Company Reports - Sphere Healthcare
StatisticsCompany Industry Founded Headquarters Key People Products Revenue Employees
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Sphere Healthcare Enabling Healthier Lifestyles
Sphere Healthcare is a 100 per cent Australian-owned pharmaceutical manufacturer that prides itself on its mission to enablinghealthier lifestyles and leads by its values. The company was formed over seven years ago, and although it initially struggled to turn a profit, it was fully purchased by private equity houses and has experienced a complete turnaround.
Part of Sphere’s success can be attributed to its solid business model, built around the values of ownership, agility, “one team” mentality and personal pride.
“We truly believe our role is worthwhile,” says Sphere Healthcare CEO Gary Smith, who joined the company in 2008. “We don’t focus on sheer profit and loss growth; we focus on mission, values and goal alignment. When we focus on those and get them right, we know our business will grow.”
Coupling those critical areas of focus with strategic business partnerships at the front end and critical business alignment at the back end has proven to be incredibly successful.
Cultural engagement has been a key part of all of Sphere’s operations and continuous improvement strategies.
“In terms of our people, engaging staff and getting people who get to come to work as opposed to people who have to come to work is extremely important,” Smith says.
While Sphere understands the importance of cultural engagement, it also knew that it needed to create a balance between culture and restructuring of the business.
Between 2008 and 2009, Sphere took a careful look at all areas, including its product mix and businesses serviced and rationalised them to eliminate anything that didn’t serve strategic business alliances. The company measured quality, speed, cost, safety and people in business units across the site aimed at eliminating non value add transactions.
By implementing Lean models such as value stream mapping, Sphere was able to cut down any activities that did not add value to its business. The company’s customer base was trimmed significantly and takt time was monitored to eliminate stock that was costing the company money and posing the threat of becoming damaged while on hand.
“We were able to increase our capacity by 35 per cent and significantly reduce our overtime costs, making us much more efficient,” says Smith. “Before we started, our packing department had 45 people. Today, we have 15 doing the exact same amount of volume and we could probably produce 20 per cent more.” The reduction of overtime, casual staff and the natural losses we experienced when realigning the strategic direction of the business allowed Sphere to reduce staffing levels from 277 to 165 FTE’s.
Sphere also concentrated heavily on its supply chain by spending two years in and out of China, India and Europe to do a quality audit of its potential suppliers and create a competitive platform. The company found that many of its suppliers in the Australian marketplace had been charging up to 160 per cent more than products would cost if they’re directly sourced.
Now that Sphere is confident it has the best managers in the industry and all of its support functions are rationalised, the company is set up for long term achievement.
“We ultimately understand that the Lean continuous improvement strategy is not a diet,” Smith says. “It’s not something that you can do for six months. We do these things continuously from the shop floor up.”
All of Sphere Healthcare’s departments are set up as mini business units. Within each unit the company has developed matrices to identify innovations, which can include anything from new tooling to quick changeovers.
Instead of scrambling to be the first in the industry to develop or implement cutting edge technologies, Sphere prefers to keep its quality levels at the top of the game. As a result, the company has indeed been an industry innovator without sacrificing product superiority.
“We put all of our technology advances into ensuring that the quality of our product is right first time, every time,” Smith says. “15 years ago, this site was the first in Sydney to manufacture soft gel products. We put an awful lot of our technology into making sure our quality was the best. Not only were we one of the first softgel manufacturers in Australia, we are now also one of the best, if not the very best.”
Unlike many of its competitors, Sphere Healthcare doesn’t strive to work with every business in the market. The company feels that if it enters into a relationship with a business that does not have the same goals and purposes in mind, it will become inefficient.
“If businesses are not aligned and are not true partnerships then this will lead to inefficiencies and ultimately costly transactions. There are businesses which are very happy to import their goods from lower cost regions sacrificing to some extent quality and speed concentrating solely on price. In this case we are not aligned and this type of transaction would be too costly for our business. ,” says Smith. “We look for business partnerships and we concentrate heavily on becoming an integrated supply chain for those businesses. We deploy ourselves not only at the top end to look at new concepts, but also throughout the value stream advising on how we can make improvements together.”
Sphere reflects on the ways it is able to negate costs and looks for opportunities for customers to do the same. The company holds workshops with customers to share ideas on reducing cost base and increasing brand awareness.
“We engage our customers and become a part of their business model,” Smith says. “We try to understand their strategic footprint for the next two to three years and match it so that we can be agile in our purpose.”
“By fully utilising our assets we will widen our customer base,” says Smith. “I think that the Sphere model of today has the agility to become something very, very different in the next few years.”