AstraZeneca's operational streamlining program for cost reduction

Astra Zeneca

Project Proposal to Streamline Operational Processes

The pharmaceutical industry in general is undergoing extreme amounts of external pressures. Not only has the economic environment since the global recession been less than ideal, but there are increasing regulatory pressures and healthcare reforms that are also expected to dramatically change the environment in which AstraZeneca operates. It is in this environment that the organization must streamline its operations so that it can be more lean and flexible when adapting to the new landscape that will emerge in the near future.

This project proposal outlines a project portfolio management program that can be implemented to ensure the organization can eliminate any unneeded waste in its operations. This portfolio will be implemented across many divisions and will require a schedule of one year. Each division will have an individual project that is tailored to a scope that suites there individual department's needs. However, these individual projects will be coordinated by the portfolio which will also provide oversight and guidance. The project requirements will also vary by department but the overall program goal is to eliminate ten percent of the company's current expenditures so that the organization will be more flexible to adapt to the upcoming changes.

Company Overview

AstraZeneca states that they are a global innovation-driven biopharmaceutical company specializing in the discovery, development, manufacturing and marketing of prescription medicines that make a meaningful difference in healthcare (AstraZeneca Global, N.d.). The global pharmaceuticals market is worth U.S.$300 billion a year, a figure expected to rise to U.S.$400 billion within three years. The 10 largest drugs companies control over one-third of this market, several with sales of more than U.S.$10 billion a year and profit margins of about 30% (WHO, N.d.). AstraZeneca is currently the fourth largest pharmaceutical company in the world and its also trying to increase its market share. Just recently AstraZeneca announced its bid to buy U.S. respiratory drug specialist Pearl Therapeutics for up to $1.15 billion as Britain's second biggest drugmaker steps up a drive to rebuild its product pipeline via deal-making (Hirschier, 2013).

Customers

The end users of the pharmaceutical products stand to gain tremendously from a company that streamlines its operations. By eliminating waste from the company, customers will be subject to value added products. For example, research and development for products that are not promising add expense to the entire company and all of the organizations different product lines. Therefore, the entire consumer base will benefit. Furthermore, by adding competitive pressure to the market, the entire industry will benefit as well and the same could be said about the state of health care in general.

WBS

Project Phase

Activity

Duration (Weeks)

Planning

Fine Tune Scope Requirements

4

Fine Tune Schedule

3

Set Project Budget

3

Make Divisional Announcement

1

Select Divisional PM

3

Divisional PM Planning

4

Total

18

Implementation

Divisional Kickoff

3

Divisional Cut Proposals

4

Project Office Coordination

4

Cut Implementations

12

Total

23

Conclusion

Review Targets vs. Actual

4

Second Round of Cuts

6

Presentation to Stakeholders

2

Major Deliverables

1. The first major deliverable will be the project planning phase in which each division will generate its reduction project individually. This should be completed within sixty days.

2. The next major deliverable will be the construction of the overall organizational project which will compare and coordinate these different projects in such a way that the overall scope is attainable. This should take no longer than thirty days.

3. The next major milestone will be the implementation of the individual projects towards their cost reduction targets. An array of different projects and project managers will launch their project simultaneously.

4. The next major milestone will be the completion of the individual projects as well as all the change management requests and alterations that will occur along the way. The project office will have to monitor these carefully to ensure that the overall project scope is attainable.

5. The last important milestone will be the conclusion of the overall project and the analysis of the reduction project. If the project is successful then the organization will be more nimble and better prepared to adapt to the changing landscape in the pharmaceutical industry.

Project Milestones

Conclusion of the Planning Stage

Appointment of Divisional Project Managers

Divisional Kickoff

Cuts Implementation

Project Offices Approvals Finished

Project Conclusion

Project Risks

Risk management planning, control, and adaptation are becoming increasingly the most common issue in project management. Projects are constantly becoming more complex as their scopes include more specialized and technologically advanced activities. Not only does this make it more difficult to manage large projects, but it also increases uncertainty. The project manager generally does not have a skill set that can cover every individual aspect of the project. Therefore the project manager must rely on many other people who give information based on their opinions and derived from a variety of sources. This increases the likelihood that task estimates are inaccurate.

Another component of risk management within any project is mitigation and adaptation especially when the project is complex. Since projects, by definition, have unique circumstances then they are surrounded by risk intrinsically (Benta, 2011). Therefore a big part of the project manager's job is trying to manage risk in the presence of uncertainty at all times. Project managers who have the skill sets to identify, prioritize, and mitigate risks will ultimately be among the most successful in the field. When the size or scope of the project is complex then this makes the need for appropriate risk management strategies significantly more important.

One example of how risks can be mitigated is how a project team handles change orders. Change orders are common in most projects whether they are formal or informally managed. There have been many empirical studies that offer suggestions as to how to most effective manage changes for best project outcomes. However, this research is specifically aimed at exploring the relationship between project characteristics and the implementation of project change management best practices (PCMBP) (Yi & Sang-Hoon, 2009). Yet, using the best practices from change management can assist project managers to adapt PCMBP to their specific set of project characteristics so that they will be better able to develop and administer their project execution plans.

Benchmarking is another powerful tool in project management. Benchmarking a project against other projects in the same industry can allow the project to use best practices and create a baseline for activities that have already been completed. Not only can this expedite many of the projects planning functions, it can allow project managers to identify potential risks that they may not have considered. For example, the project manager can use different benchmarks from projects that have already been completed so that they do not have to create the entire project plan from scratch. Using benchmarks can result in the project have a significantly increased chance of success because they have access to a broader knowledge base.

Conclusion

The project scope of a ten percent reduction is undoubtedly a large target. It is likely that the company will have trouble trimming so much from its operating budget. However, the initial target was merely provisional. It forced the various divisions to prioritize their expenditures and look for ways to reduce waste in the company. For example, if the company only hits a five or six percent reduction in expenditures then this will still put the company in a better competitive position. The ten percent target was merely a provisional target that is expected to change. However, the company will have to be careful that there is not any loss of morale for not hitting the ten percent target. When the project office coordinates the project portfolio from the various divisions, it can then announce a new and official scope that is based on the individual estimates.

The ultimate goal of the project is simply to put the company in a better competitive position in the midst of industry changes. By putting the company in a better competitive position the organization will be better able to service all of its stakeholders now and into the future. The project will force the organization to look for opportunities to reduce waste and unneeded expenditures across the entire organization. The three success criteria that are the most important is that the company reduces its overall expenditures in an organized and responsible way, is in a better competitive position, and is better able to offer returns for its investors.