Lean Six Sigma has lead to cost savings, capacity increases, and cost avoidance at Anderson Packaging, a US pharmaceutical packaging company, says Charles Aubrey, Vice President Performance Excellence and Master Black Belt at the company. In this article, Aubrey describes how the company began its journey to become more competitive and hold down prices.
Even in the days before Lean Six Sigma, continuous improvement efforts and programs were the focus of the Anderson leadership team and the organization.
For instance, when the company was founded in 1967, it manufactured packaging machines. The machines were supplied to their clients who would in turn package their products for consumers.
But the Anderson brothers, who founded the company, quickly determined that regardless of the mechanical improvements they made to machines, their customers were not able to operate their machines to get the highest standard output from them. So, in order to get the best, most effective packaging for the final customer – consumers – Anderson Packaging began to operate the packaging machines themselves.
The vision of the company today stems from those roots in continually trying to attain the highest standard. The vision today is:
"To be ‘Best in Class’ in Pharmaceutical/ Healthcare contract manufacturing and packaging services. Our culture will be customer focused, embracing regulatory compliance, and continuous improvement. By utilizing operational excellence, state of the art technology, innovation, and training, we will ensure strong growth and profitability."
Along came LSS
In 2004, the Anderson leadership team "discovered" a new formal approach to continuous improvement. At that point they began a drive to learn the approach of Lean Six Sigma.
The first year they hired a Master Black Belt with extensive experience of implementing this approach in numerous Fortune 500 companies and the pharmaceutical and medical device industries and senior management started their Lean Six Sigma journey by committing themselves to a formal intensive multi-day training program.
They started first with Lean Manufacturing and then moved onto Six Sigma Improvement. This resulted in integrating the two approaches into Lean Six Sigma (LSS) - attacking both the product and process variation and waste.
A strategic plan was developed that integrated LSS into both the long-term and annual business activities and goals. It had serious financial and leadership commitment.
Middle management all went through a multi-day Yellow Belt Training and subsequently the first round of projects and Green Belts were chosen with their five-day training delivered just-in-time as the projects unfolded. Then Process Management (PM) training was developed and a PM teams began documenting, simplifying, and eliminating waste in business processes.
A drive to improve on the part of our Quality Control group led us to initiate Benchmarking, with the desire to have the most efficient and effective quality control processes in the industry. Benchmarking project teams were trained and they are interacting with Best-in-Class Fortune 500 Companies inside and outside our industry.
Our processes are supported with over 80 mechanics. A significant effort is underway for all of our mechanics to be Lean Certified. They have multiple days of class room training with tests and demonstration projects to assure skill acquisition. They have saved $500K in improving setups alone.
Kaizen events include front line employees in lean and continuous improvement activities. These have been very effective, saving almost $2 million dollars over the last two years.
Anderson has developed six Green Belts into Black Belts by having them acquire additional training and skills. They lead projects teams to solve more difficult and sophisticated problems and implementation actions. In addition they assist in coaching Green Belt teams and deliver LSS training. Kaizen Events are led by Lean Certified experts and Black Belts. These waste reduction efforts have saved almost $500K in less than a year of operation.
The Steering Committee has committed to every employee who doesn’t already have a "Belt" to be Yellow Belt trained and certified. We are well underway to completing this in 2008. The expectation is that everyone in the organization is either identifying waste and improvement opportunities or eliminating waste and making improvements or both!
To that end our projects are focused in every area of the company: 44% Production, 26% Quality Control/ Assurance, 8% Maintenance, 8% Warehouse, 8% Sales/ Administrative/ Finance, 3% Engineering, and 1% Human Resources. There are waste and improvement opportunities in every function of the organization:
The resulting areas of impact likewise are numerous: Cost/ Capacity, Customer Service, Regulatory Compliance, Employee Satisfaction, and Community.
Listed below is a sample of the projects which Green Belts and Black Belts pursue.
The financial results of these LSS project efforts benefit both Anderson and our customers. Anderson has hard savings every year since we began our journey. It began to dip in 2009 as we did more Kaizen (front line) projects and strategic plan projects. Both of which yield lower first year cost savings. Included in capacity and cost avoidance is savings which is passed onto our customers.
Cost Savings, capacity increases, and cost avoidance help Anderson be more competitive and hold down prices. At the same time this allows us to significantly reduce the risk of defects and assure on time customer deliveries. Customer savings typically is directly transferred to customers. Some examples are reduced bulk scrap or reduction of cost that customers are typically billed for such as obsolete material disposal or reduced tooling costs.
Continuous improvement and waste reduction are added value benefits of trusting Anderson to package your product. This is a free service that makes both Anderson and you more competitive with less risk. In addition, over 25% of our projects improve our regulatory profile and directly contribute to stronger compliance with cGMP and FDA regulation.