from the loading dock to quality stock - pharmaceutical … · 2013-09-21 · from the loading dock...

Case Study Forum WHITEPAPER

From the Loading Dock to Quality Stock

Three Scenarios for Reducing Incoming Inspection Costs

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TABLE OF CONTENTS

Executive Summary .................................................................................................................5

Pharmaceutical Production/Manufacturing Challenges ..........................................................6

Handheld Non-Contact Identification Tools for Lean Manufacturing......................................6

Three Scenarios Where TruScan Has Made a Measurable Impact ..........................................7

Summary of Realizable Financial Benefits ...............................................................................9

Conclusion .............................................................................................................................10

CASE STUDIES: In-Depth Examination .................................................................................11

SCENARIO 1: Best Practices for Raw Materials Inspection...........................................12

SCENARIO 2: Enforced Increase to 100% Inspection ..................................................16

SCENARIO 3: Mandated Cost Reduction.....................................................................20

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From the Loading Dock to Quality StockThree Scenarios for Reducing Incoming Inspection Costs

Executive SummaryPharmaceutical, contract pharmaceutical manufacturing, and consumer packaged goods (CPG) production facilities face mounting pressure to increase productivity, maintain or increase qualitycontrol, and hold down costs. TruScan™, a handheld analyzer for non-contact identification of materialsat the loading dock or in the warehouse, has enabled manufacturing and quality control managers tomeet these challenges by streamlining their identification processes.

To better understand the financial returns TruScan generates, Ahura Scientific collaborated with anindependent research organization that specializes in ROI and cost-benefit analysis. The firm examinedthe implementation of TruScan in three typical scenarios:

1.Best Practices for Raw Materials Inspection

2.Enforced 100% Inspection

3.Mandated Cost Reduction

The facilities in all three cases were able to implement TruScan and then recover the initial investmentand startup costs quickly—all broke even within 12 months. Projected four-year returns on investmentranged from 268% to 339%, and cost savings ranged from ~US$600,000 to >$800,000.

Such impressive financial returns are feasible because with TruScan, the testing required for raw material identification is performed on the loading dock or in the warehouse, not in the laboratory.The resulting benefits are:

• Reduced analysis and production costs

• Postponed or avoided expansion of production support areas

• Reduced inventory and associated costs

TruScan provides a productivity solution that is inexpensive and easy to implement and maintain, with the added benefit of providing a high level of accuracy. Once implemented, cost savings accumulate rapidly.

Pharmaceutical Production/Manufacturing Challenges Facing demands for increased productivity and improved quality control, while holding down costs

Pharmaceutical, contract pharmaceutical manufacturing, and consumer packaged goods (CPG) productionfacilities face increasing pressure to increase productivity, maintain or increase quality control, and holddown costs. The pressures are particularly acute given escalating regulatory and liability pressures,more adaptive manufacturing environments, and the overall drive toward lean manufacturing.

TruScan™, a handheld analyzer produced by Ahura Scientific, has been developed to address the unfulfilled needs and expected demands faced by pharmaceutical and CPG firms, particularly in rawmaterial inspection and final product authentication. Released in late 2006, TruScan was developed invery close collaboration with select leading pharmaceutical organizations facing such significant demands as100% inspection, increased volume, and significant cost reduction mandates. TruScan utilizes the proventechnology of Raman spectroscopy in a format that can be used effectively by non-technical personnel,as well as offering capabilities required by quality assurance and quality control (QA/QC) managers.

Quality assurance managers, quality control managers, and manufacturing and plant managers haveimplemented TruScan at many of the world’s largest and leading pharmaceutical and consumer healthproduction facilities. Many describe TruScan as a sophisticated tool that has simplified the previouslycomplex and cumbersome methods of incoming inspection and product release testing.

This whitepaper describes three scenarios that clearly demonstrate the value TruScan brings to pharma-ceutical and CPG manufacturing facilities. It then explores the underlying benefits of implementingTruScan that make such extensive savings possible. The Case Studies section provides an in-depthexamination of the deployments of TruScan in the three scenarios. Each scenario concludes with adetailed assessment of the financial yield, from payback through ongoing cost-benefit analysis.1

Handheld Non-Contact Identification Tools for Lean ManufacturingBefore designing TruScan, the development team looked at the complete scope of workflow and operational improvement pertinent in a cGMP (current good manufacturing practices) environment.Based on what they found, the team condensed the analytical capabilities found in traditional bench-topRaman instruments into a handheld product that is easy to operate, uses new methods based on revolutionary algorithms for identification, and significantly lowers the total cost of ownership. Theresult is TruScan, a rugged, light weight handheld analyzer for rapid and accurate identity verificationand authentication of raw materials, intermediates, and finished products. The unit is designed to meetthe stringent requirements of pharmaceutical and consumer products manufacturing operations.

By using Raman spectroscopy 2, TruScan quickly verifies the chemical identity of the contents of a container and provides clear Pass/Fail results based on spectral comparisons to the user-defined librarystored on the analyzer.

Key benefits of TruScan include:

• Real-time results obtained at the loading dock or in the warehouse

• Analysis through translucent packaging, with no need to open the packaging

• Easy, managed workflow for reliable results by both experts and non-technical personnel

• Comprehensive validation and regulatory compliance, including 21 CFR Part 11

• Rapid method development— independent of temperature, humidity, and particle size

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1 Based on non-disclosure agreements, the company names associated with these scenarios have been withheld. For customer references and industry referrals or to request a professional assessment of the potential benefits of TruScan at your facility, contact Ahura Scientific at [email protected].

2 Additional information on Raman spectroscopy can be found in a separate whitepaper from Ahura Scientific

A Complementary Platform to Near and Mid Infrared Based Instruments

Typically, no single technology can satisfy all identification needs. Vibrational spectroscopy has madegreat inroads toward rapid material verification. Due to the overwhelming desire of end-users toanalyze materials without sampling, we note two technologies for sampling through packaging: NIRand Raman.

In recent years, the associated literature has discussed the potential use of NIR (near infrared) spectro -scopy for identity testing of solids in the warehouse. However, NIR produces data in the form of spectrathat are challenging to interpret because of non-specific spectral response and sensitivity to factors otherthan the chemical identity of the material, such as temperature, humidity, particle size, and packaging.

Compared to NIR, the Raman spectroscopy used by TruScan produces precise spectra that are environ-mentally independent, simplifying even difficult chemical ID problems. This means robust implementationof TruScan is usually quicker than it would be with NIR because methods are typically created with onlyone material reference spectrum. Use of TruScan also enables the non-contact identification of liquids.

Because neither technology can identify every material, TruScan can be used in conjunction with NIR tospeed the overall implementation of an identity-testing program at the loading dock or in the warehouse.

Three Scenarios Where TruScan Has Made a Measurable ImpactAhura Scientific collaborated with an independent research organization that specializes in return on investment (ROI) and cost-benefit analysis to perform an objective study of the financial returns generated by the use of TruScan. The organization examined the ROI and benefits TruScan offeredunder three scenarios that are representative of the primary challenges facing the manufacturing andsupply chains for consumer health, pharmaceutical, and consumer packaged goods manu facturers.

In all three scenarios, TruScan users recovered their investment within 12 months, including developmentof methods. This is a significant result, particularly when compared to the industry’s historical challengeswith NIR products.

SCENARIO 1: Best Practices for Raw Materials Inspection

In this scenario, a pharmaceutical manufacturing facility used 100 raw materials in its processes. Salesof the commercial products were steady, and therefore the production rate at the facility remained generally consistent. The plant manager was seeking ways to increase quality and decrease costs. By examining the lean-manufacturing initiatives and best manufacturing practices in the industry, hehoped to make significant operational efficiency improvements at his facility without any compromisein quality.

RESULTS SUMMARY:

Achieved ~eight-month payback period after implementation and will gain a projected:

• Cumulative four-year net cost saving of ~$600,000

• Four-year ROI of 285%

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TruScan produces precise

spectra, independent of

temperature, humidity,

particle size and packaging.

8

SCENARIO 2: Enforced Inspection to 100%

In this scenario, an over the counter (OTC) manufacturing plant used 70 raw materials in its processes.Sales and the production rate were steady. The plant launched an initiative to move to 100% materialsidentification for as little cost as possible, without decreasing inventory turns or expanding warehousespace. The quality assurance team confirmed that TruScan enabled a cost-effective means of achieving100% inspection, and yielded a number of consequential benefits, including increased laboratory pro-ductivity, reduced dependence on third parties, and no expansion in manufacturing or quarantine space.

RESULTS SUMMARY:

Achieved ~six-month payback period after implementation and will gain a projected:

• Cumulative four-year net cost saving of ~$800,000


SCENARIO 3: Mandated Cost Reduction at the Plant

In this scenario, a drug manufacturing facility used 200 raw materials in its processes. In order torecover from falling margins, the parent corporation put pressure on its plants to cut costs. Eventhough this facility was one of the most efficient and effective in the corporation, it was still expected to make significant cost reductions. Because the materials in the plant’s processes were high-cost, thefacility ordered them on an as-needed basis. The plant manager asked the lean manufacturing groupto recommend ways to make the facility even more efficient while maintaining its high level of qualityand performance.

RESULTS SUMMARY:

Achieved ~three-month payback period after implementation and will gain a projected:

• Cumulative four-year net cost saving of >$800,000


In all three scenarios, payback after implementation was very rapid, and ongoing savings will enable significant returns on the investment in the instrument and implementation costs. Such impressiveresults are feasible because of the advantages TruScan offers and the benefits it enables customers torealize.

Details of each scenario can be found in the Case Study section beginning on page 11 of this whitepaper.

Summary of Realizable Financial BenefitsThe following sections provide more details about the benefits that manufacturing, consumer health,pharmaceutical, and consumer packaged goods manufacturers can realize from the use of TruScan.

Reducing Analysis and Production Costs

TruScan is more efficient than alternative ID technologies because it offers increased throughput usingexisting personnel from the lab to the loading dock.

With TruScan, there are fewer production delays, because of its consistently short analysis turnaroundtime for incoming raw materials. This is primarily due to excellent Pass/Fail discrimination, resulting infewer secondary tests of good material as reported with NIR.

It offers faster ramp-up of new production processes, due to the rapid Raman-based method develop-ment and validation of new materials. Subsequently, the elapsed time between the completion ofmethod validation and the release of first batch of new material is very short. This is an area of particular value for QA/QC departments.

TruScan also helps facilities reduce production costs. Some of the benefits that are site- or application-specific include:

• Fewer production delays

• Faster ramp-up of new production process

• Fewer failed production runs

• Little down time for instrument maintenance/modeling/method development

• Little resource investment required for implementation

Postponing or Avoiding the Expansion of Production Support Areas

For those facilities that are experiencing an increase in production rates or an increase in raw materialinspection rates, TruScan helps postpone or avoid the expansion of production support areas, andreduces the demand placed on facilities, with these primary benefits:

• Increased testing throughput reduces demand for expansion of laboratory space

• Decreased turnaround time reduces demand for expansion of warehouse and quarantine space

• Performing testing at the loading dock or in the warehouse reduces demand for expansion of classifiedsample preparation space

Reducing Inventory and Associated Costs

TruScan helps facilities reduce inventory and associated costs in a variety of ways. It enables the use ofjust-in-time delivery of materials because it offers faster, more predictable raw material ID testing. Faster,more predictable turnaround time translates into less inventory needing to be held in quarantine.

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TruScan enables fewer

production delays and shorter

analysis turnaround time for

incoming raw materials.

TruScan enables just-in-time

delivery of material and

reduces inventory held in

quarantine.

10

ConclusionTruScan provides a productivity solution that is inexpensive, easy to implement and maintain, and provides a high level of accuracy.

Using optical non-contact spectroscopy packaged in a rugged, handheld device, TruScan providesnon-contact identification of materials at the loading dock or in the warehouse, enabling manufacturingand quality control managers to streamline their processes while reducing many of the expenses associated with ID testing, such as:

• Analysis and production costs

• Expansion of production support areas

• Inventory and associated costs

TruScan allows users to quickly develop and validate methods that are robust and require little to noongoing revalidation. Once implemented, the savings accumulate rapidly.

According to an independent research organization that specializes in ROI and cost-benefit analysis,TruScan offered these financial benefits in three typical scenarios:

1. Best Practices for Raw Materials Inspection

A facility that used TruScan for raw materials inspection experienced an ~eight-month payback periodafter implementation and is projected to gain a cumulative four-year net cost savings of ~$600,000,with a four-year ROI of 285%.

2. Enforced 100% Inspection

A commercial over the counter (OTC) manufacturing plant that used TruScan for enforced 100%inspection experienced a ~six-month payback period after implementation and is projected to gain afour-year net cost savings of ~$800,000 with a four-year ROI of 339%.

3. Mandated Cost Reduction

A facility that used TruScan for mandated cost reductions experienced a ~three-month payback periodafter implementation and is projected to realize a cumulative four-year net cost savings of >$800,000with a four-year ROI of 268%.

The facilities in all three cases were able to implement TruScan and then recover the initial investmentand startup costs quickly—all broke even within 12 months of implementation.

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CASE STUDIES: In-Depth ExaminationTo better understand the financial benefits offered by TruScan, Ahura Scientific contracted with an independent research organization that specializes in ROI and cost-benefit analysis to examine three scenarios comparing the costs and benefits of using TruScan.

As explained earlier in this whitepaper, the three scenarios are:

1. Best Practices for Raw Materials Inspection

A commercial pharmaceutical manufacturing plant used 100 raw materials in its processes. Sales andthe production rate were steady. The plant manager was seeking ways to increase quality and decreasecosts, and was examining the best manufacturing practices in the industry.

RESULT: Payback in ~eight months after implementation

2. Enforced 100% Inspection

A commercial over the counter (OTC) manufacturing plant used 70 raw materials in its processes. Salesand the production rate were steady. The plant had an initiative to move to 100% materials identificationfor as little cost as possible, and without decreasing inventory turns or expanding warehouse space.

RESULT: Payback in ~six months after implementation

3. Mandated Cost Reduction

A commercial manufacturing facility used 200 raw materials in its processes. In order to recover fromfalling margins, its parent corporation put pressure on this plant and others to cut costs. Though thisfacility was one of the corporation’s more efficient plants, it was still expected to cuts costs. Materialcosts were high, and ordered on an as-needed basis. The lean manufacturing group was looking forways to make the facility even more efficient.

RESULT: Payback in ~three months after implementation

In the following section, we take a detailed look at each scenario, and at the expected financial benefitsoffered by TruScan.

SCENARIO 1: Best Practices for Raw Materials Inspection

The Background

In this scenario, we investigate a commercial pharmaceutical manufacturing plant and its use ofTruScan. This facility had steady sales and a steady production rate, and used 100 raw materials in itsprocesses. The plant manager anticipated no change in the inspection levels and did not foresee regulatory demands to provoke any dramatic events in the schedule.

At a macro-level, the workflow of the plant involved sampling a subset of incoming containers prior to moving the materials into quarantine. Operators moved the containers to a sample room, pulledsamples from them and sent the samples to an internal lab. The lab turnaround time was generally twoweeks. Upon receiving the results, operators moved the released materials from quarantine into thewarehouse.

This commercial facility is on a campus that also includes a clinical pilot plant. The two plants are supported by the same quality control laboratory and staff. The clinical manufacturing group had beencomplaining about production delays because the quality control group places the highest priority onsupporting the fully Good Manufacturing Practices (cGMP) commercial facility.

The Challenge

The commercial plant manager was examining the best manufacturing practices in the industry, andwas seeking ways to increase quality and decrease costs. In the process, he learned of the potentialbenefits of performing raw material ID in the manufacturing facility instead of in the lab. The two mostpromising technologies seemed to be Raman and NIR. He sought to understand the benefits eachcould bring to his plant.

After some investigation, he determined that approximately 70% of the plant’s materials were good candidates for Raman (the spectroscopic technology upon which TruScan is based), and approximately70% were good candidates for NIR.

Taking a pragmatic approach, he felt that it would be best to implement either technology in stages. He identified the 20 materials with the greatest monthly sampling needs, representing 60% of the totalcurrent sample volume, or approximately 900 samples per month. These materials were both NIR- andRaman-active.

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Options Investigated

Using these initial 20 materials as a way to evaluate the potential of each technology at his facility, the plant manager projected the costs and benefits of implementing either TruScan or NIR on thesematerials. Most of these materials were delivered in packaging conducive to testing at the loadingdock, and the rest had to be measured in the sample room.

The projections of the plant manager indicated that TruScan would save the facility more than NIRbecause TruScan had a lower cost of ownership. Furthermore, he predicted that TruScan would beimplemented more quickly than NIR. Together, these results meant a greater return on investment ofcapital and resources. He decided to move forward with TruScan.

The manager purchased two TruScan units. The plant uses one unit primarily at the loading dock fortesting materials by operators (not analysts) as the materials arrive at the plant. The other TruScan unitis kept in the analytical lab for ongoing method development and for sharing with other sister facilities.The TruScan units have been in use for one year. The following business case is based on that one yearof use, and three years of projections.

Recouping Investment

By moving to TruScan, the plant was able to recover the investment very quickly:

• A payback time after implementation of ~eight months

In the years to come, the plant will gain significant financial benefits, including:

• A cumulative four-year net benefit of ~$600,000

• A four-year ROI of 285%

Prospective benefits with NIR were not as favorable. The plant manager projected the payback periodafter concluding an extensive implementation period to be 11 months, the cumulative four-year netbenefit to be ~$450,000, and the four-year ROI to be 147%.

Only Raman-Active30 materials

~200 samples/mo.

Not NIR- or Raman-Active

Only NIR-Active30 materials

~200 samples/mo.

Both NIR-Active & Raman-Active40 materials

~1,100 samples/mo.

OVERALL MATERIALS SAMPLING SITUATION

Top 20 materials represent 60% of total samples/mo.

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Benefits Realized

The bulk of the benefits from TruScan are due to a reduction in test costs over four years. With TruScan,staff spends significantly less time on material handling, sample preparation, and documentation. Forthis particular facility, changes in the material order quantity and frequency would have caused them todeviate significantly from the most economical order quantity, and so the facility could not take advan-tage of the potential working capital benefits TruScan typically offers.

Because ID testing is more efficient with TruScan, the plant has the flexibility to increase the rate ofinspection on materials received from new or less reliable suppliers. With fewer cGMP samples toprocess, lab personnel have accelerated a clinical manufacturing program. The clinical manufacturingstaff are regularly borrowing one of the TruScan units to ID final product to ensure they have placedactive product and placebo product in the correct packaging.

Since TruScan was implemented, there have been no false failures, the sample contamination rate hasbeen zero for materials analyzed through packaging, and the material contamination rate has beenzero for those materials analyzed through packaging. In addition, there have been no final productquality issues (lots failing final testing) related to the quality of raw materials.

Upfront Support and Rapid Implementation

With advanced preparation and assistance from Ahura Scientific, the company was able to develop the 20 methods and validate them in just under one month. After two months of comparability testing,TruScan was fully implemented and became the official release method. If NIR had been used, it couldhave taken nearly a year to implement NIR to identify 20 materials, because that technology requires extensive amounts of preparation time to develop methods.

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FINANCIAL DETAILS

PROJECT COSTS Year 1 Year 2 Year 3 Year 4 TOTAL

Investment and Startup $168,438 $0 $0 $0 $168,438

Ongoing Testing Costs $75,460 $52,232 $52,232 $52,232 $232,157

Annual Maintenance $11,000 $11,000 $11,000 $11,000 $44,000

TOTAL PROJECT COSTS $254,898 $63,232 $63,232 $63,232 $444,594

AVOIDED COSTS Year 1 Year 2 Year 3 Year 4 TOTAL

Ongoing Testing Costs $263,170 $263,170 $263,170 $263,170 $1,052,679


TOTAL BENEFITS $265,170 $265,170 $265,170 $265,170 $1,060,679

No false ID results since

implementing TruScan

Reduction in test costs over

four years

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CUMULATIVE NET BENEFIT

$250,000

200,000

150,000

100,000

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FINANCIAL SUMMARY

Cumulative Net Value (1-Year) $10,272

Net Present Value (1-Year) $1,626

ROI (1-Year) 1%



ROI (4-Year) 285%

Implementation Time 3.3

Payback (Months after implementation) 7.7


$700,000

600,000

500,000

400,000

300,000

200,000

100,000

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Contact Ahura Scientific to schedule a professional assessment of the benefits of TruScan at your facility.

Email: [email protected]

Telephone: +1 978-657-5555

Not Raman-Active10 raw materials

500-600 samples/mo.

Raman-Active60 materials

~1,000 samples/mo.


Top 30 Raman-Active Materials represent 70% of total samples/mo.

SCENARIO 2: Enforced Increase to 100% Inspection

Background

In this scenario, we investigate a commercial, over-the-counter drug manufacturing plant and its use ofTruScan. This facility had steady sales and a steady production rate, and used 70 raw materials in itsprocesses. The plant sampled a subset of incoming containers. It moved containers to a sample room,pulled samples from there, sent the samples to an internal lab, and moved the materials to quarantine.The lab turnaround time was two weeks.

The Challenge

The corporate quality department had mandated that the plant identify 100% of materials containers.The facility wanted to move to 100% inspection for as little cost as possible and without decreasinginventory turns or expanding warehouse space. Before the mandate, the facility was performing iden-tity tests on about 400 samples per month. Complying with the mandated increase in inspection raterequired identifying approximately 1,500 to 1,600 samples per month — a fourfold increase.

Sixty of the materials the facility used in its processes are Raman-active, and the top 30 Raman-activematerials represented 70% of the total future sample volume. Most of the materials were delivered inTruScan-friendly packaging; the remainder were in paper bags.

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The manager investigated several ways to accommodate the dramatic increase in sample volume,including investing in additional lab capacity or outsourcing the entire overflow, but all alternativeswere unfavorable. At that point, the manager discovered TruScan and investigated its costs and benefits.

Upon conclusion of his evaluation, the manager chose TruScan. The plant uses two units at the loadingdock where operators test materials as they arrive at the plant. The TruScan units have been in use forone year. The following business case is based on that one year of use, and three years of projections.


By moving to TruScan, the plant was able to recover the investment very quickly:

• A payback time after implementation of ~six months

In the years to come, the plant will gain significant financial benefits, including:

• A cumulative four-year net benefit of ~$800,000


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Benefits Realized

The bulk of the benefits result from the facility’s ability to avoid a substantial escalation of testing costsover four years that would otherwise have accompanied the increase in inspection rate. WithoutTruScan, the facility would have needed to either outsource the additional samples or expand its inter-nal resources and facilities. Neither was a favorable option. With TruScan, however, staff spends signifi-cantly less time on material handling, sample preparation, and documentation than they would haveneeded to spend if they had continued to use only their existing technology. Each test can be per-formed in less time, and can be done without tying up valuable QA and QC resource talent, enablingan overall increase in test throughput.

If the plant had used an external lab instead of TruScan, it would have faced turnaround times of threeweeks, forcing a buildup of inventory. However, there was no room at the warehouse to handle theinventory increase. If the plant instead had added testing capacity to its internal lab, it would have hadto hire two additional lab personnel to process samples, and would have had to spend $20,000 onadditional lab equipment.

With TruScan, there have been no false failures, and the final product rejection rate has been negligible.TruScan has been able to code and track samples via a bar code reader, leading to fewer documentationerrors. With no need to verify the identity of the 1,100 Raman-active samples per month, existing labpersonnel have the capacity to handle the remaining 400 to 500 samples per month coming from non-Raman active materials that cannot be processed by TruScan.


With advanced preparation and assistance from Ahura Scientific, the company was able to develop the30 methods and completely validate in just over a month. This timeframe not only included executionbut also closing of validation protocols. TruScan became the official release method after two monthsof comparability testing. No methods required maintenance over the first year of operation.

FINANCIAL DETAILS






Avoided Costs Year 1 Year 2 Year 3 Year 4 TOTAL

Investment $20,000 $0 $0 $0 $20,000

Ongoing Testing Costs $321,652 $321,652 $321,652 $321,652 $1,286,607


TOTAL BENEFITS $343,652 $323,652 $323,652 $323,652 $1,314,607

Without TruScan, the facility

would have needed to either

outsource the additional

samples or expand its internal

resources and facilities

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$300,000

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50,000

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$800,000

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600,000

500,000

400,000

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200,000

100,000

01 2 3 4

YEARS

FINANCIAL SUMMARY



ROI (1-Year) 20%



ROI (4-Year) 339%





Telephone: +1 978-657-5555

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SCENARIO 3: Mandated Cost Reduction

Background

In this scenario, we investigate a commercial drug manufacturing facility‘s use of TruScan. Sales for theproducts produced at this facility were fairly steady, and therefore, the production rate was relativelyconstant. Two hundred materials were used to manufacture its products, and many of the materialswere costly.

This plant was one of the parent corporation’s more efficient facilities thanks to the work of its leanmanufacturing group. The team had implemented many cost saving and quality boosting programs,including a system that would enable the facility to reduce its inventory holding costs by ordering itscostly materials as needed. Although the team’s programs had succeeded in reducing manufacturingcosts, stiff price pressure had caused the margins on the plant’s products to drop precipitously over thelast several years.

The Challenge

In an effort to recover from falling margins at this plant and other facilities within the company, theparent corporation put pressure on its plants to cut costs. Despite its stellar performance and efficiency,this facility was still expected to make significant cost reductions.

The lean manufacturing team knew there was still room for improvement, but it required new technol-ogy and new operations. One area they considered was raw material identity testing. Even though thematerials ordering process was efficient, the lengthy two-week turnaround time to obtain ID result fromthe lab resulted in additional inventory carrying costs. The team resolved to decrease the turnaroundtime on its 1,000 to 1,200 samples per month by moving the identity testing process from the lab tothe loading dock.

Only Raman-Active65 materials

~225 samples/mo.

Only NIR-Active55 materials

~200 samples/mo.


95 materials from two categories represent 60%

of total samples/mo.

Not NIR- or Raman-Active

Both NIR-Active & Raman-Active60 materials

~575 samples/mo.

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The facility had purchased an NIR instrument, and spent a few months attempting to implement thenew technology. NIR spectra were collected from samples in the sample room before they were sent tothe lab for official release testing.

NIR development work was taking a long time because the technology is sensitive to physical attributesof the materials, resulting in a high false failure rate. In addition, the modeling becomes complex whentrying to add many materials. Modeling 115 materials was proving extremely challenging. The plantmanager asked the lean manufacturing group to investigate other technologies. The group learnedabout TruScan from a colleague at another company and thought it could be a good tool.

The team’s research showed that of the 200 materials processed at the facility, 125 materials areRaman-active, including 65 of the 85 materials that are not NIR-active.

The 65 that were only Raman-active represented 20% of the total sample volume. The top 30 materialsthat are both Raman- and NIR-active represented an additional 40% of the total current sample volume.Together, these 95 materials represented approximately 650 samples per month. Most of the sampleswere delivered in TruScan-friendly packaging. The rest were in paper bags or liquids in drums and hadto be measured in the sample room.

The facility chose to use TruScan to supplement the NIR development work. The NIR team halted anydevelopment work on Raman-active materials and focused its attention on the 55 materials that wereNIR-active but not Raman-active and therefore could not be processed by TruScan. Meanwhile, after abrief period of development, validation, and comparability testing, they used their two TruScan units totest the 650 samples per month associated with the 95 Raman-active materials mentioned above. TheTruScan units have been in use for one year. The following business case is based on that one year ofuse, and three years of projections.


By using TruScan, the plant was able to recover the investment very quickly:

• A payback time after implementation of ~three months

Over the coming years, the plant will gain significant financial benefits, including:

• A cumulative four-year net benefit of >$800,000


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FINANCIAL DETAILS






AVOIDED COSTS Year 1 Year 2 Year 3 Year 4 TOTAL

Working Capital $328,736 $75,862 $75,862 $75,862 $556,322



TOTAL BENEFITS $520,803 $267,929 $267,929 $267,929 $1,324,590

TruScan analyzed raw

materials through packaging,

dropping contamination

rate to zero

Benefits Realized

The benefits of TruScan are due to a reduction in testing costs over four years, as well as a decrease inworking capital costs. The working capital benefit is a combination of a reduction in the inventory ofraw materials, and the lower carrying costs associated with that inventory. TruScan makes quicker IDpossible, so raw materials move through the system faster, leading to a reduction in raw materialsinventory and associated costs.

Because significantly less time is spent on material handling and sample prep, operators can be used forother more productive tasks, increasing the overall productivity at the facility. The sample contaminationrate dropped to zero for materials analyzed through packaging. There were only two false failures overthe course of the first year of operation, and that situation was easily remedied: small adjustments weremade to the corresponding method to ensure the method would be as robust as the other TruScanmethods that had not required any adjustment over the previous year. The sample contamination ratedropped to zero for those materials analyzed through packaging, and the final product rejection ratewas reduced. In addition, the lab has been able to reduce cycle times on analyses for other areas of the business.


With advanced preparation and help from Ahura Scientific, the company was able to develop the 95methods and validate in 3.5 months. This timeframe included execution as well as closing of validationprotocols. TruScan became the official release method after two months of comparability testing. Byimplementing TruScan to supplement NIR, the NIR staff has been able to focus its attention on thematerials that cannot be identified with Raman. As a result, the NIR experts have made significantprogress over the past year toward developing and validating methods to identify 55 NIR-active materials.

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$400,000

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FINANCIAL SUMMARY



ROI (1-Year) 58%



ROI (4-Year) 268%





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Case Study Forum is the leader in the writing and production of ROI-focused Case Studies. Each ROICase Study provides insight into the business impact —the revenue, productivity and cost savings thecustomer achieved as a result of the investment made in the solution or service. For more information,please contact Case Study Forum at 508-380-8886, or visit www.CaseStudyForum.com.

The information contained herein is subject to change without notice. The only warranties for products and services are set forth in theexpress warranty statements accompanying such products and services. Nothing herein should be construed as constituting an addi-tional warranty. Case Study Forum and Ahura Scientific shall not be liable for technical or editorial errors or omissions contained herein.

from the loading dock to quality stock - pharmaceutical … · 2013-09-21 · from the loading dock...

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