What medical device manufacturers can learn from the auto industry

Many medtech businesses could make more money by combining lean manufacturing processes with continuous improvement. These methodical practices have paid-off handsomely in other industries, as Dr Chris Owen, chief executive of Industry Forum, explains.

Medical device manufacturers compete in such a fast-moving industry that there has to be a big commitment to technological innovation, but this sharp focus can sometimes push out of view other ways of improving profitability. Manufacturing itself is a prime example. Factory infrastructure, equipment utilisation and employees’ production-line working processes might not sound as exciting as new product development, but all can be improved in ways that make a worthwhile difference to the bottom-line.

Because of the cost sensitivities of emerging markets, increasing pressures to deliver value to customers and stakeholders, and tightening regulations requiring flawless quality controls, medtech manufacturing efficiencies are now more important than ever. The ways in which other industries have met such challenges can be instructive. What’s really illuminating is how the most efficient makers of high-quality engineered products have adopted two key disciplines: lean manufacturing and continuous improvement.

You might have heard some businesses say that they ‘tried’ lean manufacturing and were disappointed by the results. Unfortunately this has been a widespread phenomenon.

Lean manufacturing is inextricably linked with continuous improvement, with the emphasis on ‘continuous’. Day after day, month after month, year after year, the determination to make things better through self-critical attention to detail must never end. If this sounds daunting, it doesn’t have to be. Lean manufacturing and continuous improvement are attainable by introducing methodical, repeatable processes. These processes bring a rigorous structure to evaluating a plant, so that problem areas and inefficiencies can be identified, analysed, and improved. And it’s surprising how little these improvements typically cost.

The world’s most successful practitioner of lean manufacturing is widely acknowledged as Toyota Motor Corporation, and Toyota is willing to share insights into its working practices with manufacturers who aren’t competitors. Hence medical device and pharmaceutical companies were recently invited to a workshop and factory tour at Toyota’s Deeside Engine Plant in North Wales, home to the Toyota Lean Management Centre. This event was co-hosted by SMMT Industry Forum, for whom I’m chief executive. SMMT is the abbreviation for Society of Motor Manufacturers and Traders, but for years now Industry Forum’s consultancy and training services have helped transform the manufacturing competitiveness of businesses not just in the automotive sector but many others too.

A wide range of sectors are also assisted by the Toyota Lean Management Centre, which works with companies in food, chemicals, aerospace, pharma and medtech. Courses run at the Centre allow access to the Deeside plant for unique study and benchmarking opportunities. This plant employs about 700 people and produces close to 340,000 car engines per year for shipping to vehicle-assembly plants in the UK and overseas, including Japan.

Foundations for continuous improvement

Challenge: It is vital to have a medium- and long-term vision, and this will almost always necessitate managing change. To ensure that the forward-looking vision is sharp, there has to be detailed study of manufacturing processes and capacity.

Respect: Toyota starts with the belief that all people want to do a good job and the company regards itself as being responsible for creating the environment in which people can develop and grow. A development map is created for every individual, with a clear path for training and advancement.

Kaizen: This is the process of making small improvements continuously, targeting the elimination of waste and non-value-added activities. Toyota Deeside assembly-line staff members are rotated between four (of the six) different line tasks every day so that they stay engaged with the job and keep looking with fresh eyes for ways to eliminate waste. Every staff member is also asked to come up with at least two improvement ideas per month. To encourage Kaizen, information about targets and performance is displayed prominently at many locations throughout Toyota’s plant.

Hoshin Kanri: In corporate-speak, this means ‘policy deployment’, but to everyone in the workplace - and I really do mean everyone - it means teamwork. This is how Toyota’s strategic goals drive progress and action at every level. The company uses Hoshin as its starting point to align business strategy with shop floor activity, then deploys high-level strategy at all levels through daily management. What’s more, all levels in the company create their own Hoshin, with assigned responsibilities.

Genchi-Gen-Butsu: Translated as “Go and see,” this spells out that it is imperative for managers to go to the production line and see whether individuals are all working to exactly the same, standardised methods. Standardised work is a tool that can be applied to any process involving human interaction by organising and defining process-steps and human movements. This ensures that safety, quality and efficiency are built into human processes. One Toyota manager told us: “We standardise everything - but we don’t stifle creativity, because the challenge for our members is to create the standard and then constantly improve it.”

Assembly-line team leaders observe that standardised procedures are adhered to and this manual monitoring is supplemented by the location of video cameras around the plant. Far from being the first step in a blame game, the cameras are there to help identify where mentoring and support is needed. One manager told us: “Trust is essential. We’re not using the cameras to catch anyone out, but to bring improvements. We never blame the individual, we analyse and improve the process.”

To understand the importance of standardisation, consider this: out of all the 337,516 engines produced at Deeside last year, only 13 defects were found. Toyota says “that’s 13 too many” - and every one of those could be traced to lapses from standardised procedures.

The payback from continuous improvement is that waste elimination and efficiency gains are also continuous. The results of such disciplines are hugely impressive at Deeside and representative of what Toyota is achieving elsewhere. The Deeside plant produces 1,300 engines per day, yet has cut the number of engines stocked from 2,700 to 450 - and is now targeting 350. This plant was designed to produce an engine every 54 seconds (simultaneously producing 25 variants of that engine) and started by achieving the production rate of 57 seconds, but has now got that down to 42 seconds.

No big investments were needed to achieve this valuable productivity gain. It was arrived at, step by step, entirely through Kaizen and eliminating waste. It is true that some of the easiest and biggest gains from continuous improvement are usually made first, and that it becomes necessary over time to look harder for smaller rewards - but when every member of the company is looking, as they are at Toyota, small improvements keep on coming in such large numbers that they add up to something truly significant. Medtech companies who are willing to open their minds to these possibilities have much to gain.