Madison Biotech Supplier Goes Lean to Stave Off Foreign Competitors

2/19/14Follow @XconomyWI

When you say the words “lean” or “Six Sigma” on the shop floors of industrial plants across the globe, people immediately know what you’re talking about.

Pioneered decades ago by automakers determined to cut waste out of their manufacturing processes, those same ideas are now starting to permeate the chemical vats and microscopes of biological manufacturing labs.

Biotech companies have traditionally focused their efficiency efforts on improving the “yields” of their biological and chemical processes—essentially trying to boost production by refining the scientific procedures. But over the past five to 10 years, the biotech industry has followed the lead of legacy manufacturing industries and implemented some of the same “just-in-time” principles on the equipment and labor side of the equation, industry observers said.

One such example is a project in Madison, WI, at a small contract manufacturer of proteins for pharmaceutical, biotech, agricultural, and diagnostics customers. The local division of Aldevron, a company based in Fargo, ND, has brought in researchers from the University of Wisconsin-Madison’s Center for Quick Response Manufacturing to study the company’s manufacturing processes and outline a strategy for improving efficiency.

Aldevron’s local 13-person lab is already a lean operation, but vice president and general manager Tom Foti says the partnership with the university could help shrink the facility’s product delivery timeline by at least 25 percent—which would shave a week or two off of a typical four to five-week process.

For a company that positions itself as a more expensive, but high quality contract manufacturer of proteins, that’s a significant productivity gain that could prove an important selling point. Aldevron is hoping the productivity gains from lean manufacturing will help it fend off overseas manufacturers that provide the same services at cheaper rates.

“Because our labor force is more expensive, we’ve got to figure out how to do things faster,” Foti said.

And as the Aldevron project advances, Foti and his academic partners want to share what they learn with the broader biotech community in Madison.

“Maybe they should adopt some of these tools or ideas so that the greater biotech manufacturing community in Madison can compete more effectively in the global market, so that our local industry can be stronger,” Foti said.

Foti’s company has been working with the university for more than a year on the project. The research is being funded by a four-year, $325,000 National Science Foundation grant awarded last year, said Ananth Krishnamurthy, one of the project’s principal investigators. Krishnamurthy is a UW-Madison associate professor of industrial and systems engineering and director of the university’s Center for Quick Response Manufacturing.

The center was co-founded in 1993 by Rajan Suri, who developed the concept of Quick Response Manufacturing (QRM), which aims to achieve the same efficiency gains as programs like Six Sigma, that tend to be focused on large-scale manufacturing. But QRM is tailored more toward the manufacturing of diverse, smaller-scale, custom-engineered products, and its principles are applied across the enterprise, not just in the production area, Krishnamurthy said.

The QRM center has consulted for manufacturers in multiple industries, but only started serving biotech companies about three years ago, he said.

The tricky (but interesting) part for UW engineers is adapting to the inconsistencies of biological manufacturing, which involves working with living cells, versus working with inorganic materials like steel in traditional manufacturing facilities, Foti said.

“They’re trying to get their head around applying these [QRM] principles to these process steps where there’s more risk for variability, and does it work the same way with their theories?” Foti said. “The only way they can prove that is to partner with companies like Aldevron where they gather data.”

Over the past year, Tugce Martagan, a research assistant and engineering PhD candidate, has observed Aldevron’s 6,000-square-foot lab and collected data on its production process. She has helped build a beta version of a software tool in Microsoft Excel that is meant to help Aldevron more seamlessly lay out its production schedule and develop better plans for utilizing its resources.

Aldevron logoA typical order from a customer can take an average of four or five weeks for Aldevron to make—from cloning the gene to culturing the cells to purifying the proteins to shipping the finished protein back to the customer, Foti said. The analytical software tool will help foresee and alleviate bottlenecks in Aldevron’s production lines, such as a protein purification machine that takes 12 hours to perform each run.

“We’ve looked at when do you start a process, and [we are] thinking about second shifts or some type of weekend schedule, to try to get more output per unit time,” Foti said. “[The project] forced us to think about our equipment base, where our constraints are, where we want to make investments, but also how we schedule things.”

Aldevron Madison serves about 100 customers. The top 15 customers generate the majority of Aldevron’s revenue. Foti declined to share exact numbers, but said his division’s sales tripled last year.

He is considering hiring four new employees this year, and if the company inks a few key contracts, Aldevron might need to add lab space in Madison, Foti said.

Foti expects to start seeing the impact of the QRM project on Aldevron’s bottom line this year, as the company begins to use the software and implement operational changes as a result of the partnership. The idea is lab efficiency gains would lead to taking on more orders. The additional revenue would be invested in equipment and new hires, Foti said.

“[For] a growing company, usually when you screw up from a capital standpoint is you underinvest or overinvest,” said Foti, who spent $200,000 on equipment last year. “The timing of when you hire people, when you buy equipment, is probably one of the bigger decisions that we make. The idea [with the university partnership] is that if you have a tool to do better forward-looking capacity planning, that will allow us to find where our gaps are and … [try] to make the best investment at the right time.”

Foti has assembled a coalition of representatives from about a dozen Madison-area biotech companies. This week, the group is holding its second meeting, in which Aldevron and university officials plan to share what they’ve learned so far and solicit feedback from companies who might benefit from a similar project.

“The target here is we want to address very specific issues that are probably unique to bio-manufacturing and haven’t been addressed before,” Krishnamurthy said. “Perhaps companies have addressed [the issues] internally, but now we are looking at this as a community.”

AldevronKrishnamurthy sees the federal grant as testimony that the National Science Foundation views bio-manufacturing as an important sector—and that Madison is an “emerging biotech hub.”

“There is a great focus on manufacturing, and people are debating what type of manufacturing is going to be there in the U.S. going forward,” Krishnamurthy said. “The consensus is bio-manufacturing is going to grow over the next several decades.”

Jeff Engel is the editor of Xconomy Wisconsin. Email: jengel@xconomy.com Follow @XconomyWI

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