| by Kennedy Smith
Quality Achievements
Medrad has achieved an annual average revenue growth
rate of 15 percent since 1998.
The company is the market leader in the United States
and Europe for its vascular injection systems and
related services, with market shares significantly
greater than its best competitor in many product lines
and regions around the world.
Since 1999, overall employee satisfaction has exceeded
the industry best-in-class benchmark.
In 2002, the company reimbursed employees $487,000
for tuition. It has budgeted $535,000 in tuition reimbursement
for 2003.
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On March 9, President George
W. Bush and Commerce Secretary Don Evans presented seven
organizations with 2003 Malcolm Baldrige National Quality
Awards in recognition of their performance excellence and
quality achievements. One of the winners was Medrad Inc.,
with locations in Pennsylvania and around the world, including
Europe, Japan and Australia.
Medrad develops, manufactures, markets and services
medical devices used for diagnostic and therapeutic imaging.
Its products include vascular injection systems and magnetic
resonance accessories, which are sold to hospitals and medical
imaging centers around the world. The company is a subsidiary
of Schering AG, Germany.
What follows is an interview with John P. Friel, president
and CEO of Medrad. Here, he discusses the company’s
Baldrige journey, dating back to the first Baldrige Awards
in 1988.
QD: When did Medrad’s
Baldrige journey begin?
It was back in the
late 1980s, near when the first Baldrige Awards were announced.
The whole idea of total quality management had become a
very hot item. We always thought, as most companies do,
that we had very high quality levels, but then we went through
one of our FDA inspections.
The FDA gave us a wake-up call, saying we weren’t
as good as we thought we were. We had a supplier problem
that caused an interruption in our ability to deliver one
of our products. We were scrambling and worked very hard
to make sure that we were able to meet customer requirements,
but it took a lot of firefighting on our end. We did a “cost
of quality” calculation and discovered it cost us
a lot to deliver those products to the customer and didn’t
come close to the revenue we were generating. That’s
when we took a hard look at TQM.
QD: How difficult is it
to overcome employee skepticism about a new quality initiative?
I see it all the
time. When companies start to get involved in the Baldrige
journey, one of the common questions is, “How do we
get everybody engaged?” There’s internal resistance,
and we were no exception.
One of the things that we did--which I highly recommend
to anybody who’s starting to apply the Baldrige principles--was
to go on what we call “Quality Champion Visits”
to learn from past Baldrige winners. Our head of operations
went to Xerox, our head of sales went to Federal Express
Corp., and I went to Milliken and Co. I was very impressed
with Milliken and saw the results that it was getting. The
company had the highest prices in the industry, the largest
margins, the best quality and the highest levels of customer
satisfaction. After we came back, we thought, “This
can work for us.”
We borrowed shamelessly from these companies. We took
some tools from Xerox, some from FedEx, and some from Milliken
and other best-practice companies. Once you get going, it’s
all about figuring out what’s important to your business
and taking a look at the criteria: leadership, customer
and market focus, strategic planning, human resources focus,
process management and knowledge management. These provided
us with a framework. Then we identified what was important
to the business and started applying these principles and
worked on continuous improvement. Eventually, Baldrige became
ingrained into the fabric of the organization; it became
part of the way we do things.
QD: When did you first
apply for the Baldrige Award?
We applied in 1996
but didn’t make it to the site visit stage. We applied
again in 1999, 2000, 2002 and 2003. We received a site visit
in each of these years.
QD: Tell our readers about
your experience with the site visits.
The examiners came
in and spent three to four days trying to close any gaps
they had with understanding our organization. Examiners
know about the company through its application, which then
generates questions for them. They looked over documents
and systems. They talked to a lot of employees and spoke
to people in our U.S. and European facilities. They met
with people in our second- and third-shift production and
interviewed several hundred people.
QD: How would your company
then respond to the feedback reports?
There’d be
three categories of reaction. One would be: “They’re
giving us this feedback, but they really didn’t understand.
The feedback doesn’t quite make sense.” Our
reaction was, “Shame on us for not doing a good job
of explaining ourselves to the examiners.”
The second category would be items where we said, “That’s
a good point but it’s really not important to our
business, so we’re choosing not to do it.” If
that meant we weren’t going to be a recipient of the
Baldrige Award, then so be it. If it didn’t make sense
to pursue, we wouldn’t.
Then there was the third category, which was most significant.
It was when we said, “They’re making a good
point, and it’s something we need to work on.”
We would make as much progress as we could, and when the
application cycle came back around, we’d apply again
and earn another site visit. Then the teams would see how
much progress we’d made.
I’d place most of our reaction into the third category:
very good feedback that we ended up responding to and taking
into account. After four rounds of site visits, our performance
level really increased as a result of the feedback.
QD: Having used site visits
and feedback reports to help determine how you’re
doing, but now receiving the award and not being eligible
to apply for five years, how will you keep yourselves on
track?
We’ll continue
using the Baldrige criteria and doing our own self-assessments.
We’d love to be able to apply again next year, but
that’s just not an option.
There is a networking group called the Baldrige Award
Recipients, in which past winners work together and do assessments
of each other. That’s something that we can pursue
in lieu of applying. I’m also considering pursuing
some other quality awards such as the European Foundation
for Quality Management’s European Quality Award. I’m
not saying we’re definitely going to apply, but it’s
an option.
QD: Did your Baldrige journey
improve your annual FDA inspections?
One of the improvements
we’ve highlighted is what are called 483s, which are
comments of nonconformance from the FDA. They’ve dropped
dramatically over the years. We’re best-in-class as
far as receiving so few of them. We’ve now gone through
several audits without receiving any. We definitely saw
improvement, and this was one of our key performance metrics
included in our application.
QD: Is the company looking
at any other quality methodologies such as Six Sigma?
There are a number
of tools we use that are consistent with several quality
methodologies. Baldrige and other methods aren’t mutually
exclusive. You can use quality tools that help you to perform
and meet the Baldrige criteria. We use those that have worked
for us. We’re very open to explore new tools, and
we tailor them to the Medrad situation. An example is the
demand-flow manufacturing technique, our version of which
we call Medflow. We’ve adopted it and applied it to
our circumstances. We’ve increased our efficiency,
decreased costs and increased quality as a result.
We have not formally adopted Six Sigma, but we have a
number of Six Sigma Black Belts within the company, and
we’re looking at deploying it in some subsegments
of the company and one of our smaller business units.
QD: Based on your latest
feedback report, what will you be working on in the future?
There are a number
of items. One is that we can get better at using our information
on lost-orders analysis: why you lose a customer, why you
didn’t get an order, etc. One of the feedback elements
was that we have a lot of data but aren’t really using
it to its fullest extent. It’s a customer-focus issue.
When we do lose business, what are the reasons for it, and
what can we do about it?
Another area that we’re working on is that it’s
tough for us to get enough information to compare ourselves
with our competitors. They’re either parts of larger
companies or privately held, so it’s difficult for
us to see how we stack up. However, we do have information
on our competitors, and we want to pull it all together
from various parts of the company so we’ll have a
better handle on how we’re doing compared to our competition.
Kennedy Smith is Quality Digest’s associate
editor.
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