By Louis Garguilo, Chief Editor, Outsourced Pharma
Remo Colarusso, VP, manufacturing and technical operations at Janssen (pharmaceutical companies of Johnson & Johnson), knows what you measure is as important as how you measure, and cross-functional review of the results can be as essential as the results themselves. He also knows that nowadays, Janssen appears in good shape in all four of these quadrants.
For proof of this, Janssen, like other pharma companies, looks to supply chain measurements such as LIFRs — line item fill rates (more on LIFR specifically in a moment.) Executives at other pharmas might be envious of the statistics Colarusso sees: obtaining or exceeding 99.5 percent LIFR for core products; 90 percent reduction in missed orders since 2011.
Colarusso, a 27-year veteran of J&J, spoke exclusively with Life Science Leader CMO Supplement about a main driver of these results. Below he describes how Janssen’s “Reliability Rooms” are elevating the art of measuring and improving reliability and quality throughout the supply chain. And while some of this information may prove valuable to other pharma companies, external partners should take equal notice — a “room” could be heading your way soon.
Metrics To Build On
“Reliability Rooms aren’t just a room and a place,” says Colarusso. “They’re a business performance management process.” We’ll take a look at that process closely, but in essence, Reliability Rooms started in 2011 as, and still include, physical areas established at each of the company’s 20-plus manufacturing locations. Within these rooms Janssen gathers an array of supply chain metrics for finished drug products and APIs, available for cross-functional teams to review, digest together, and take specific actions on.
A mainstay of that data for drug product plants has been the LIFR mentioned earlier. This can be defined as an overall measure of the ratio of actual orders filled in terms of all the fulfillment lines for a product. For example, if three of five lines of an order are filled, the LIFR would be 60 percent. Looked at from the opposite perspective, we can see how important this measurement really is: 40 percent of a specific product did not get to certain customers, for example hospitals, fulfillment centers … and more and more directly to patients. “We count all the lines within all the orders in a specified time period,” explains Colarusso. “For some key products we’ve consistently reached 99.5 percent. While we strive to be 100 percent, that’s a tremendous accomplishment.”
But it’s not all LIFR. All told, Janssen has identified a basket of 21 standard, end-to-end reliability metrics, including these categories and examples: DESIGN (on time product launch), PLAN (inventory on target), SOURCE (material supplier quality), MAKE (on time in full), DELIVER (LIFR), and RISK MANAGEMENT (supplier readiness). Colarusso comments: “None of these is revolutionary; they are pretty standard areas that everyone measures. But when it came to reliability of supply specifically, we wanted to measure everything important, from demand forecast variability to deviations and quality events, and measure them all the time. What is really important for us is, first, we have clearly defined and brought together what exactly we’re going to stress in our metrics, and thus what drives behaviors. Second, we’ve ensured these metrics are fully standardized across all of our plants globally so that when we applied automation, they could roll up in the same way. We can now clearly compare A versus B, as in this plant’s doing better than that, or this plant is learning from the other.”
Let’s look then, at the Reliability Rooms of today, their automation, and also get back to the business process Colarusso started us off with.
A Room With A View
Janssen has been tuning this “performance management process” since its inception in 2011, when Reliability Rooms were first rolled out. For one — like most everything else nowadays — the data is easily accessed via electronic dashboards. But that doesn’t mean employees, managers, and executives can again hunker down in their respective cubicles, plants, offices … and silos.
“What’s perhaps noteworthy industrywide,” says Colarusso, “is how we manage this. We’ve set a strict agenda of metrics, but, as importantly, we’ve prescribed a process for their review in a fully cross-functional format. It isn’t just manufacturing or engineering, or maintenance and quality; it has to be all things together.”
To accomplish this, according to Colarusso, Janssen divides the metrics into “several tiers of information,” with each tier having a different group of people who review the metrics at different intervals. For instance, the basic tier pertains to factory shift workers who meet daily for on-the-spot, proactive performance reviews and discussions on avoiding events that might impair the ability to deliver product on time. The next tier of information is reviewed weekly and monthly by management. “We’re specific around who’s involved and how meetings are conducted,” says Colarusso. “We’re just as clear on how that information rolls up and the actions, roles, and responsibilities of the various levels. That’s what’s really improved for us.”
And let’s not fail to give recognition to the advances that online access, data clouds, and formatting for mobile devices afford users of the Reliability Rooms. According to a Janssen Supply Chain Reliability document Colarusso shared with us, an “Automated Reliability Metric Dashboard” provides full transparency into the 21 reliability metrics, providing senior leadership with the ability to track in real time and predict performance across supply chains, markets, and products. This should help executives develop insights into the cumulative improvements and strategies across the network.
That automation has provided someone like me the ability to get into a Reliability Room and drill down to a particular plant or a particular business unit, and then call up all the reliability metrics around that unit,” says Colarusso. “So the access is beneficial. But again, I want to stress this all hinges on our standardization of the metrics across facilities. The metrics are here, so are the cross-functional teams to discuss them, all revolving around the best quality and reliability for the customer.”
"This all hinges on our standardization of the metrics across facilities."
VP, manufacturing and technical operations, Janssen
A Room Of Your Own
There’s one area in this reliability management process where Janssen has some work left to do. Colarusso informs me that as of yet, Janssen’s CMOs and other external suppliers don’t quite have a seat within the Reliability Rooms. “That integration of CMOs and key external partners is a key next step,” he says.
Currently, Janssen utilizes an overall metric for contract companies called “On-Time In-Full” to track supplier quality and reliability. “We do get into specifics with each supplier, of course,” says Colarusso, “but when we order a certain quantity of API, for example, ‘Did it come into us on time, and in full quantity and quality?’ is the overarching question.” Colarusso is quick to add, though, that in fact this measurement drives the same type of key metrics as those on the drug product side. “It’s basically an analog for API and raw materials to the LIFR for finished products.” Well enough for now, but Colarusso and Janssen look forward to fully assimilating the CMOs directly into Reliability Rooms for a tighter-managed integration of the entire supply chain.
“We’re working with our partners now, and there are options on the table,” says Colarusso. A lot will be determined by the sophistication that’s necessary or required for each vendor. “Different vendors have different capabilities,” he explains. “Now our sites have the process laid out and the data synergized so it can be rolled up. We would envision ultimately doing that for our partner CMOs.”
Colarusso envisions this step starting out much like the original Reliability Rooms, as “initially something simple and manual.” Janssen will study how and what adds the most value and tweak the process until it too leads to useful day-today data and metrics that efficiently roll up to senior management. “To me, that’s what I’d call the real automation: The efficiency of the process to get started.”
And finally, while on the subject of CMOs and outsourcing in general, I ask Colarusso how important this “external factor” is for Janssen. Is outsourcing growing as we’ve heard from other pharma companies? Is there a model or strategy for outsourcing — for example, diversify the chain or concentrate on fewer and bigger partnerships?
“We fall more in line with the strategic partnership model,” replies Colarusso. “We try to focus on bringing that total number of service providers down, but of course we’re never fully successful. One reason is because there’s a lot of licensing going on all the time, and those licenses typically come with CROs, CDMOs, and CMOs attached.” Colarusso says another factor is the consistent need for new partners with new and advanced technologies and capabilities based on the new drug programs at Janssen.
“Things change depending on your activity,” Colarusso concludes. “Overall, our strategy is centered around building the supply chain from whatever is best for that business. That’s the mission. Whether that involves internal or external resources, it has to do with specific product, the technology utilized by the product, what we consider core technologies we think we’re better at, or what technologies might be core to key partners.”
What is certain is that whoever gets to work with Janssen — be it on the inside or externally — should be fully prepared for the 21 key measurements, serious cross-functional (and intercompany) review, and proactive actions … and to spend a fair amount of time in the Reliability Room.
In Pharma, There'S Little Daylight Between Reliability and Quality
As a convicted wordsmith, or perhaps more positively because words do matter, it’s of interest to me how the pharmaceutical industry interchanges these two words: reliability and quality. This was again brought to mind when talking with Remo Colarusso, VP of manufacturing and technical operations, about Janssen’s Reliability Rooms. Along with the allure of alliteration, there was certainly more to Janssen’s decision to use “reliability” instead of “quality” for this important supply chain initiative, wasn’t there?
Before asking Colarusso, let’s consider: Where are the Reliability Control (RC) or Reliability Assurance (RA) titles to match those of Quality Control (QC) and Quality Assurance (QA)? This is no trivial pursuit. A more stringent division of these two words might help in the continuing efforts to alleviate product shortages and to market drugs of the highest quality standards. Reliability is to supply chain performance as quality is to individual products (within the chains). Yes, they are intrinsically connected, but does our industry make the distinction clear enough to improve both sides?
A Reluctant Division
I ask Colarusso if the pharmaceutical industry’s intoning of quality — no doubt for good reason – in some degree detracts from supply chain management and actually impacts overall reliability. Let’s say Colarusso doesn’t quite take the bait. He does, though, take the thought seriously, and provides some valuable insight.
“At Janssen, like other companies, it is very much both,” he replies. “We start from our long history of being a ‘high quality organization.’ We view that, first, as meaning we are a fully regulatory-compliant company. Yes, there has been so much talk and emphasis around quality in the industry, and that’s been no different for us. I’d agree that, comparatively, perhaps the broader supply chain reliability has not been as emphasized.”
If there has been any under-representation of reliability as the overall process of the supply chain, Janssen is addressing it via the Reliability Rooms. That initiative will also reach CMOs and other external partners. Considering outsourcing and external supply chains, which as we know have become essential elements of drug manufacturers’ business models, the discussion here seems to tilt heavily to the topic of quality.
However, I’d submit that with the now very experienced and well-established cGMP-compliant CMOs — which have undergone years of FDA and other regulatory inspections — quality is actually less of a concern than the overall reliability of product delivery. Here’s what I mean: As CMOs and other pharma partners continue to grow in importance, will they be able to effectively manage projects, handle compressed development and delivery timelines, coordinate larger alliances (with various product lines), and plan sufficiently for steady (reliable) supplies of starting and raw materials? Can they keep costs down and their margins up to stay viable? Do they understand their position within the chain for each product they provide services for? These are reliability questions of growing concern.
“We talk about how both quality and reliability are foundational elements to our success,” says Colarusso, “and that has to include our partners. Note that it is quality and reliability. Because of that dual emphasis, I think everyone understands these are not the same, but also that there is not an emphasis on one over the other. To me, they remain synergistic, and that’s what we stress as an organization and in terms of overall business performance,” Colarusso adds. “The reality is, the reliability of the pharma supply chain is still most heavily impacted by quality. One quality problem in the chain can quickly lead to a supply disruption.”
Partners In Performance
I think we would all agree that there can only be one ultimate measurement. The supply chain is either reliable or it is not. It either consistently delivers the requisite amount of goods (on time) that meet quality standards or it doesn’t. If it is not, or it doesn’t, external partners have become as important as internal resources in rectifying the situation.
“An older term was ‘supplier performance management,’ wasn’t it?” Colarusso asks rhetorically about external partners. “That kind of signifies how procurement groups throughout the industry would look at outsourcing. It was more about the ‘buy’ — ‘Here’s an order, deliver our product by this date at this price.’
“At Janssen, we realize that some of our partners are doing sophisticated manufacturing for us,” Colarusso continues. “We want them to continue to get better because that means we get better. Their reliability to us can translate to our reliability to our customers. That’s why we are moving forward in sharing more of our processes that have demonstrated improved performance.”
Along with this process sharing, what advice might Colarusso offer other pharma companies? “The best advice I could give any organization is to first make sure any relationship you are about to enter makes sense for your business. You’ve got to be consistent with your business strategy,” he replies. As an example, he says it’s good policy to utilize your core strengths and technologies, and outsource what you may not be focused on as a company. He also says that, to the extent possible, sponsors should provide CMOs and suppliers with meaningful opportunities to become true partners. “Both sides need to move away from transactional-based thinking. You should have the perspective that you both win, by both winning.”
What about advice to the service providers for ensuring they become reliable partners? “It’s very similar,” he says. “Service providers also need to look for the customers willing to provide the opportunity to establish those win-win relationships. Next, I’ll go back to the original discussion we had on this. It is paramount for any company in the pharmaceutical industry, no matter external or internal or where they are in the process, to focus relentlessly on the quality of supply and the reliability of the entire chain. Those two are foundational. You can’t do anything else without that.”