Quality Management: Medrad Works and Wins as a Team
Baseball teams put nine players on the field. Football teams field 11 at a time. Basketball teams start five players and hockey teams start six. For Medrad (Indianola, PA), a medical device manufacturer, their goal is to have all of their more than 1,300 employees in the game at the same time, creating ideas, sharing knowledge, and growing and learning as employees.
It is this endeavor that led to a steady 15% compounded annual growth in revenues, shorter turnaround times, and improved customer and employee satisfaction. It also earned Medrad the 2003 Malcolm Baldrige National Quality Award.
This spirit starts at the top with its president and chief executive officer, John Friel, who spends time each month answering customer calls or working the assembly line, in an effort to understand employee challenges and hear their ideas for improvement. The spirit works its way through leaders such as Michael Kochis, executive director of electromechanical manufacturing, who switched roles in a planned cross-training action. Communication and teamwork continues throughout the organization to include people like quality technician Linda Paholich, who, with her years of experience, can pick out soldering defects invisible to most. It also includes workers who schedule lunch and breaks so half of the workers are always producing the company's syringes and injection systems.
President Bush referenced this atmosphere of teamwork at the Malcolm Baldrige National Quality Award ceremony in March. "I'll tell you what I like about John's (Friel) style; he spends a day a month on a front-line job. Here's a fellow who is the CEO who mops the floors, who's taken phone calls, who's heard customer complaints, who works on the assembly line. He's built a culture where everyone at the company has a voice in the way things are done."
Friel, who has worked for Medrad for more than two decades and was named president and CEO in 1998, calls the efforts to receive the quality award a journey. Speaking at the awards ceremony Friel said, "Our Baldrige journey began 15 years ago when the first Baldrige awards were announced. Performance excellence has since become the blueprint for exceeding the expectations of our customers, shareholders and employees. We attribute much of Medrad's success to the Baldrige process."
In 1988, the year that the Baldrige award was introduced, Medrad integrated a total quality management process called Quality for Life that focused on product and service quality, on-time delivery and customer satisfaction. In 1994, in what Medrad calls its next step toward "unsurpassed customer satisfaction," the company conducted a self-assessment against the Baldrige criteria. With that experience, the company submitted its first Baldrige application in 1996. Three years after that, a second application was made, which earned the company a site visit from Baldrige examiners.
Examiners visited Medrad's facilities again in 2000 and then in 2002, when it was one of only eight organizations to earn a site visit. In 2003, after its fifth application, the company became a Malcolm Baldrige National Quality Award recipient.
Earning the award was no simple task. In his book, Baldrige Award Winning Quality, consultant Mark Graham Brown says that the Baldrige competition has never been tougher. Brown says that two-thirds of those organizations that he has worked with that used the Baldrige model to drive improvement have not improved much as a result of Baldrige assessments. He adds, "The one-third that has dramatically improved has a common characteristic-executive commitment and involvement."
One of the reasons the competition got tougher was that the Baldrige criteria were changed in 1995 by replacing the word "quality" with the word "performance." With the change, the entire focus of the Baldrige Award changed, according to Brown. "The last five years has been on balancing all aspects of organizational performance, including profitability, safety, growth, market share, employee morale, innovation and a variety of other factors," Brown says. "The new focus has caused the criteria to get much tougher than they were in the early days."
According to Brown, the Baldrige criterion lists 32 areas and 89 individual questions that a company must address in its application. There are, he says, a few common themes that underlie these criteria such as visionary leadership and executive commitment.
At Medrad, each of these factors has been put in play. The company grounds its purpose in a three-prong philosophy: to improve the quality of health care, to ensure continued growth and profit, and to provide an enjoyable and rewarding place to work. Created by employees in 1983, the philosophy essentially commits to three equal and balanced stakeholders: employees, shareholders and customers. Teamwork and sharing of communication are detailed as paramount. Focus was also placed on improving processes everywhere throughout the organization.
This effort is working if on-time delivery and financial performance are gages-and for the Baldrige judges, they are. Medrad results for on-time delivery range from 98% to 100% for syringes, disposables, injectors and magnetic resonance coils. These results equal or exceed best-in-class levels, says Julio Rivera, Medrad's senior vice president and chief compliance officer.
In terms of growth, the company has seen annual, double-digit increases in revenue. A subsidiary of Schering AG of Germany, a Berlin-based pharmaceutical company, Medrad has seen sales rise by at least 15% every year since 1998, growing from $141 million in 1998 to $254 million in 2002.
At its heart
Much of this success can be attributed to the efforts that have led to new products, better services, more satisfied workers and improved processes. However, some might say that improving on a process was at the heart of Medrad from the beginning.
The company's roots can be found in the kitchen of Dr. Stephen Heilman, who in 1964 created the first angiographic injector in an effort to use X-ray technology to improve medical care.
With this technology, a contrast agent is injected at a controlled flow rate into the arteries of a patient and an X-ray image is captured, which enables doctors to better detect problems with the cardiovascular system. Through the years, Medrad also introduced the first injection system technology for Computed Tomography (CT) and Magnetic Resonance (MR) imaging.
Today, more than 20 million medical images are created each year at facilities around the world with the aid of Medrad products.
As part of Medrad's philosophy to improve health care and meet stakeholder expectations, the company has continued to introduce new products and services. Today Medrad's product portfolio includes vascular injection systems, magnetic resonance surface and endorectal coils and accessories, and equipment services.
Medrad's ability to launch these new products and services might have been tested had it not been able to improve production, communication and data analysis, while still relying on the intellectual capital of its experienced and loyal workforce. This loyalty was earned by Medrad executives who retained and retrained workers when the company automated its sterile disposables operation. "We have phased in automation over the years, and as a result have kept all of the jobs," says Anne Papinchak, director of Medrad's Performance Excellence Center. "We prioritize redeploying our resources and continuously engaging the talent of our people."
All new products and processes have to be aligned with scorecard goals that are developed by the company's Executive Committee using a systematic strategic planning process. The five goals are to exceed financials every year, grow the company, improve quality and productivity, improve customer satisfaction, and improve employee growth and satisfaction.
"The five corporate goals are aligned within the whole organization and everything we do must work toward meeting them," says Rivera. "Since 1999, we have consistently achieved our goals and objectives."
Medrad uses what it calls a waterfalling process to disseminate its goals and objectives throughout the organization. Managers create departmental objectives and plans to support the corporate scorecard and Top 12 corporate projects, and then work with employees to develop individual goals to support departmental goals. This, the company says, helps relay its goals down to the employees. In the most recent employee satisfaction survey, 87% of employees responded affirmatively when asked if they understood their relationship between what they do and Medrad's goals and objectives.
In its Baldrige application, Medrad executives pointed to frequent formal and informal communication, interaction with key stakeholders and participation in training, and employee recognition as key reasons for its success.
Performance reviews are held monthly and quarterly. The Executive Committee meets monthly to talk about business and quality issues;
profit-and-loss results by month and year-to-date are reviewed.
Quality improvement teams often have cross-functional participation to solve a problem or pursue break-through improvements. A Customer Satisfaction Advisory Board (CSAB) is one such cross-functional team. The board meets monthly to analyze on-time delivery rates and customer data. "In a continuous improvement environment," says Jim Kessing, senior vice president in charge of operations, "there is always an opportunity to improve."
The CSAB identified product reliability as one of customers' most significant requirements. Improvement processes and new products such as the Stellant CT Injection System are brought to market based on customer insights through various channels including customer surveys conducted throughout the year.
"You have to start by understanding your customer's needs," adds Bob Schmidt, manager of global customer satisfaction. "Because of this knowledge, we know that our focus has to be on product reliability, including on-time delivery and customer support."
One example is in the service area, where customer surveys indicated that customers wanted a response within 30 minutes of placing a call. To meet this need, the company changed its dispatch process so that service representatives get paged immediately. "We get about 700 to 800 calls a month. When we started, we had 100 or so calls that were not returned within 30 minutes," says Schmidt. "Now it is just a handful."
To help generate ideas, the company uses what it calls a Rack system, which is a team-focused idea generation system that encourages team members to identify problems and issues that affect quality, safety or efficiency. For example, in 2002, the Rack system in the Sterile Disposables syringe production area averaged 22 ideas per month. More than half of the ideas focused on facilities and equipment-maintenance improvements.
Each Rack has a cross-functional team that meets weekly to review submittals, assign action, investigate ideas and consider implementation.
Other avenues of cross-functional knowledge sharing include Quality Forums, where quality and productivity best practices are shared, and a Performance Excellence Conference that focuses on sharing team best practices.
A cross-function Failure Analysis Team (FAT) meets regularly to conduct product failure analysis. Unfavorable failure trends attributed to process or design defects result in a corrective action that is assigned to a design, lifecycle, manufacturing engineer or a quality-assurance worker.
Failure activity related to suppliers, processes and field performance are integrated into a new, custom-built database called FRACAS, or Failure Reporting Analysis and Corrective Action System.
As with everything else, FRACAS fits within the framework of Medrad's scorecard goals. "It helps us succeed financially by reducing warranty and service costs," says Eric Ferchaw, manager of the operations productivity center and one of the three programmers who developed FRACAS. "Reliability is part of our brand. If we don't keep our promise of quality, we won't be successful."
The database, which went live in 2002, is both a database and a process, says Barry Iddon, manager of systems and safety engineering. Prior to the database, information was kept in different locations and there was little tie-in between systems. The new database allows detailed trending analysis to occur. Employees can trend when problems may occur, ferret out the reasons for recurring problems, keep a real-time history of products and components for future reference, and provide this information when needed via the Internet.
"This allows us to effectively assign our people so that they are working on the right issues instead of reacting to the squeaky wheel, which may not be the best use of our resources," says Iddon. "We get a systematic look at what needs to be done. It is used to capture, analyze and trend field performance. It helps improve quality by identifying early failure trends and validating the effectiveness of corrective actions."
The company has recently made improvements to its manufacturing operations. Medrad produces its syringes, or barrels as it calls them, at the company's Indianola facility and builds the injection systems and other electromechanical products at its Heilman Center that is located seven miles away.
Target efficiencies for each production line are assigned visual indicators, for example a frown or a smiley face, and posted so that the workers know if they are meeting goals.
Working 24 hours a day, five and sometimes six days a week, the assembly operation in Indianola builds over one million syringes a month in a clean-room environment that demands quality and consistency. To avoid contaminating the products, workers in the clean room must wear specialized smocks, clean foot wear and head coverings.
The syringes are quick-fill tubes that hold the contrast media when it is injected into the body by the injector system. To ensure quality, the company leak tests the syringes on a random-sample basis. For syringes used in CT procedures, they must be able to withstand 300 pounds per square inch (psi), and angiography procedures must be able to withstand 1,200 psi.
During assembly, the barrels are aligned with a machine-vision system that checks the orientation of the feet on the flange. Four probes then automatically check the bottom of the syringe. It is then dimensionally checked to determine flatness, if it is parallel and if the position of the plunger is correct.
When the syringes are assembled, they are 100% inspected by quality technicians who visually check for damage and particulate contamination.
In the Heilman Center facility, the production has been substantially reconfigured in the last year. Lines that were once inline have now been organized in a cellular configuration. The lines are all different colors to optimize material flow. Products "flow" from the inside out with all testing, including life-cycle testing, conducted on the outside of the cell.
Each electromechanical system is thoroughly tested and inspected. "Any failures that might occur would be caught here," says Doug Wilson, manufacturing manager. "What takes us the most amount of time in our process is quality checks. The lengthiest operation that we have is production of the (injection system) Stellant head in its dual mode. It takes three hours to produce the product, and 20 to 22 hours of quality checks to achieve our high quality standards."
Additionally, testing has been improved. "Over the past two years, we have significantly enhanced our testing capabilities," says Wilson. "We are going to a common platform. Previously, when we tested units, it was custom and we could only put a particular product on a particular testing station. It was very inflexible. The last three product lines that we have implemented use a common test platform, and the facility reconfiguration was designed to take advantage of this new technology."
The reconfiguration of the manufacturing facilities and the improvement of processes and products are just some of the steps that Medrad has taken along the path of continual improvement that led them to winning the Baldrige Award. The Award itself is not the end of the game, however, because, they say, there is always a product or process that can be improved, there is always a customer that can be further satisfied and there is always an employee who might just have the next great idea. Q
FIVE CORPORATE SCORECARD GOALS• Exceed the financials: Profit growth greater than revenue growth.
• Grow the Company: Revenue growth greater than 15% per year.
• Improve quality: Grow profit per employee greater than 10% per year.
• Increased customer satisfaction: Continuous improvement in customer satisfaction ratings.
• Increase employee growth and satisfaction: Continuous improvement in employee satisfaction above best-in-class Hay benchmark.
TECH tIPS• A 15-year journey culminated in the 2003 Malcolm Baldrige National Quality Award.
• Sales have risen at least 15% annually since 1998.