In the last few years Pfizer has undergone a period of extremely rapid growth resulting from the commercial success of products including Viagra, Lipitor, and Celebrex. This aggressive growth strategy, enabled through mergers and acquisitions, was designed to achieve the scale required to gain synergies, invest in costly technologies, and spread the enormous risk of the drug development process. Yet size can itself become an impediment to the agility and flexibility which are critical to lasting business success. Retaining these characteristics can be a serious challenge for successful companies. Global Operations, within the R&D division of Pfizer Inc., has responded to this challenge by building a foundation for the future based on best practices from the companies of which it is now comprised.
Like many major corporations, Pfizer hails from humble beginnings. Cousins Charles Pfizer and Charles Earhart, both recent German immigrants, founded the company in Brooklyn, N.Y., in 1849. Pfizer was actually a confectioner; his cousin Erhart was the scientist. So while Earhart invented medications to treat various ailments, Pfizer developed the candy coatings to make them palatable. Early products that fueled the company's growth include the anti-parasitic Santonin and citric acid. The company was also the leading supplier of penicillin during World War II.
After decades of more or less "normal" business success and expansion, the company has grown almost explosively over the past few years. In 2001, the company merged with Warner Lambert, which effectively increased the R&D facilities portfolio by 85 percent to 10 million sf of space. In 2002, an additional 1.2 million sf of new construction came online. Then in 2003, at the completion of its acquisition of Pharmacia Corporation, the R&D portfolio increased to 14.7 million sf--roughly two-and-a-half times what it had been just three years prior.
"It's certainly been an interesting past few years at Pfizer," says David Goodrick, associate director for the Global Operations Group of Pfizer's Global Research and Development division in New London, Conn.
As a result of these changes, the company—now the world's largest research-based pharmaceutical company—is organized into three main business units: human health care (which develops, manufactures, and markets prescription drugs), animal health care, and consumer health care (which deals with over-the-counter drugs).
Pfizer Global Research and Development (PGRD) is a part of the human health care business unit. The division boasts major R&D sites in the United States, Europe, and Asia that have produced leading products in 14 therapeutic categories, and an R&D budget alone of more than $7 billion.
Rx for Success
To deal with this major growth and keep the company responsive, the division has undergone a major operational realignment over the past three years. Goodrick has overseen systems implementation for the realignment within Global Operations. The key to success, he says, is to build a solid foundation of effective processes and reliable data, then implement a continuous improvement regime on top of that foundation.
Global Operations has built a foundation for continuous improvement on three dimensions: People, Processes, and Tools. In doing so, PGRD has actually been able to capitalize on Pfizer's sheer size.
"One of the ways that we can use scale to our advantage is through internal benchmarking," explains Goodrick. "Pfizer is now a hybrid of companies, so we have people from what were several distinct companies. Therefore we have a great opportunity to learn from each other."
When the company merged with Warner Lambert in 2001, Global Operations retained what had been Pfizer's site-based organizational model. They did, however, create some new centralized functions to complement the site-based functions: real estate and facility planning for master planning and capital; divisional environmental health and safety for strategy and policy; and enterprise performance management (of which Goodrick is a member) to drive the overall strategy for performance management and continuous improvement activities.
After acquiring Pharmacia in 2003, Pfizer chose to adopt the acquired company's "matrixed" organizational model. This model leverages both site-based and functional reporting relationships. According to Goodrick, the Pharmacia model brought some distinct advantages to key processes and communications, enabling better internal benchmarking and sharing of best practices.
Within this overall organization, Global Operations relies on a framework of six key disciplines, organized into functional networks: environment, health and safety; facilities management and engineering; operational services; project engineering; security; and strategic facilities planning. These six networks essentially cut across the division's six main sites.
"What we have effectively done is taken the head of each of those disciplines at each of our sites and made them part of a global network, a global team," says Goodrick.
In addition to a new operating model, Global Operations has its own vision statement and a set of strategic objectives based on the principles or concepts of a balanced scorecard. These strategic objectives emphasize the department's role as a support function to the company's primary business: the discovery and development of new pharmaceutical products.
One of the first tasks, once the networks were formed, and using the strategic objectives as a framework, was to identify the key functions and processes within their disciplines and then to document the "as-is" processes at each location. The next phase, currently in process, is to review the different "as-is" processes and develop common and consistent processes for implementation at each site for each of those key functions.
The operational realignment also involved a major implementation of TRIRIGA's FacilityCenter software application. PGRD now uses several modules of FacilityCenter to manage real estate, moves, maintenance, and assets.
"The project really involved more than just the implementation of a single software application," says Goodrick. "We have interfaced FacilityCenter to our financial, procurement, and demographic enterprise systems. We are also linked to AutoCAD for facility infrastructure information, and have deployed 400 handheld devices to our maintenance technicians worldwide. In addition, there are two custom Web applications, the first to receive customer work requests, and the second to provide an audit trail for changes to our regulated assets and locations."
Pfizer also partnered with TRIRIGA to make the FacilityCenter product compliant with federal regulations governing electronic record-keeping (21 CFR Part 11)—regulations that are of critical importance to pharmaceutical companies.
In putting FacilityCenter in place, PGRD decommissioned 23 other systems that had been in use at one or more of the company's several locations worldwide. Rather than simply migrating existing data from those systems into a new centralized database, however, they used the opportunity to standardize and verify the data being collected. In doing so they re-polylined all 14.7 million sf of space, and re-inventoried approximately 100,000 infrastructure assets.
"The initial FacilityCenter implementation took us 18 months. We developed more than 20 global business processes and 83 global data standards. We put the system in place at six legacy Pfizer and Warner Lambert sites at that time," says Goodrick. "This implementation was completed just after the Pharmacia acquisition and then it took us eight months to bring on two legacy Pharmacia sites—about 3.5 million additional sf. The reason we could do the Pharmacia sites quicker is that we had the global standards and processes developed, the project processes, the institutional knowledge, and a great team in place from the prior implementation."
As part of the system strategy, the project linked FacilityCenter to an existing data warehouse to enable operational as well as financial and procurement data to be retrieved for analysis. (In addition to FacilityCenter, PGRD uses Ariba for procurement and Oracle for financial management.) Automating the processes through which information makes its way into the data warehouse forces greater discipline on data integrity.
The recent investment in new technology systems enables greater and better access to information, allowing more informed business decisions to be made. The data warehouse is now a rich source of information, with historic trend data growing by the day. This data is now able to be analyzed using tools including Business Objects. It is also being used to feed performance measurement tools including a Web-based Hyperion performance scorecard.
"In the past, we spent more time looking for information and trying to validate it than we were able to spend analyzing it and making decisions," says Goodrick. "The reverse is true now. We have accessible, credible information, and can put the majority of our effort into analysis and decision-making."
Managing for Continuous Improvement
Of course, having a sound foundation for continuous improvement is not enough. To remain responsive and successful, an organization also needs an effective continuous improvement program itself. Compensating for inefficiencies can consume significant resources; through performance measurement and analysis, these can be identified and systematically removed. According to Goodrick, Global Operations uses a three-step model to do this:
"It's easily explained. First, measure your current performance in one or more areas of the business. Second, compare the results to reliable benchmarks, and use analytical tools to identify potential improvement opportunities. Third, execute initiatives to realize those opportunities that you find. Then, you return to step one to see how successful the implementation was, look for additional improvement opportunities, and the cycle continues."
Goodrick points out that having common and consistent standards and business processes across the organization greatly enhance the effectiveness of continuous improvement efforts, with the knowledge that the data being produced is comparable. With such a reliance on information sources, it is important to maintain the quality of data—and this takes effort. For instance, based on the principles of ISO 9000, a program of internal system reviews was also put into place, as part of the FacilityCenter implementation. These system reviews include field checks on assets, space, and demographics information, as well as process and standard operating procedure (SOP) compliance.
Lessons Learned and Critical Success Factors
In implementing such a dramatic realignment of organization, processes, and technology, Goodrick counsels persistence and lots of communication.
"Implementation of an operating model based on networked teams actually requires a great deal of courage and patience. You have to formalize sub-teams early and give them both accountability and authority. Communication is key. You simply can't have too much of it," he says.
Goodrick also advises managers facing similar tasks to invest in the tools and technologies necessary to ensure they are getting accurate data.
"You need to be able to trust the information you have. Invest in tools and techniques, and invest the time and resources to ensure your information is reliable."
Goodrick points out that implementation of a new software application like FacilityCenter is not just an "IT project," as people may be inclined to think.
"Installing the system is one key element, but to standardize the operations the way we did is truly business transformation," he says. "Large change needs to be driven, and there is a delicate balancing act on this type of project between making good schedule progress and taking enough time to implement the change correctly. Planning for an investment in organizational change management expertise is critical. Fundamentally, I would go as far as to say that it is pivotal to project success."
By John Treat