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What skills and responsibilities do managers need for API manufacturing?
Some general managers may think they need only an
accountant and an attorney to run a business, but if you have risen through
the technical ranks, you know a lot more insight is required to successfully
manage an API facility. Sure, accounting and legal services are two
very important items in your toolbox. Both functions tend to operate in a
conservative fashion and serve to mitigate or limit risk. However,
businesses do not tend to grow without taking risks. General Patton was
quoted as saying, "Take calculated risks. That is quite different from being
rash."
So, the accounting and legal functions should be asked for
the extent and degree of risk acquired by some particular business action.
By analogy, the API development chemist might say, "I got it! You want to
know the scope and limitation of each reaction in the synthetic sequence,
the hazards involved, and whether the process is sufficiently robust to
produce the desired outcome every time!" Exactly.
So how does the general manager integrate many of the truly
business-function issues with the technical operations of the company? Often
barriers exist well beyond the cherry paneling of the front office echelons,
the laboratory bench-top and the shipping dock. Some managers may work from
a holistic approach; on the surface this sounds good, but complex chemical
operations, rigorous quality standards and regulatory mandates require a
more analytical and definitive approach. There are always the clichés to
justify the "soft" people skills or the "hard" analytical strengths, such as
"Leaders lead people and managers manage things."
However the current market environment demands that successful businesses --
and their general managers -- must have strong combinations of hard and soft
skills. It can be a difficult balancing act. As the deleterious effects of a
one-world economy challenge the standard of living and the quality of life
for the U.S. workforce, higher productivity, faster delivery and cheaper
production costs appear to be the remedies expected by company investors to
assure a return. To even the most casual analyst, these expectations
approach an asymptotic limit and certainly a point of diminishing returns.
How does the general manager retain effectiveness during this market
turmoil? How does one hang on until some level of prosperity returns? What
disciplines can managers exercise to place the company in position for the
best opportunity for success?
One familiar, yet simplistic, refrain in the management ranks is also
prophetic: "I'd rather be lucky than good." Being in the right place at the
right time can often bring unexpected rewards. However, fortuitous geography
and timing is not a good substitute for a practical business plan. This
article discusses how the general manager balances risk with opportunity,
and what planning, organizational, implementation and control behaviors will
add value to the enterprise. It is definitely important for the effective
general manager to have a disciplined review cycle to address each of these
activities to optimize the return on the assets for which they have been
entrusted.
The Organization
There have been numerous comparisons between business activities and
military operations ranging from Clausewitz and Sun Tzu to Guerrilla
marketing. As our nation is in the midst of an "economic war," perhaps these
comparisons should receive more serious consideration, but that discussion
is beyond the scope intended here. However, military organization based on
the "PITS" model is worth a few comments. "PITS" is an acronym for:
Personnel, Intelligence, Training (and Operations), and Supply. No doubt,
general managers have the equivalent of these functions along with the
accounting and legal teams at their regular staff meetings. For instance,
the personnel department representative may have fairly defined
responsibilities (benefits, hiring, labor law, etc.), while competitive
Intelligence may include strategic marketing, sales force observations and
information gleaned from the company's technical leadership. The Training
and Operations activities can often be well defined in a manufacturing
environment, but when the R&D function is included, the responsibilities
take on a potentially broader and long-term perspective. Similarly, the
Supply function can often have a "liberal" interpretation; in its usual
business context it contains all of the logistical components needed to
manufacture and ship APIs. This includes receiving raw materials,
scheduling production and shipping the drug substance. Naturally, the thread
(or titanium-linked chain) of regulatory requirements runs throughout this
process and may include everything from import laws to DOT regulations and
of course, the FDA's GMP guidances. Systematic processes and SOPs will
assist in preventing these activities from becoming a "new event" every time
the name on the product changes or an employee leaves the company.
Organizationally, nearly every company has the same standard departments or
functions. What is intended here is to present a way to think
organizationally that delivers the desired results, and a way to clearly
understand the parties responsible for their delivery. A general manager
should never hear that items have dropped through the cracks or someone did
not know he was responsible for a given task. With the "general staff"
approach, the team should recognize there is "no excuse, sir"! Individuals'
titles may represent the traditional business hierarchy -- e.g. director of
manufacturing -- but the general manager would be well served to cross-match
their responsibilities to the fundamental requirements contained within the
PITS model.
The Plan
A good routine to adopt is the yearly exercise of detailing a rolling
five-year business plan. The business plan should encompass more than a
re-hash of the annual report and financial statements; it needs to include a
tactical and strategic assessment of the enterprise--kind of a "state of the
union" address, minus the political positioning. Ideally, the business plan
should be a compilation of the short- and long-term perspectives of the
organizational PITS components discussed above. The Intelligence function
should clearly integrate business development activities with market trends
and production capability. Extending this, an evaluation of the competitive
landscape needs to be aligned with tactical marketing activities, the sales
force's goals and the forecast(s). Obviously, parts of this plan overlap
among the different staff functions. The general manager should make it
clear that the staff should reach consensus on the issues that interface
between functions.
In an API manufacturing environment, the Training and Operations
function would likely contain the capital expenditures anticipated
throughout the year along with the longer-term expenditures expected for
subsequent years. Large expansions, or planned refurbishments should include
an Economic Value Added (EVA) or net present value calculation for each
project. Naturally, within a GMP environment (and/or facility where
controlled substances are prepared), employee training for regulatory
compliance is essential. The operations management also needs to be
appraised of R&D projects or business prospects that may impact plant
capacity or scheduling.
The plan can also serve as a repository for the management's top-level
thinking and to assist the company in being a learning organization. The
business plan is the company's vision and description of how it will not
only survive, but also thrive in a competitive marketplace. Therefore, the
plan should include a heavy dose of the operating philosophy for which each
staff function should be committed (and held accountable). To continue with
the military organization analogy, the company can respond quickly and
flexibly to an evolving economic battlefield when the top leadership is of
one mind. Of course, the plan includes the operational doctrine that
transmits the vision into a manufacturing reality and each staff function
should be satisfied. In connection with the general manager's soft skills,
it should be noted that leadership does not depend upon the democratic
process. If the overall plan consists of the sum of the (staff function)
parts, the general manager has a responsibility to assign different weights
or levels of importance to each as reason and conscience dictate.
As mentioned in the introduction, the accounting and legal functions
invariably tend toward a conservative, status quo approach. Decisive
leadership may limit the weighting placed on the "avoid risk at all costs"
factions and balance the equation in favor of reasonable risk for a
favorable return. Indeed, risk avoiders often use wild speculation to
introduce fear into an organization instead of providing inspired leadership
to assure the company receives good advice on difficult issues. The
discerning general manager may tolerate the "sky is falling" positioning for
a limited duration, however eventually, the creative imaginations of these
staff members are not adding value to the company's business objectives.
In summarizing this section, the general manager needs to assemble a
business plan meeting tactical and strategic objectives. Independent of how
a company is organized, the company has invested in assets, resources and
people--and some of those people (the staff) are responsible for leading and
managing different portions of the company's investments.
It all comes together with the general manager, whose responsibility is to
fine-tune each company instrument into the perfect ensemble.
Implementation
With the business plan in-hand, implementation should be easy, right? It
rarely is, because in chemical terms, entropy takes over. One of
management's main duties--at all levels within a company--is to minimize the
natural tendency toward higher entropy (disorder). At the general manager
level, the implementation of the business plan essentially consists of
allocating sufficient resources to accomplish the objectives. The plan might
be neat and tidy, but as the battle dynamics evolve, allocating resources
and reserves, changing schedules and possibly modifying the objectives have
ripple effects and consequences throughout the company. Entropy can rule
(read: "ruin") the day if decisive leadership doesn't step in and correct
the problem(s).
As an example, let's take a look at the problems encountered by the supply
staff function when the plan's implementation runs afoul. Let's focus on
Supply as the purchasing organization. The plan indicates a manufacturing
forecast and schedule for which Purchasing responds by ordering raw
materials. Unexpectedly, Manufacturing reports that the equipment required
to produce the API is in need of immediate repair (e.g. repair of a
glass-lined reactor). The process has been validated using that particular
reactor train and equipment, so now QA/QC will have to assure the reactor is
clean before starting the batch. The client has formulation and fill
capacity scheduled and reserved--they expect API delivery on-time.
The business development unit negotiated a premium from the client for
on-time delivery. The raw material is temperature and time sensitive and has
to be shipped from a distant location; its timely use is imperative. R&D is
asked to evaluate if the raw material can be stored for a longer period and
still be good. QA/QC will have to run additional tests for the R&D function
to demonstrate material would pass release specifications if used. Perhaps
waivers would have to be written and approved. Then, the manufacturing
manager gets chastised by nearly everyone for "creating" problems. You get
the point; it gets ugly quickly and absolutely no one will be happy. It is
easy to say, "Things like this happen," and that people should be
accommodating. Then you have to hear from the "risk avoiders" (discussed
above) saying, "I told you this could happen." Well, sure, but what are you
going to do about it? Entropy took round one.
It shouldn't be necessary for the general manager to step in and solve the
hypothetical problem presented here, but potentially it could have serious
consequences and the general manager should be informed. Both the soft and
hard skills possessed by the general manager should be employed to get the
organization back on track. The general manager should expect a
results-oriented focus on the problem using good problem-solving skills. The
magnitude of the problem should be well understood and kept contained.
Lastly, the internal resources applied to the solution should be
commensurate with the difficulty of, and consequences from, the problem. The
general manager can provide appropriate focus, set the expectation for
results, and if smart, appear to have accounted for this contingency!
Implementation of the business plan is all about good execution of tactical
and strategic tasks needed to accomplish the objective. Good execution is
expected throughout an organization from the staff, to project managers, to
accounts payable. In an API manufacturing environment, the number of
factors associated with producing an approvable API batch--everything
from QA and regulatory compliance to robust chemistry--can often appear
insurmountable. Good execution of each component is required and most often,
the failure modes happen at the interface between functions. A good general
manager should encourage his staff to work to yield the popular buzzword
operational status of "seamless." Of course, there is a feedback loop on the
implementation program and that's the control mechanisms that the general
manager uses to assure operational integrity and results.
Control
Exercising control of business operations may be the most difficult task of
all the general manager's duties. Control at the general manager level
requires the ultimate balancing act between the "soft" people skills and the
"hard" analytical skills. After all, it's people with whom you accomplish
the goals and objectives; the flip-side is that "hard' analytical skills are
usually required in API production--and the company has made
commitments! Those commitments pay the bills and allow the company (and
therefore its employees) to prosper. To insure the company remains healthy
and viable, the general manager must establish and enforce accountability
throughout the company. As discussed above, the overall business plan may
consist of a component sum where the components represent each of the staff
functions and their inherent responsibilities. The general manager may apply
different weights to each of these staff function components to affect the
overall business outcome. Similarly, control of that "equation" may require
another coefficient in front of each component to optimize the overall
outcome (and to decrease entropy!). Again, the general manager's techniques
for maintaining integrity and accountability throughout the organization are
a challenging balance between soft and hard skills.
So how does the general manager provide accountable leadership and thereby,
in good conscience, hold the staff accountable? For sure, the general
manager has a boss or bosses too--at least the CEO, the chairman of the
board, and the stockholders--so despite all the rhetoric surrounding the
team approach, the leadership hierarchy definitely has the underlying
element of a military organization. In simplistic terms, this structure
states, "you will produce, or we will find someone who will." Can the
general manager really afford to do otherwise? Would it be responsible
leadership to keep unproductive staff in the company or to use fixed assets
or resources at something less than their optimum? These answers should be
obvious. Accountable leadership means, "You say what you do, and do what you
say." The equitable consequence to this behavior is the general manager can
and should have the expectation that their staff will perform and operate
similarly.
For true accountability, there have to be consequences to failure.
Sometimes, the inability to achieve the objective was not for the lack of
hard, disciplined work. The general manager and senior management can be
very forgiving in these circumstances especially if they were routinely
informed of the approach and the difficulties encountered. Here again, the
"soft" skills of the general manager and the ability to discern fact from
fiction may determine the extent of the consequences. Further, an employee's
history for accomplishing the company's objectives may heavily influence
whether consequences are forthcoming. Most everyone has heard of the Peter
Principle, whereby some people are ultimately promoted to their highest
level of incompetence. It is important for the general manager to recognize
when this has occurred and to take appropriate action--quickly.
Probably the best means of controlling the organization's progress is to
provide definitive goals and objectives that cascade through the
organization so that everyone has been told and understands what is expected
of them. The general manager's staff may have directors and project managers
on their respective staffs, and the duties and responsibilities are
allocated or delegated accordingly. A major component to this cascading
system is for each employee (at any level) accepting ownership for their
responsibility. With that ownership acceptance, the senior management must
allocate sufficient authority to that employee to accomplish their tasks.
Now, when one succeeds, all succeed. However, when there's failure, it's not
too difficult to find the root cause or where the system broke down.
Ultimately, the general manager has to report to their boss(es), and results
-- not excuses -- are expected. Hence, a pattern of failing to deliver
results will inevitably lead to the individual being reassigned to duties
commensurate with their abilities, or being terminated from the company. A
general manager cannot exercise control over company performance without the
ability to apply consequences to poor performers.
The effective general manager must employ both the soft (people) and hard
(analytical) skills to produce the desired results from an organization.
Disciplined planning cycles and clear, concise expectations placed on the
senior staff can be translated throughout the enterprise to every employee.
Appropriate levels of authority must accompany the control of this
responsibility cascade, or the system will mire into analysis paralysis. The
general manager can envision optimizing the company's performance based on
the sum of the functional group contributions and refine or modify the
results by applying different weights (or multipliers) to each factor. In
this manner, the goals and objectives of the business plan can be optimized.
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