Accomplishments That Demand Respect
In spite of the current restructuring, it’s important to credit and recognize the automotive industry for its many impressive accomplishments and contributions to industrial America. Benchmark management systems for quality assurance, process improvement, supply chain management and new product/technology introductions are all part of the automotive landscape in North America. OEMs have provided the methodologies, tools, language and approach to effectively manage highly complex products, processes and technologies in virtually any business. Decades of work have been well documented, and many of their management concepts have become standard practices across many industries.
The significant investment into these time-tested management systems came from external pressures driving the need to change. Growing competition, decreasing profit margins, increased regulations, rapid technology advancements and product performance expectations all motivated radical changes and long-term management commitments to higher levels of product performance supported by management system effectiveness. Consumer demands, marketplace dynamics and shareholder pressures mandated organizational efficiencies.
Sound familiar? Several decades later, the same pressures and forces are only beginning to affect the medical device industry. The similarities are striking, making the lessons learned from the automotive sector invaluable.
Lessons in Quality Management
Of all the industrial contributions made, those affecting quality systems are among the richest. This discipline encompasses the other three management systems—continuous improvement, supply chain and launch. The original 1994 quality system requirements QS-9000 standard was a harmonization of Chrysler, Ford and General Motor’s independent systems and was roughly based on the ISO 9000 standard. These authoring companies expanded every one of the 20 ISO elements by more than 70 percent with the addition of prescriptive requirements supported by five documents detailing specific techniques and methodologies covered in ISO 9000. In addition, QS-9000 encompassed both the internal manufacturing entities and the entire supply chain to best ensure customer satisfaction through the explicit application of continuous improvement, defect prevention, variation reduction and waste elimination. These OEMs created a standard for themselves, and their supply chain was far more rigorous, prescriptive, demanding and comprehensive than any non-industry regulation. As a result of worldwide harmonization and aligning with ISO 9000 updates, QS-9000 expired in 2006 and was replaced by ISO/TS 16949, with continued commitment to a process-based quality management system focused on enhancing customer satisfaction through a commitment of continuous improvement.
The medical device industry would do well to pay attention to the quality management lessons of the automotive industry. Its future success may depend on it.
Lesson 1: Deploy FundamentalQuality Principles
Much of the medical device industry trails its automotive counterparts in the deployment of fundamental quality principles. The U.S. Food and Drug Administration (FDA) Quality System Regulation 21 CFR Part 820 for medical devices is a relatively non-prescriptive basic architecture and a reasonable guideline. Mere compliance and liberal interpretation with limited depth of application can be risky and inadequate, especially considering the magnitude of moral, ethical and financial consequences for failures.
The value automotive OEMs placed on manufacturing control and continuous improvement has been evident for decades. From the Henry Ford assembly line to the process-based, rigorous requirements of ISO/TS 16949, the definition, implementation, measurement/analysis and process improvement are core business and management practices. Inspection plans have become obsolete, while control plans are now required. The quality function once defined by armies of inspectors now oversees required processes, including process data analysis, process change management, continuous improvement cycles, corrective and preventative actions, problem-solving methodologies, error-proofing and compliance audits. Embracing the Plan-Do-Check-Act continuous improvement approach accelerated the evolution from inspection-based detection and reaction to planning-based prevention via process controls. Quality failures are dangerous and expensive, making the inherent risks associated with detection intolerable.
Lesson 2: Embrace a More Stringent Approach to Quality Management
The medical device industry would benefit greatly by embracing a more customer-focused, process-oriented and continuous improvement-based approach to quality management. This is an extremely effective strategy to reduce the risks of failure and maintain, or even improve, financial performance in times of cost inflation and price deflation.
Supply chain management is the discipline with the greatest in variation across these two industries.
Even pre-QS-9000, supply chain development was a key strategy for all automotive OEMs. The commitment to include the supply chain in their continuous improvement journey was supported with dedicated resources (supplier quality engineers), specific nomenclature (Tier I, Tier II, Tier III, etc.), and full inclusion in the stated goal, purpose and scope in both QS-9000 and ISO/ TS16949 documents. Thousands of companies benefitted from the forced rigors of these quality system requirements. Although the supply chain often outperformed the OEMs, most suppliers wouldn’t have begun this journey alone and, therefore, many wouldn’t have achieved nearly as much success. True to the spirit of the regulations, the ultimate winner is the customer, who gained a higher quality, safer, more reliable and more affordable product.
Lesson 3: Reevaluate SupplyChain Management
Limiting supply chain management to purchasing and incoming inspection functions is a missed opportunity for the medical device industry. The OEMs that exceed FDA 21 CFR 820 requirements have established high-performing, high-contributing, powerhouse supply chains. The benefits to the industry are second only to the benefits of society—customer access to higher quality, safer, more reliable and more affordable healthcare products.
Few industries have launched as many new products and/or technologies than the automotive industry.
With decades of experience from relatively minor model year styling or option enhancements to complete brand and platform launches, these OEMs wrote the book on design control—literally. The design and development sections of both QS-9000 and ISO/TS16949 are key components of product realization and in many ways more rigorous and thorough as manufacturing process controls. Consistent with the spirit of focusing on customer satisfaction through waste elimination, the concepts and methodologies of quality function deployment (QFD) were developed and universally incorporated.
Lesson 4: Consider the LaunchProcess
With the exploding rate of technology advancements, establishing an effective, efficient, and repeatable design and launch process is critical to the success of most medical device companies. Advancing typical design control methodologies to a QFD system can help meet the growing demands of converting sophisticated discoveries into commercially viable solutions for healthcare providers and patients.
Several trends in the medical device industry add credence to these four lessons.
The regulatory scrutiny from the FDA continues to grow both in depth and in scope, putting significant strain on many companies’ marginal quality systems. Increased competition, the economic downturn, reduced volumes and rising overhead costs all add up to diminishing financial performance.
The combination of these quality and cost challenges are causing supply chain contractions and consolidations. And if that weren’t enough, the information-rich consumer is demanding more technology, better products and better clinical outcomes at a lower total cost. This all sounds remarkably familiar.
Regroup & Refocus
In many ways, the major difference between these two great industries is simply time. Automotive companies have been industrial trailblazers for many, many years, and it’s time for them to regroup, refocus, restructure, resize and reinvent themselves; they don’t have a choice.
It’s no coincidence, however, that in the current economic downturn, the leaders in these management practices are in measurably better shape that the followers. As the industry reshapes, those who invested in their management processes with commitment, discipline and rigor will be rewarded.
And what of the medical device industry? It’s very simple. We can decide to upgrade our quality systems and pursue continuous improvement, or not. We can decide to develop our supply chains and effectively commercialize their inventions, or not. We can decide and adapt best practices, or not. We can decide to learn from a legend…or not.