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Setting up greenfield projects: Doing it the right way!


Vilas Dholye, Independent Pharma Consultant outlines the measures that need to be implemented at the planning/ construction stage of a greenfield project to avoid issues of non-compliance to quality standards and lose out on growth opportunities

20160531ep52We read news about greenfield projects being set up by pharma companies to scale up their operations. It will be interesting to see how companies handle this project phase and subsequent operations phase life cycle of new site. While views expressed are relevant to all types of industries, I have written this paper with pharma API/ fine chemicals and formulations manufacturing in mind.

Most of the greenfield pharma projects (which may involve capital investment in the range of Rs 100 to 700 crores) focus on engineering and construction aspects majorly and are essentially monitored by senior managements on the following two aspects

  • Completion time and
  • Budget

Scope of these projects largely revolves around creating physical infrastructure. These projects are also designed for substantial expansion (2X or more) in future.

How do we manage projects to operations phase?

Sometimes, during the advanced phase of a project (almost towards the completion of construction), the site operations teams, including manufacturing, quality, maintenance, stores, HR, Finance, SHE are gathered/ hired, and sent to the site. The team is expected to decide and evolve the site operation management processes, structure, operations philosophy etc. Similarly, QM and GM processes are evolved with learnings from your own organisation or from other pharma companies. This situation occurs since project departments which are responsible for project execution and the EPC consulting agencies which handles design and engineering have no scope, mandate and expertise in operations management and QM/ GMP processes design.

What is the result?

This haphazard situation results in the loss of a lifetime opportunity to start a new site with the right culture, processes, and practices. While one may purchase the best of the equipment available and use the latest automation ideas, the operation results fall short of expectations. We know that significant adverse audit observations from leading regulators are not attributed to equipment and facilities but due to failure of the staff to observe compliance, which is more of a cultural issue. A key component for continued GMP/ statutory compliance is having the right culture and this must be the focus while planning a greenfield project.

After a few years in operation, unless the right measures are put into place, many problems faced by an organisation’s existing plants start manifesting at the new site. New problems also surface. However, over the years, many changes in operations and quality leadership, both at the corporate and plant level may result in significant changes (improvements).

Some problems commonly faced by these plants in operations are listed below:

A) GMP and operations management:

  1. Use of contract manpower in core manufacturing leading to  issues in GMP compliance/ housekeeping/ safety/ IR
  2. Variability in lead time, yields, quality parameters
  3. Poor learning from problems, poor CAPA skills.
  4. Poor maintenance management practices.
  5. Process capability
  6. Outsourcing activities like housekeeping, warehousing, testing, maintenance, IT
  7. Documentation and data integrity
  8. Lack of training.
  9. Too much variety in machinery sizes/types/makes for the same operation, leading to high maintenance/spares/loss of capacity as all products do not work or are not validated on all types of machines. (e.g. compression machines, coating machines, packaging machines on the same shop floor!).

Such problems occur because of reasons such as:

  1. Saving on Capex
  2. Respecting the policy of getting three quotations
  3. Respecting the experience of newly joined managers from other industries!

B) Operations management

  1. Too much manpower, manpower productivity is low
  2. No proper structure and HR systems, leading to confusion, low morale and performance and retention problems
  3. No proper metric to monitor plant performance
  4. Low capacity utilisation and low machine productivity
  5. High cost of operations, materials, utility, consumables etc.
  6. High lead times in manufacturing
  7. High inventory in RMs/ PMs, WIP and FG

What needs to done to correct the situation at this stage?

At this stage, top management decides to engage expensive management consultants  and GMP consultants to study and recommend solutions to address the above issues. Consulting companies may spend few months studying the situation and come up with many recommendations. However, implementation of these recommendations require major change management. Sometimes, changes are not possible due to limitations of physical infrastructure or teams’ limitations.  It is also an expensive endeavour at times, particularly when physical changes are required. At the end, the improvement efforts cease, resulting in partial gains or success.

Addressing the problems at the project stage

Many of these problems could have been addressed if proper  management and GMP/ QM processes had been put into place when the project was being set-up.

If the following steps are taken during the planning or the construction stage of a greenfield project, we could avoid such issues in future and will help create a sustainable performance culture for the new site:

  1. Create a vision for the greenfield project to ensure that  it remains topnotch,  not only in technology and engineering but also in management practices and GMP adherence. It will remain competitive over, say the next 10 to 15 years with built in  processes which are sustainable and aids continuous improvement.
  2. If this greenfield project is for a company which already has manufacturing operations then there will be a wealth of knowledge as to what practices  must be avoided and what must be retained. This will involve the study of all the units of the company, regardless of the product lines. Coupled with this internal knowledge, we must also bring outside views from other diverse industries (e.g.  automotives/ electronics/ chemicals) to choose and assimilate best practices.
  3. The above study will help create a blueprint for the management, and decide the master plan and strategy for operations. This must be presented to the top management for their approval. Post approval, this becomes like a ‘Constitution’ for the site and in future, plant teams cannot deviate from the basic philosophy.
  4. Management systems recommended above will dictate the technical design choices e.g. batch sizes, inventory/ storage policy, material handling, automation, IT systems to drive GMP and regulatory compliance (e.g. MES, LIMS), machinery standardisation, planning for smooth expansion and growth etc. Therefore, project cost estimation and budget process must be started only after the philosophy document is created and approved.
  5. Operation management should fix daily management processes for all factory functions. Shop floor production/ shift wise/ weekly/ monthly reports should be designed and MIS should be designed to manage the processes.
  6. There should be also an MIS declaring every month that there are no deviations to the ‘Constitution’ or philosophy for this site.
  7. Systematic people selection and indoctrinating them about the philosophy is necessary. This should apply to all levels of plant management, including the plant head! Key team members, including the plant head must be on board, right from the initial study and project approval.
  8. HR policies and practices for site must be documented
  9. Every year, top management must review benefits of such project design approach and ensure that there are no deviations to the approved constitution document without their knowledge.

Are managements ready to invest time and efforts in the above measures at the project stage to avoid future issues?

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