Basic Information of Eli Lilly and Co. :
The Flexible Facility Decision--1993
Author: Gary P. Pisano, Sharon RossiPublisher: HBR
Case Number: 9-694-074
Publication Date: Mar 22, 1994
Revision Date: Apr 21, 1994
Course Category: Operation
Case Summary of Eli Lilly and Co. :
The Flexible Facility Decision--1993
Set in 1993, the case focuses on a difficult decision faced by Steve
Mueller, manager of strategic facilities and planning at Eli Lilly, about the
type of manufacturing facility to construct for the three new pharmaceutical
products that the company plans to launch in 1996. A number of growing industry
and company specific conditions have made this decision particularly relevant
and have sparked debate with management and throughout the company. In response
to these conditions, Lilly management decided to establish a set of company-wide
goals that focused on improving time to market for its products in development
and a reduction of manufacturing costs. Specifically, these goals were:1. Reduced new product time to market by 50% from the current 8 -12 year process
2. Reduce the cost of manufacturing by (25%)
The key to achieving these goals was Mueller’s decision of what kind of manufacturing facilities should be used to produce the new products. This equated to a debate between a strategy of “specialized” manufacturing plant which had worked well for Lilly in the past, and a proposed strategy of building “flexible” manufacturing facilities that could accommodate almost any of the company’s new products. It was required that whichever facilities strategy chosen must align with the two company goals listed above.
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