Merck Sharp & Dohme
Activity: Manufacture of prescription drugs
Task: High-volume production to exacting quality standards under tight cost control
Size: 208 employees
Outstanding Features: Innovative automation, ability to absorb investment while still increasing volumes, people management
Merck Sharp & Dohme's Cramlington factory is one of its four plants in the UK. It is also one of the US pharmaceutical giant's lowest-cost manufacturing units, reports Brian Lumsden senior director of UK operations. Here 200 staff produce almost 2.8 billion tablets and capsules annually, with a sales value of $2 billion. Since 1992 the plant's cost index has dropped from 100 to 45, and further investment is expected to lower the index to 24 by 1998. By that time operating costs should have increased by 70% over a six-year period, while volumes will have climbed 700%.
Cost reduction is a Merck tradition that predates current pressures in the pharmaceutical market: back in 1976 the company was the first in the world to commission an entirely automated tablet packaging line, Lumsden points out. The 20-year-old Cramlington factory 'has always been lean on headcount'.
The characteristic is very much in evidence in the Proscar prostrate drug facility, where a mere four people produce 400 million tablets a year - the entire world output of this product. Even testing is totally automated, samples being analysed for weight and hardness at intervals of every 30,000 tablets, and the presses being adjusted as necessary.
Soaring volumes and falling unit costs have obviously been propelled by heavy investment: some £60 million since 1992. But the human factor has not been lacking. Continuous improvement teams have cut cleandown times from as much as 300 man-hours to 40, achieving substantial savings in energy, fuels and maintenance costs. Cramlington is not only a lean organisation, it is also a learning one. All employees will receive 10 days' training this year and everyone will also be individually appraised. 'Reverse appraisals' take place biannually.
'We produce two things here,' says Lumsden, 'tablets and documentation.' However one of these could soon be cut back severely. The factory is in the final stages of installing a multi-million pound paperless manufacturing system that will be 'unique in the industry'.