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Eli Lilly Case Study

Eli Lilly and Company must decide how to upgrade its manufacturing process. It has three options - specialize manufacturing, use flexible facilities, or use a hybrid approach. Implementing a hybrid model with both flexible and specialized facilities could provide the most benefits. It would allow flexibility early in a product's life cycle and lower costs through specialization later on. A two-stage process is recommended, starting with a flexible facility and transitioning to specialized manufacturing over time. Operations strategy must account for industry trends like increasing costs and shorter product lifecycles.

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427 views5 pages

Eli Lilly Case Study

Eli Lilly and Company must decide how to upgrade its manufacturing process. It has three options - specialize manufacturing, use flexible facilities, or use a hybrid approach. Implementing a hybrid model with both flexible and specialized facilities could provide the most benefits. It would allow flexibility early in a product's life cycle and lower costs through specialization later on. A two-stage process is recommended, starting with a flexible facility and transitioning to specialized manufacturing over time. Operations strategy must account for industry trends like increasing costs and shorter product lifecycles.

Uploaded by

prakhar gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Eli Lilly and Company: Manufacturing process

Technology Strategy Case Study

Submitted to: Dr Akshay Joshi

Submitted By:
CV Vedesh – 80011920100
Ekta Aggarwal - 80011920012
Utkarsh Kumbhare - 80011920004
QUESTIONS:

Analyze on following aspects:


1. Summary
2. Characterizing the company approach for manufacturing pre and post 1987; progress
made.
3. Recommendations regarding the alternatives of process development; with reason.
4. Steps to implement your recommendations.
5. Operations Strategy and Product Development

ANSWERS:

1. Summary

Eli Lilly and Company has been in business for almost 140 years. Colonel Eli Lilly
started the company in 1876. It is a pharmaceutical business that manufactures
medications. Joe Cook is the Vice President of Production and Engineering. He must
make a judgement on the company's manufacturing process upgrade. Manufacturing,
he felt, could play a critical role in gaining a competitive advantage in the market. The
company's main focus has always been on producing high-quality items and adding
value to customers through its services. Eli Lilly is a Fortune 500 business with
operations in over 25 countries. The pharmaceutical business has evolved dramatically
since 1993, and competition has grown dramatically. The firm now sought to alter and
enhance its production method in order to save money and increase profits. However,
they did not want to jeopardize the quality of their goods. They can choose from three
choices. Plan one is to specialize, plan two is to be flexible, and plan three is to be
hybrid. They had to decide which strategy would benefit them the most in the long run
as well as in the near term.
2. Characterizing the company approach for manufacturing pre and
post 1987; progress made.

Company’s manufacturing approach pre-1987: -

Prior to 1987, Eli Lilly and Company's priorities were divided into three stages:

• In the early and mid-1980s, top management focused on the expense of idle plants and
attempted to derive a technique to balance the plants' overall capacity.
• In the second half of the 1908s, demand for a certain product unexpectedly rose, and
their attention turned to corporate expansion and meeting continuous demand.
• They changed their attention to capital investing in the late 1980s. Manufacturing's
contribution to corporate strategy was found to be rather modest in weight. They looked
at all of their previous investments, and they discovered that many of their important
production choices had been reactionary.
Company’s manufacturing approach post 1987:
• After 1987, Lilly created a Production Strategy Committee to assist the business in
establishing worldwide manufacturing policy.
• Their R&D budgets were boosted as a result of this strategy.
The Committee was created to look into all elements of production planning and how
it affects the entire company.
• After 1987, the industry's competition has risen substantially. As a result, the firm
understood that they needed to immediately improve their operational efficiency in
order to increase their profits and become the market leader.

3. Recommendations regarding the alternatives of process development;


with reason.

There are three possibilities. Those are:

a) Establish a specialist manufacturing plant -


• There would be no decrease in process lead time if the firm chose to use this approach.
• As a facility, it would only be for a limited number of specialized items. The operations
of the other product would not be flexible.
• It also has no direct effect on overall income. However, there is a significant cost
savings. This would aid in maintaining market share even after the patent expires.
b) Construct a multifunctional production facility -
• This facility's benefit is a reduction in cycle/lead time, but only in the long run, not in
the near run.
• Even while the cost/kg would drop with time, it would be greater when compared to a
specialized case facility.
c) Build flexible and specialized manufacturing facility-
• There would be a significant payoff.
• There will be a deployment of new technology.
• It would be adaptable in the early stages of the product life cycle, and after a few years,
it could be replaced with a specialized facility for the same product.
• It would also lower many costs and boost the profit margin significantly.

Our Recommendations: -

Plan 3 would provide more benefit to Eli Lilly. Because it would be flexible early in
the product life cycle, and a specialized facility could be used for the same product after
a few years.

4. Steps to implement your recommendations.

The following are the measures to execute the recommendations and we have worked
on just two stages:

• First, we must create a flexible manufacturing facility for the early life of the product.
• Second, we must develop a specialized facility model for the long run manufacturing
process.

5. Operations Strategy and Process Development

Eli Lilly & Company's Operation Strategy: - The pharmaceutical industry has been
consistently increasing at an annual pace of 8% to 15%. There are a number of causes
that have caused the industry to slow down, resulting in lower revenue for the firm.
Globalization has resulted in an increase in average development costs, as well as a
slower rate of innovation, a high level of government interference in the sector, and a
shorter product life cycle.

In order to keep all of the above factors in mind, the firm had to modify its operating
strategy and product development procedures as time went on.

Strategy that was adopted so far: -

• Incorporate modern technology into processes


• Form a new Manufacturing Process Committee
• Maintain a strong focus on products that are in great demand in the market
• Continue to grow R&D budget

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