Saturday, November 20, 2010
Roche Watch: 'Hit" with Operations Excellence--or What?
Roche reported this week that it will cut 4,800 jobs over two years, mostly in the U.S. to help save $2.4 billion by 2012. Sites specifically “hit” were listed as: Florence, SC; Boulder, CO; Nutley, NJ; Madison, WI; Vacaville, CA; and Oceanside, CA.
“Hit” with what?
According to reports, these locations will be “hit” the hardest by Roche’s “Operational Excellence.”1
So we, the readers, are to conclude that Roche conducted a thorough evaluation of its operations and determined that they will be able to operate in a more excellent manner after cutting 6% of its global workforce.
We are led to believe that by using the tools of quality to analyze waste and unwanted variation; by performing value stream analyses, redundant and unnecessary steps are being removed; that each initiative has been carefully assessed and will be verified to ensure the goal was achieved—and, by the way—all the requirements have been met.
In my experience, downsizing, restructuring, vertical integration—or being operationally execellenced—isn’t quite that disciplined. Typically, each operating division is given a reduction quota, which in turn is divvied across its operating departments.
It is top down, not bottom up.
There is no ground swell of quality excellence initiatives that perk up to the top causing executives to glean them across the organization and declare a savings for the greater good of the company, shareholders and patients. There’s nothing DMAIC about it.
In reality, area managers sweat how they are going to be a team player and turn in their layoff list to the boss and still operate their departments. After all, the workload really hasn’t changed. It’s a fight for survival, a fight to save your own job.
I have no insider information as to how Roche really went about determining who to let go, or if they consciously studied the impact to the organization other that the short-term financials. I sure hope they did.
STOP THE PRESSES—STOP THE PRESSES—THIS JUST IN
Now, according to reports, Roche CEO Severin Schwan has been telling investors that the company will have to downsize because of healthcare reform.2
So, which is it? Operations Excellence, or reaction to healthcare reform?
Anyone who follows me for long knows that I am not a huge OpEx fan. Not because of the ideals and methodology, but because (1) it is strategically and chronically misused in the pharma industry, (2) it is a misunderstood substitute for the regulatory-required quality assurance and quality management system, (3) black belt plebes overreach their product, process and regulatory knowledge, and (4) it is often a precursor to systemic FDA regulatory compliance problems—due to all of the above.
However, I am now coming to the defense of Operations Excellence. (No, really.)
I would strenuously object to having my process improvement program being identified as the means by which opportunities for workforce reduction were identified. That gives the company far too much credit for taking any sort of disciplined approach that will benefit the customer—the patient.
Didn’t we read about Johnson and Johnson’s “restructuring” in 2009? 3 Now, fast forward to the current quality and regulatory compliance problems at McNeil and the 2nd Euro Lean Sigma and Kaizen for Life Sciences conference in Berlin this past September where McNeil’s Director of Process Excellence gave a featured presentation entitled Case Study: McNeil’s Approach to Lean Implementation and Strategy Development for Roll-Out? (See QAPharm 6/19/10.)
The Quality Management System (QMS) is like an ecosystem. There are interdependencies. One change affects the others. The QMS is more than words in a set of standard operating procedures. (See The QA Pharm 7/30/10.)
I will be the first to say that there are always opportunities to make the QMS more efficient. But there are regulations that must be satisfied to ensure that changes do not affect the state of control of the operation and negatively impact product quality and the conditions under which the product was approved. And rarely, if ever, does a pharmaceutical firm consciously evaluate the cost-and-effect of a major workforce reduction on the state of control.
Layoffs are mandated. You fall in line. And when the CGMP compliance wheels fall off the cart, you are not to mention the effect of the workforce reduction as a root cause or contributing factor during deviation investigations.
Fast forward to about 2015. What will we have heard about Roche product quality from the patients’ perspective? I really and truly wish them all the best, because I am all about the patient.
However, Roche is going on “The QA Pharm FDA Compliance Watch List.”
The QA Pharm
1 Frank Jordans, Associated Press, Drugmaker Roche will cut 4,800 jobs, mostly in U.S., 11/17/10.
2 Jim Edwards, BNET.com, Why Roche’s CEO is wrong to blame Obamacare for 4,800 Layoffs, 11/17/10.
3 Tracy Staton, FiercePharma, J&J restructuring claims up to 8,000 jobs, 11/3/09.