Medrad: Award-Winning Quality Is Its Own Reward

Originally Published MDDI February 2004

Q & A

Using the best ideas from the best companies, Medrad implements a total quality system good enough to be the 2003 Baldrige Award winner for manufacturing.

Erik Swain

When it comes to quality, persistence is a key virtue. Just ask the people at Medrad Inc., an Indianola, PA–maker of medical imaging products. Last November, the company was one of just seven to win the nation's highest honor for quality, the Malcolm Baldrige National Quality Award. 

The award's famously rigorous application process makes this an impressive achievement for any company. Few companies not dedicated to continuous improvement would make the effort even once. But Medrad went through it several times before winning. Why? Because you don't have to win an award in this process to make valuable gains. For companies like Medrad, the benefit of the Baldrige award is not in winning it, but in the process itself. As Medrad's example shows, it is a learning process that by itself can produce dramatic improvements in a company's operations.

The Baldridge criteria form a process and a series of best practices that companies from all industries can use to improve manufacturing and other operations. And its winners can be used as benchmarks for other companies that are looking to operate more efficiently, develop quality products more effectively, and otherwise achieve excellence. 

Since Medrad began using Baldrige criteria, the company doubled revenues between 1997 and 2002, and has expanded manufacturing capacity three times and also posted off-the-chart customer-satisfaction percentages. It made the final stages of consideration for the award three times before winning last year. John P. Friel, Medrad's president and CEO, spoke with MD&DI East Coast editor Erik Swain about how the Baldrige process works and how it benefited the company even before it won the award. 

Q: How did Medrad first get involved in the Baldrige process?

A: It started about 15 years ago. We decided to get into total quality management. This was right around the time when the first Baldrige Awards were announced. An executive team went out and visited early Baldrige recipients such as Xerox, Milliken & Co., and Federal Express. That convinced us that [the process] was appropriate for our company. I was director of sales and marketing at the time, and I personally went to Milliken. The representative there said that they had the highest margins and charge the most money in their industry, but their customers are delighted and keep coming back because of the quality. I thought that if customers are delighted that you're charging more, there must be something to this. The other senior managers had similar experiences on their visits. And that's how we got started. 

One reason we wanted to go with the Baldrige program was that by having such a framework and the same lingo, we knew we could tap into a wealth of best practices, best knowledge, and best companies and organizations that are based on the criteria. If we wanted to work on strategic planning, there was a wealth of that subject matter available. Whereas if we had developed our own model, there would not be information that would match up directly with what we were trying to do. There is a lot of value in tapping into that wealth of information. 

Q: Were there any factors specific to Medrad that prompted getting into the program?

A: We always felt that we had a high-quality organization and that we produced high-quality products. But we had an FDA inspection in 1987 or 1988 and the results were a bit less favorable than we would have liked. There were no serious difficulties but they did tell us “you're not as good as you think you are.” That was sort of a wake-up call. They were telling us areas of importance that we should pay more attention to, and that served as a springboard into the program as well.

Q: How did adopting the Baldrige program's process affect your manufacturing and other operations?

A: We've implemented numerous process improvements. The whole idea of laying out your process is central to the program. We looked at our then-current activities and used some quality tools to map out the state that we would like to be in. We called them “bowl of spaghetti” diagrams because they showed all the movement in our manufacturing and other operations. And once you've charted your process, you can see all the links going every which way. We streamlined these and came up with a much more simplified and orderly process. This included implementing things such as just-in-time inventory and demand-flow manufacturing. We stole shamelessly from benchmarked and best-in-class companies. We adopted different techniques from different companies and “Medrad-ized” them; that is, we applied them to our applications. 

Q: How did this affect your products?

A: One important change we made was what we called “inbound marketing.” That had to do with product planning and specification development and getting customer requirements from them. Significantly, we implemented numerous tools and increased our number of customer contact points. We implemented new customer surveys, focus panels, and conjoint analyses to better ensure that the specifications of the products matched up with our customers' unmet needs and requirements. The end products were better because of that upfront work. There were improvements to everything from disposable syringes to connector tubing. We made a significant investment in automation and moved away from manual processes. We are very proud that when we did that, we did not have any layoffs as a result. We were able to continue to grow the company while identifying jobs for all of those people who were affected. In many cases, they moved to higher-paying and higher-skill-level positions. Over the 15-year process, we have taken advantage of changes and improvements in 
technology that we have adapted and incorporated into our production processes. A specific example of a product that was improved is our latest CT injector, the Stellant. The improvement came about because of customer input into the specification and development processes. Some features we thought were going to be important, we found out didn't matter as much to customers. And when we used the conjoint analysis and focus groups, they indicated we should change our approach to some other features. It paid off. When we showed the device at the recent Radiological Society of North America convention, the response was phenomenal. So the adaptive role has been very rapid. Customers really like the Stellant and are responding. 

As an example on a micro level, in the disposables area we have to wind tubing on a mandrel, which is put through an oven where the coil is baked into plastic. We had an employee who had an idea for a new winding operation that would make the process more efficient. He came up with a little clip for this purpose. We took the idea and ran with it. It turned out he was right. We designed a component based on this clip and the first year it was implemented, it saved us $250,000. Now it probably saves us $500,000 a year. And that came about because under total quality management, we empower the employees and solicit ideas from them. The employees know best how to improve their jobs. Management's task is to give them the tools. 

Q: How did the program affect your relations with your suppliers?

A: Overall, it was very positive. We engaged our suppliers as partners. We increased the level of communication with them. We realized that for quality principles to work, you have to eliminate defects as early in the process as you can, and not try to inspect them out at the end of the production line, after you've added cost. Now the process is more upstream, and that includes the suppliers' operations. We are helping them with quality tools and processes. And some suppliers have employees who are located on our site. 

Our whole process of selecting suppliers was improved. We know a lot more about them and they know a lot more about us. We are doing more homework before we move forward with a relationship. We have also developed supplier scorecards that evaluate them and allow them to look for opportunities to improve.

Q: How did the award process work?

A: The process is fairly intense. First you submit a 50-page application that tells your story, based on Baldrige criteria. This serves three purposes. One is obviously to address the criteria for the award itself, but the others are that it allows the organization to do a self-assessment, and it is used to provide feedback to applicants. The judges go through the applications and decide who will go to the next stage. A lot of companies drop out at this point. 

The next review determines whether you get a site visit. This was our fourth time in the site-visit phase. During the site visit, a team of about eight examiners comes out. They spend about four days with you. We estimated that they reviewed 5000 documents and conducted 300 employee interviews in the United States and around the world. They came in for second shift and third shift. They met with everyone from product development to accounting to engineering. At the end of that, they compile a feedback report. 

Aside from the recognition, the feedback report is the real value in going through the whole process. The suggestions and opportunities for improvement based on the criteria are what we are looking for. Some, we decided, were not appropriate for us, but most were ideas that we wanted to take and see how they applied to our business. Then, if you don't receive the award, you start the process all over again the next year. 

Q: What is the key to winning the award?

A: Continuous improvement has to become part of what you do every day. It has to get ingrained into the fabric of your organization. Who you are and what you do follows from the framework. It's like breathing. It's a complex process, but it's also elegantly simple, and you can do it without even thinking. Then that gives you a standard by which you can measure results, like a report card. We have an employee in Columbia who told me that he was nervous when the Baldrige team called, but he found the process easy because all he had to do was tell them what he does. 

Q: Why do you think Medrad won it this year as opposed to other years?

A: I can't tell you for sure. It's hard to say one particular thing did it. You keep accumulating the benefits of the process, and eventually you reach a cumulative result that is worthy of recognition. But when [the selection committee] made the announcement, it cited several things. [The committee] liked our consistent growth rate, which has averaged 15% a year. We are a market leader in the United States and Europe, and our market share is significantly greater than our nearest competitor. Our on-time delivery results are 98–100%, which equals or exceeds best in class. The results of our overall employee satisfaction surveys consistently exceed the best-in-class benchmark. We get the highest possible response when our employees are asked if they understand the company objectives and how their jobs fit into them. We invest a lot in employee training and we have a good internal product development process. We get good marks for leadership and social responsibility. We have a code of conduct related to ethical behavior, and we participate in the United Way's “Day of Caring,” in which we give employees a full day to do community support projects. We have a strong employee development program and spend $500,000 a year for tuition reimbursement. 

Q: What will the award mean for the company in the short run and in the long run?

A: The recognition is nice. We are delighted about it and are very appreciative. We are glad to see our employees get the recognition that they really deserve. In the short run, it is a tremendous morale boost. When we approach the actual day that we will receive the award and meet the president, the morale boost will be tremendous. In terms of practical benefits to the company, we'll be identified as a good company to work for, and that should help us hire the best possible people that we can. We will become that much more attractive to the best and the brightest, nationally and internationally.
 
In the long term, we must guard against thinking that we've “made it” and can rest on our laurels. It will be a challenge to grow the business in the increasingly complex medical device imaging marketplace. We will have to continue to apply the principles we've learned and try to become a better and stronger organization every day. 

It is also a positive for the Pittsburgh region. It shows that Southwestern Pennsylvania has what it takes to build a world-class, quality medical device company. We have universities, world-class hospitals, great quality of life, and solid economic development organizations. It proves the people in Southwestern Pennsylvania are of the caliber to produce a world-class organization. 

Part of the responsibility of a Baldrige Award winner is to be a good ambassador for the award, and we intend to do that. Baldrige is a very good framework to use, and we would like to promote it. You've got to have a multifaceted focus on continuous improvement with customers and with your employees, while having social responsibility and continuing to drive innovation. Focus on those priorities, and the business results will follow. 

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