When it comes to drug development and manufacturing, operational excellence (OpEx) is critical for success at all levels. It can help establish a culture of continuous improvement and innovation while supporting data quality, compliance, customer satisfaction, and more. It can even impact external perceptions of the company and confidence in the strength of the business.

The challenge is establishing OpEx through all corners of your organization. At the highest level, OpEx is a cultural shift achieved when each employee is committed to mastering their role, can see the flow of value to the customer, and works to improve that flow continuously. That means everyone must be on board.

This article will discuss the benefits of adopting an OpEx mentality throughout your company, why it’s crucial to adopt OpEx practices early on, and what elements go into formalized OpEx practices. With this information in mind, life science companies can implement OpEx strategies from the beginning to attract investor attention and optimize their growth.

The benefits of adopting an OpEx mindset

Operational excellence has the potential to address some of the biggest challenges in drug development and manufacturing. Companies can move forward with a smaller capital investment, greater manufacturing capacity, and fewer drug shortages. It’s a win for both patients and shareholders.

Drug shortages, in particular, are front of mind right now. However, the causes are not well understood. Shortages are often misattributed to unforeseen changes in demand in the biopharma industry. Experience has shown that it is more likely due to manufacturing operations struggling to scale up in response to new information, rather than being caught off-guard due to inadequate or poor-quality information. Manufacturing operations that quickly pivot and increase output likely already embrace a culture of OpEx. The approach results in fewer wasteful activities such as idle time, inconsistent processing speeds, and quality defects to contend with when surges in demand occur. The subsequent effects of this culture also manifest in meaningful ways outside of pure manufacturing capacity and agility. For example, less capital investment in fewer plants to get products into the supply chain.

At the manufacturing facility level, having a high state of OpEx ensures medicines flow to the market with superior reliability and minimal waste. But what about the earlier stages of a drug’s existence, beginning with preclinical development?

When considering drug development stages, companies face constant uncertainty. McKinsey’s research has shown that new product development is slow, complicated, and costly. Companies invest a disproportionate amount of time optimizing the clinical development phase to reduce costs and accelerate commercialization. However, companies would also benefit by bringing this emphasis to the preclinical stage and by moving beyond straight optimization efforts to implementing a culture of OpEx from the outset. Culture is about people, and rather than de-bottlenecking a process or optimizing a stage, embedding an operational excellence mindset in everyone at the company, from the newest employee to the Chief Science Officer, would unlock unprecedented efficiency. A culture of OpEx empowers employees to identify uncertainties and risks quickly and, by doing so, be able to mitigate them.

Why adopt an OpEx strategy early on?

OpEx requires every employee to adopt an independent sense of excellence. To facilitate this, companies must hire like-minded, excellence-oriented people. This requires an OpEx strategy from the outset, as it can be challenging to implement further down the line as the company grows, both in size and complexity. Forcing a cultural shift in an already established company can be difficult for workers to adopt.

Even so, companies of all sizes and maturities can adopt an OpEx strategy with determination and hard work. Unfortunately, companies often try to attain this by “doing operational excellence” instead of implementing a philosophy centered on “being operationally excellent.”  They embrace standard tools and buzzwords without buy-in from their people, which dooms the effort from the outset. Many large, established companies have implemented OpEx strategies with mixed results, but companies that implement OpEx strategies from the beginning almost always fare better.

Companies with well-established OpEx strategies are always on guard, looking for ways to overcome new problems before they arise. They tend to anticipate operational challenges, and by maintaining OpEx, get ahead of any issues that arise.

How to solidify OpEx practices

As described, people play a critical role in maintaining a culture of OpEx. At its core, OpEx is about people putting their best effort forward, teaching others, continuously improving in all realms, and fundamentally minimizing human error. It goes without saying, but putting strategies in place to protect against human error will increase a company’s state of operational excellence.

Supervisors have an often overlooked but significant role in sustaining a culture of OpEx. They are both role models of OpEx in practice and the watchdogs of its implementation. While having a budgeted OpEx team is unnecessary, investing in leadership that embodies OpEx can positively influence an organization.

In addition to human factors, technological advances can also help promote OpEx. Two timely trends are the intense focus on data integrity and the rise of machine learning. Data integrity in the context of drug development and manufacturing is synonymous with product quality — allowing drug developers to trust the information at hand.

However, this puts biopharma companies in an interesting predicament. These companies now produce more data than their data team could possibly analyze manually. That’s where machine learning steps in. Machine learning allows companies to maximize their data without manually sifting through it. Using machine learning algorithms to process massive quantities of data and distinguish patterns brings a new dimension to operational excellence that, until now, has been underutilized.

With practices and people in place to drive the OpEx culture, it’s essential to track the performance of these efforts using key metrics across compliance, quality, efficiency, innovation, customer satisfaction, risk management, and employee engagement. Companies should use two methods to measure OpEx: key activity indicators (KAIs) and key performance indicators (KPIs). KAIs represent the current activities a company is practicing to accomplish a goal. KPIs show how successful the company was in achieving it. KAIs tend to be highly variable, tuned to each project’s situation and stage. They reveal any inefficiencies in activity execution. On the other hand, KPIs are more static, as they measure results. Together, these measurements are valuable tools to track OpEx efforts.

Engendering a culture of OpEx

To achieve OpEx, companies must intentionally build it into their culture from the start. The benefits include streamlined processes from new product development through to pre-clinical and clinical stages, factory design, and manufacturing. Companies should start building a culture of OpEx from day one to ensure that every employee is committed to mastering the approach. Then, by combining the power of personnel and technology, companies can execute OpEx strategies and measure their success with well-defined metrics. By living and breathing OpEx daily, companies can maximize their value. And with this much-needed support, the life science industry can continue delivering drug products that improve human health.

Rich Tree is the Chief Operating Officer at CAI, a prominent global life sciences consulting firm with a team of over 800 professionals. At CAI, Tree helps clients with operational readiness and operational excellence.