The external eye sees more

Supply chain check at pharmaceutical manufacturer Heel

Götz-Andreas Kemmner

As part of an analysis, Biologische Heilmittel Heel GmbH had the supply chain management of all production sites evaluated by internal teams. Abels & Kemmner carried out an external review at the company headquarters in Baden-Baden, which is also Heel’s largest production site. The aim was to determine the efficiency of the supply chain and possible potential for improvement.

Biologische Heilmittel Heel is one of the world’s leading manufacturers of homeopathic medicines. The specialty is modern homeopathic complex remedies based on homotoxicology, a special method within homeopathy. Heel’s approximately 1,200 employees generated 70 percent of sales abroad. The company exports to more than 50 countries from its headquarters in Baden-Baden. Heel is represented in ten countries, including Germany, by its own subsidiaries, some of which also produce products themselves.

In its management mission statement, Heel defines committed employees as the most important factor for its success. However, the consistency and efficiency of the value chain are also of the utmost importance to the company. For this reason, Heel combines the planning and control of the value chain and its physical processing under the responsibility of Supply Chain Management (SCM). The complete SCM area of responsibility ranges from resource management (procurement) and the production of dosage forms (galenics), the production of sterile and non-sterile forms, quality assurance and logistics to technical service. It therefore covers the entire operations management.

AmpouleSupply chain efficiency plays a major role throughout the pharmaceutical industry. In order to further strengthen its international competitive position, the Heel Group evaluated all international production sites. An internal project team from the Baden-Baden headquarters carried out the analysis at the foreign production sites. Heel’s supply chain specialists did not want to evaluate the Baden-Baden site themselves. Rather, they also underwent an objective, professional review. Heel commissioned the consulting firm Abels & Kemmner with this task.

Processes and IT in focus

The checklist included organizational and infrastructural points:

  • Is the entire “Operations” process set up correctly?
  • What are the strengths and weaknesses of today’s supply chain?
  • In which fields of action can performance reserves/potential still be uncovered?

This had to be considered:

  • the organizational processes,
  • the associated support for processes in the SAP system,
  • the interfaces between the individual departments,
  • the distribution of competencies and
  • the interfaces to exposed departments outside the supply chain, with forecasting and regulatory affairs being particularly important.

The aim was to identify potential bottlenecks, define necessary areas for action and identify possible “quick fixes”. The project began with interviews with all those responsible along the value chain. This involved clarifying the organizational processes as well as exchanging information with other departments within and outside the Supply Chain division. Heel uses SAP to control materials management and production. The extent to which the SAP system effectively supports the business processes and organizational procedures therefore also had to be examined. Coupled with the consultants’ experience, these interviews enabled an initial rough assessment of the current situation.

Constraint analysis

In order to carry out the review as effectively and quickly as possible, the consultants from Abels & Kemmner used the constraint analysis method for further problem analysis. The constraint analysis corresponds to a vulnerability analysis. The decisive addition is that supposed or obvious weaknesses (effects) are examined with regard to their underlying, not always directly recognizable core causes. These root causes must be eliminated in order to eliminate the observed weaknesses, as if in a row of falling dominoes. Once the core causes are known, the fields of action to be taken can be clearly derived. The result of the constraint analysis is a so-called constraint network. This is a “reality tree” which, like a circuit diagram, shows the cause-and-effect network between recognized symptoms and the core causes mentioned.

However, the interviews were only the first step in identifying weaknesses in the logistics chain at Heel: as part of an analysis workshop, aspects of the current supply chain that were rated as negative were compiled together with the division’s managers – and then the causes of these negative aspects and the resulting consequences were worked out. Based on the results of the analysis workshop and the findings from the interviews, the consultants constructed an initial draft of a constraint network. Based on the core causes identified, the consultants developed proposals for their elimination, summarized them into packages of measures and categorized them into four fields of action: process streamlining, system support, responsibilities and interfaces, and personnel.

Verification and implementation

The developed constraint network as well as the proposed measures and defined fields of action were verified, adapted and approved in a project planning workshop. As the packages of measures developed in the individual fields of action all originated from the constraint network, there were naturally interactions between them. In a final step, it was therefore necessary to evaluate these interactions in order to tackle those packages of measures first that are least influenced by the other packages of measures on the one hand and that themselves have the greatest influence on other packages of measures on the other.

The interactions were evaluated in a so-called influence matrix and presented in an influence portfolio.

An initial overall result was that Heel’s supply chain management is very well positioned overall. Potential for improvement was identified above all at the interfaces to other areas and in system support. Working groups made up of employees and managers from Supply Chain Management are now systematically working on these optimization measures together with the other divisions.

Reviews plus supervision

This and numerous other projects have shown that even companies that pay close attention to their supply chain and employ several supply chain management specialists benefit from regular external reflection on optimal supply chain alignment. This is because technologies as well as structural and personnel conditions are changing and an exclusively internal view can lead to “blinkered thinking” or operational blindness. Constraint analysis has proven to be an ideal tool for such supply chain reviews. The packages of measures resulting from these analyses do not address the symptoms, but the roots of the problem. At the same time, once the constraint networks have been created, they provide a good basis for continuous reflection and subsequent supervision. Abels & Kemmner does not understand supervision to be the control of those involved, but rather the support of the experts by agreeing objectives for a specific period and regularly monitoring success. Supervision has proven to be a good way of ensuring that the results of a supply chain review are implemented. The aim is to keep an ongoing improvement process alive. However, setting objectives, reviewing the implemented measures and results, reflecting on experiences and continuously adjusting objectives can lead to the coaching process.

Heel is very satisfied with the result of the supply chain review. “The analysis uncovered issues that were not immediately apparent when managing day-to-day business. The analysis has provided a valuable basis for decision-making, particularly for current and future optimization projects,” summarizes Dr. Werner Hofmann, Head of Supply Chain at Heel.

Constraint analysis is an element of the Theory of Constraints developed by the American-Israeli physicist Eliyahu Goldratt. TheTOC assumes that every organizational-technical system continues to grow until a system element reaches a limit (= bottleneck). If this bottleneck is recognized and eliminated, the system continues to grow until another system element reaches a bottleneck. The bottlenecks can be of a technical or organizational nature, but they can often also consist of internal regulations, principles or company policy. Constraint analysis is a systematic method for identifying the bottlenecks addressed.

Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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