Automation Project Justification when not Running at Capacity

by | Feb 18, 2013 | Industry, Life Sciences & Medical, Operations & Business Management | 0 comments

Justifications for automation investments can be based on many factors—increasing revenues, reducing costs, increasing working capital efficiency, and maximizing the return on fixed capital. How do you justify automation investments from a production process not running at capacity?

I caught up with Emerson’s Michalle Adkins, whom you may recall from earlier Life Sciences-related posts. For pharmaceutical and biotech manufacturers not at production capability, Michalle noted that projects could be justified through reductions in deviations, discrepancies, and documentation errors.

Typically, each one of these issues can potentially hold up the release of product and may result in work in process or product discards. When these discards can be prevented through the use of automation technology, the value of the consumed raw materials and the costs associated with the disposal processes can be avoided.

Additionally, the costs associated with both tying up resources on the quarantine, investigation, and release process of these materials and the costs associated with holding the inventory can be significant. Inventory ties back to working capital efficiency. Inventory carrying costs include the costs associated with materials expiring before they are released and/or consumed, controlled storage costs, insurance, etc.

In addition, when inventory is held, the capital associated with the inventory is tied up while yielding no positive return. Opportunity to invest in other revenue-enhancing or cost-reducing initiatives is lost. By decreasing inventory, working capital is freed to invest in projects that yield positive return on investments.

Michalle shared an example where a pharmaceutical manufacturer not running at capacity found an opportunity to streamline their workflow and reduce work-in-progress and yet-to-be released inventory levels. In this case, an Emerson Life Sciences consultant worked with the customer to identify the business processes that could be streamlined.

Example of a Value Stream by siddhu2020, on Flickr

Value stream maps were generated for the existing batch record, manufacturing, release, and document archival process. A future state process was established taking into consideration the impact of an operations management solution that would help to prevent many of the deviations, discrepancies, and document errors which tied up resources associated with investigations, led to material losses, and tied up valuable inventory.

By using technologies such as operations management software, workflows and manual checkpoints can be error-proofed, streamlined, and sometimes eliminated.

Michalle has worked with pharmaceutical and biotech manufacturers to realize improvements such as improved cycle times for batch record review, decreased deviations as well as the time associated with gathering data for remaining investigations, improved operator efficiency, decreased material waste including discards, decreased inventory, and increasing capacity while maintaining the same number of resources.

Justifying automation projects begin with a clear understanding of business objectives and an assessment of the current state of operation. Michalle and the team of Life Science consultants can help you with the assessment and justification process.

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The opinions expressed here are the personal opinions of the authors. Content published here is not read or approved by Emerson before it is posted and does not necessarily represent the views and opinions of Emerson.

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