWARA REDDY BOYA 2
Dr.K. S. SEKHARA RAO

*1Research Scholar of Koneru Lakshmaiah 2

Associate Professor & RPAC Chairman,
Education Foundation, (Department of Management) Koneru Lakshmaiah Education Foundation,
Vaddeswaram, Guntur Dist., AP, India. Vaddeswaram, Guntur Dist., AP, India.
E-mail: [email protected]
DOI: http://doi.one/10.1729/Journal.19940

ABSTRACT

Operational Excellence plays an important role in Pharmaceutical sector and also in other sectors. Today
without Operational Excellence it is difficult to be in the market competition. One of the reasons why many
Pharmaceutical companies are shutting globally is due to poor Operational Excellence. Therefore, it is very
much essential to implement Operation Excellence programs in the Organizations. The several factors which
can influence Operational Excellence in Pharmaceuticals are Good team and Leadership, Strategic Planning,
Communication, Financial management, Marketing, Human Resources Management and Time Management.

Key words: Operational Excellence, Pharmaceutical, Leadership, Human Resources Management and Time
Management.

INTRODUCTION

As per Operational Excellence Society, Operational Excellence is defined as the constant and deliberate
improvement of an organization performance and the conditions of those who work there – to pursue
Operational Excellence by design and not by accident. [1] Operational Excellence is required for all the sectors.
Operational Excellence in current business environment spreads beyond the organization’s shop-floor,
incorporating the whole supply chain, optimizing processes between the organization, suppliers and customers.
During the whole production, supply chain and order -to- delivery cycle, Operational Excellence is about
fulfilling customer requirements by knowing where everything is, how much is required and what is supposed
to be done to deliver a quality product. In addition to supply chain, Operational excellence supports
organizations to provide quality products constantly with sustainable performance where potential risks are
identifies upfront and proactively mitigated. These are key capabilities for SMEs aspiring to become main or
preferred suppliers to MNCs and big companies. [2]

Organization need to improve Organization need to improve their operations management by

considering continuously improving production costs, delivery schedules, manufacturing skills, supplier
relations and productivity in all practices. Moreover, the organizations need to restructure themselves by making
new plans and ideas to attain business excellence. This is because following excellence will guide the
organizations on the right track to achieve their goals and mission. As per Ekmekci (2012), excellence will
direct the organization to enhance continuously to last and only those who can stay forward through excellence
are well-positioned in the race. To remain competitive and enhance the organizational performance,
organizations need to constantly progress and work to an excellent standard. One of the ways to accomplish
excellence in the business is by following the operational excellence. Operational excellence is one of the
significant features of business excellence which is a feature of organizational structure that struggles for
improvements in key operational performance metrics.

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Russell & Koch (2009) stated that operational excellence is about reaching the height of operational
efficiency through doing things better, faster, and cheaper. Previously, operational excellence was optimizing
business processes, production and manufacturing that aim to satisfy customer demand, improve quality and
increase efficiency and productivity.

Assen (2011) states that operational excellence as the design and management to maximize operating
profits through constant operation of an excellent production and delivery system that offering product and
services to customers at right value. Dunggan (2011) explains that operational excellence is the operation which
is at the highest level of performance and the organization has attained the highest operation can be. Operational
excellence is just not about operation performance such as flexibility metrics, quality, time and financials but
also about how process side of the business help the business development. It not only includes quality
enhancement and cost reduction but also need to effectively deal with resources and people. An organized way
of operational excellence will lead organizations to attain a constant development culture, customer orientation
and service excellence and at the same time attain operational excellence and customer satisfaction.

Operational excellence is a balance of time, cost and quality and simultaneously concentrating on the
requirement of the customer. Operational excellence stresses on productivity and organizations practices that
the way organizations to attain best performance and constant development. It is an ongoing development in all
dimensions of the production plant and measured by the performance effectiveness and efficiency. In order to
attain operational excellence, the higher-level management should play an active role to engage the operational
excellence structure and culture to their staff. [3]

Operational excellence is not only to improve quality and cost reduction, but also being smart about
how to tackle people and use resources. It requires good leadership and solid change management ability to
become operational excellence. Operational excellence is dependent on culture of continuous improvement,
ownership and employees’ empowerment. Providing leadership for operational excellence comes down to
combining control and balancing and individual responsibility, and requires high level of employee
commitment. [4]

Operational Excellence in terms of short lead times, fast and reliable deliveries, low inventories and high
resource utilization is desirable for manufacturing companies. The objective of Operational Excellence is to
provide quality that may be defined as “What the customer wants”, “Conformance to standards”, “Right first
time”, “Right thing at the right time”, “Value for money” and so on. The manufacturing productivity will be
poor when organizations fail to take advantage of methods designed to help improve quality, such as total
quality management (TQM), Lean, Six Sigma, agile manufacturing and the theory of constraints. Every
company and improvement program team definitely need to use a large store of tools and techniques in their
application process. However, organizations should choose tools and techniques that manage with their
environment and respect their limitations. Inventory management identified several applications of Operational
Excellence programs and continuous development. The pharmaceutical field is considered by specific
characteristics that distinguish it from the manufacturing sector where the Operational Excellence was born.
These differences should be considered while selecting the appropriate tools and techniques of Operational
Excellence for inventory management. Operational Excellence is identical to Business Excellence and it also
includes other excellence programs such as Supply Chain Excellence, Marketing Excellence, Service
Excellence and Manufacturing Excellence. Constant Improvement (CI) is an important ingredient of
Operational Excellence. [5]

STATEMENT OF THE PROBLEM

The role of Operational Excellence in Pharmaceutical Industry is a big challenge which has been studied
in this research paper. Today many of the Pharmaceutical companies do not have Operational Excellence
programs due to which they are unable to meet the many of their customers and various Regulatory agencies
requirements.

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OBJECTIVE

The main objective and purpose of this study is to prove how Operational Excellence can be achieved
in Pharmaceuticals.

SCOPE OF THE STUDY

The study emphasizes on how Good team and Leadership, Strategic Planning, Communication,
Financial management, Marketing, Human Resources Management and Time Management will play a vital
role in achieving Operational Excellence in Pharmaceuticals.

DISCUSSION

Operational Excellence plays an important role in Pharmaceutical sector and also in other sectors. Today
without Operational Excellence it is difficult to be in the market competition. One of the reasons why many
Pharmaceutical companies are shutting globally is due to poor Operational Excellence. Therefore, it is very
much essential to implement Operation Excellence programs in the Organizations. Every organization should
have Operational Excellence department. Operational Excellence teams should focus on improvisation of the
existing system in the organization. Large multinational companies like Pfizer, Novartis, GlaxoSmithKline, Dr
Reddy’s Laboratories, Merck and many have already established their Operational Excellence teams and are
running successfully in their business.

Pharmaceutical companies across the world supply huge tons of medicinal drugs to all the patients
around the world. It should be understood that a patient severing from a disease expects to become cure by
taking the medicinal drugs. Therefore, a quality medicine should be manufactured each time. This where the
Operational Excellence comes into picture by delivering quality medicines to the customers. It is very much
important to not only manufacture and supply quality medicinal drugs but also to offer them at most affordable
price to the customers. This can be effectively done by Operational Excellence departments.

There are several factors which can influence Operational Excellence in Pharmaceuticals. They are
Good team and Leadership, Strategic Planning, Communication, Financial management, Marketing, Human
Resources Management and Time Management.

Good Team and Leadership: It is well known that a good team is essential for the Organizational Growth and
to achieve the goals of the Organization. It is the team work which will produce the results at a faster pace.
Without good team it is not possible to achieve Operational Excellence. In the Pharmaceutical Industry, each
department right from R & D to Marketing should have teams which can deliver the requirement of the
customers.

Leadership plays an important role in the performance of the Employees which in turn leads to the
Operational Excellence. A good Leadership always creates the positive atmosphere in the Organization,
communicates effectively, motivates the employees towards achieving the goals of the Organization. Good
leaders are capable to fix goals and achieve goals through effective strategies. Besides this, good leaders can
also motivate their employees by creating positive group culture and ensure that they get employee benefits like
health insurance, timely increments, leave benefits, flexible timing and work life balance. [6]

Strategic Planning: The second factor which influences Operational Excellence is Strategic Planning. Despite
of having good teams and Leadership, without strategic planning, it is not possible to achieve goals of the
organization and to attain Operational Excellence. Planning is the first step required by any team before
executing a task successfully.

Strategic planning is an organization's process of defining its strategy, or direction, and

making decisions on allocating its resources to pursue this strategy. [7] Organizations usually plan for a long
term when involved in strategic planning. The purpose of strategic planning is to lead the leaders of the

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organization in their decision making process to go ahead. A strategic planning team should implement this
process.

There are several benefits of implementing strategic planning. It not only helps an Organization in
achieving Operational Excellence but also helps the organizations to be known of future challenges and
opportunities. It gives a direction to achieve the organizational goals. [8]

Communication: Effective Communications plays a significant role in achieving Operational

Excellence not only in Pharmaceutical field but also in other fields. Good team management and Strategic
planning requires effective communication skills. In Pharmaceutical Industry right from R & D to Marketing
Department, communication is required at each level.

For example, communication is crucial when it comes to marketing your product. Marketing
Representatives should communicate effectively with doctors and retailers on a daily basis in order to achieve
organizational goals and objectives. Even if all the departments in a Pharma company run successfully, without
marketing department it is not possible to achieve profits.

In any organization it is very much essential to organize Daily, Weekly, Monthly and yearly meetings
in order to attain the goals of the organization which will in turn helps in achieving Operational Excellence.

Human Resources Management: Human resources management (HRM) is a process which includes
four tasks of attracting, developing, creating view point and maintain of human resources. [9] Human Resources
Management plays an important role in achieving Operational Excellence in Pharmaceutical sector. It includes
recruiting of talented and qualified staff, retention of existing staff and training. Selection of good talent and
retention of existing staff are the two main challenges faced by Human Resources Management today in many
of the organizations.

Marketing: There is always a relationship between Operational Excellence and marketing management
in pharmaceutical sector. Many Indian Pharmaceutical companies have two divisions in marketing. Domestic
Marketing and International Marketing. Without successful marketing management, it is not possible to
accomplish OE in any organization.

A marketing program to be effective, must have a right mixture of marketing mix, not to mention market
research, a quality product, an extensive distribution network acceptability, excellent promotion coupled with
a competitive price. The maximum market is held by small companies, the largest pharmaceuticals company
holding only 6 percent of the market share. This leads to unique marketing mixes. [10]

Time Management: Time management is the process of determining needs, setting goals, prioritizing
and planning the tasks to achieve the organizational goals. The process of utilizing time effectively to attain
extreme output includes handling work schedules and engaging in proper planning and executing to accomplish
the organizational goals. [11] [12]
Time Management is considered as one of the important factors influencing Operational Excellence in
Pharmaceutical industry. Without proper time management, one cannot achieve the desired results on time. In
Pharmaceutical sector, time management plays a vital role in achieving Operational Excellence.

Financial management: Effective Financial Management plays a significant role in achieving

Operational Excellence in Pharmaceuticals. Every organization should have Finance department. As
Pharmaceutical industry involves procuring of raw materials, chemicals, equipment, instruments and many, it
should have an effective Financial Management team. Profit and loss statements are prepared by Finance teams.
According to JUDY LAUX (2013), Financial managers:
 Ensure good accounting records
 Ensure to minimize the cash-to cash cycle
 Stay ahead of industry averages and provide financial information
 Prepared effective credit policies that bring and satisfy customers
 Ensure adequate working capital to sustain operations, pay suppliers, employees, creditors,
stockholders
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 Find suitable funding for selected projects

 Search for profitable growth opportunities in the form of acquisitions and mergers
 Provide information for appropriate projects (Judy Laux, “Financial Management: An Organic
Approach” (2013)) [13]
Conclusion: Based on the review of available literature and discussion, we can conclude that Good team
and Leadership, Strategic Planning, Communication, Financial management, Marketing, Human Resources
Management and Time Management are very much essential to attain Operational Excellence in
Pharmaceuticals and also to achieve the organizational goals.

CONFLICT OF INTEREST: Declared none

ACKNOWLEDGEMENTS

I am deeply grateful to my Managing Director (A. Siva Rama Prasad), Directors (A. Vamsi Krishna, K.
Madhava Rao & E. Vineeth Rao) and Plant Head (N. Ramgopal Prasad) of M/s Credo Life Sciences Private
Limited for their generous support.
Firstly, I would like to thank Dr. K. S. Sekhara Rao, Associate Professor & RPAC Chairman, Koneru
Lakshmaiah Education Foundation, (K.L. University) Vaddeswaram, Guntur Dist., AP, India for his guidance
and support.

I would also like to thank My Doctoral committee members of KLU Business School, Koneru
Lakshmaiah Education Foundation, (K.L. University) Vaddeswaram, Guntur Dist., AP, India for their kind
support.
I extend my very special gratitude to my wife, daughter & late son Master Praveen Kumar Reddy
Boya, who entered eternity on 12th November 2011. He was the one who gave me immense inspiration and
energy to continue my academics.
And finally, last but by no means least, I’m very much thankful, also to my colleagues of Credo Life
Sciences Private Limited, Hyderabad.

REFERENCES

[1] https://opexsociety.org/about/

[2] Operational Excellence Diagnostic guide, Enterprise Singapore.

[3] Mohd Hafeez Al-Amin Abdul Wahab, Mohammad Ismail, Mohd Nazri Muhayiddin, “Factors Influencing
the Operational Excellence of Small and Medium Enterprise in Malaysia” 2016, Vol. 6, No. 12

[4] Oon Fok-Yew, Hartini Ahmad and Shamsuddin Baharin, “Operational Excellence and Change
Management in Malaysia Context”. Vol. 2013 (2013).

[5] Malak Mouaky et al., Guidelines to choose Operational Excellence techniques/tools for inventory
management: the case of pharmaceuticals supply chain. Proceedings of the International Conference on
Industrial Engineering and Operations Management Rabat, Morocco, April 11-13, 2017

[6] Moo Jun Hao & Dr. Rashad Yazdanifard, “How effective leadership can facilitate change
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[7] https://en.wikipedia.org/wiki/Strategic_planning

[8] https://searchcio.techtarget.com/definition/strategic-planning

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[9] Orlikowski, W. J., & Barley, S. R. (2001). Technology and institutions: What can research on information
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