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ECO Process Improvements: Making a Change for the Better

Originally Published MDDI November 2001

ECO Process Improvements: Making a Change for the Better

Streamlining engineering change-order processes can increase quality, reduce burdensome paperwork, and get changes made more quickly.

Gregory Lanides and Karen Watson

As medical device and diagnostic companies grow and mature, so do their processes and products. As a result, the information these companies must manage becomes more voluminous and complex. Given this common occurrence, how does a company keep its processes, materials, and procedures consistent? And how does it maintain that consistency while improving its products, complying with regulatory requirements, and providing good customer service?

Part of the answer is to implement an effective engineering change-order (ECO) process. Proper management of ECOs is critical to maintaining quality, accuracy, and efficiency of processes and products. A poorly managed ECO process results in wasted materials, customer product returns, and random changes to products, among other things.

For the purposes of this article, an ECO is an order to change any process, procedure, document, material, or piece of equipment within a company, no matter how small or large the change. Unfortunately, a poor change-order process will make even the small changes seem big and in some cases create more difficulties than it solves. To begin changing their ECO process for the better, companies should make themselves aware of common problems with ECO processes, identify and analyze those problems within their own process, adopt ideas for improvement, and then implement those ideas.


If a company's ECO process is not running smoothly, all that's needed to pinpoint the major problems is to talk with those who are the most involved. Feedback such as, "I dread all the paperwork I need do in order to process an ECO," or "Changing a typo in a desk procedure and changing a major assembly procedure on a device take the same amount of work and time to complete," is common. Employees from various departments should be interviewed to get their unique perspectives. Some specific, helpful queries include, "What do you need from the ECO process? How do ECOs affect your day-to-day work?"

Once the inquiries are complete, a company will have quite a laundry list of problems and issues that need to be resolved. The interviewing process not only highlights potential improvement areas, but brings more people into the improvement process, which is critical to effective change management.

Process Analysis. As with any improvement initiative, a company seeking change must understand its current situation to determine the work needed to arrive at the ideal one. Creating a basic map of the current ECO process as outlined in the standard operating procedures (SOPs) is a good start, but it isn't enough. A company should sample a number of already completed ECOs, making sure the sample represents the variety of ECO types the company processes (if proper categorization of ECOs doesn't exist, that is also a problem). Companies may also want to trace change orders that are just beginning the process to determine their paths. Only by closely studying its current process will a company be able to determine what is really happening.

To the greatest extent possible, companies should try to find the reasons for any discrepancies between the theoretical process (as outlined in the SOPs) and that actually being performed. Perhaps individuals are skipping the more cumbersome steps or unnecessary iterations are being made to the ECOs. Maybe the orders are simply sitting on a key executive's desk for too long. Getting to the root causes of these problems will help identify key improvement opportunities.

Figure 1. Performing an x-theoretical analysis highlights the process steps causing the most problems.
(Click to enlarge)

Another useful tool is x-theoretical analysis, which highlights the steps that are causing the greatest ECO-processing delays (see Figure 1). After mapping out the ideal theoretical process, a company must determine the theoretical time for each process step. These times are then compared with the actual process-step times taken from a sample set of ECOs. The ratio of the actual to the theoretical is the x-theoretical ratio. The higher the ratio, the worse the performance of that step.

In Figure 1, the sample analysis reveals steps four and seven as the least efficient in terms of process time taken. A good rule of thumb for assessing the cycle-time proficiency of an ECO process is: less than 10x-theoretical is excellent, 10x to 30x is average, and more than 30x is poor.

Resource Problems. Any process, whether manufacturing or business, requires adequate resources for its implementation. While it is not unusual to search for constraints and bottlenecks in a manufacturing plant, such searches are less common in the office environment. Like manufacturing work in progress, ECO paperwork travels from queue to queue and desk to desk waiting to be dealt with. Surprisingly, business processes are usually less predictable than manufacturing processes, and people are often busier than machines. Company managers should keep in mind that as a person or department takes on more work, the amount of time that work will spend in queue will increase exponentially. A highly variable process takes even more time. Resources that are given work taking more than 85% of their available time will generally have a very high x-theoretical ratio for their respective steps.

What this means is that a basic resource analysis—i.e., an assessment of the time required of a resource compared with the time available—is needed. Constant assessment of resource load is very important, because a high load can cause long lead times for otherwise efficient processes. Those performing the assessments should always account for standard inefficiencies, such as interruptions to normal workflow, when determining how much work a person can really do.

Another load issue frequently appears at the approval stage. Because approvers are typically senior personnel with a great deal of responsibility and little time on their hands, ECOs often sit on their desks for weeks waiting for approval.

Quality. There are two quality elements involved in evaluating an ECO process:

  • The nature of the changes (are they really making things better?) and the soundness of the supporting analyses.
  • Second, the accuracy, thoroughness, and compliance of each ECO document.

Evaluating the first element is a subjective process. One way to determine the nature and soundness of an ECO process is by looking at the number of change orders that are rejected. Another is to notice how often ECOs are sent back for further analysis or validation. If these numbers are high, it is likely that the ECO submitters are not carefully thinking through their proposed changes. A third method is to poll the ECO approvers for their opinions of the typical worth of the proposed changes that come across their desks.

The second quality element is easier to evaluate, as documentation groups often track the amount of erroneous or incomplete paperwork coming through their areas, and they use checklists to ensure that they don't process incomplete paperwork or noncompliant documents. If no such checklist is available, one should be drafted as soon as possible.

Too Many Cooks. One very important issue to weigh is the number of people reviewing and approving ECOs, regardless of the subject or criticality. Sometimes, too many individuals want to become involved for fear of missing something that will affect them, or someone may offer them a courtesy FYI review. This too-many-cooks system is as inefficient as it is illogical. A common example is a sales and marketing department that wants to review every ECO submitted, even when a proposed change is minute and product performance is not affected.

Another common problem occurs when parties responsible for implementing a change become part of the approval process as well (such as purchasing staff when buying a new part). But does a purchaser really have the technical know-how to alert an engineer that a change request is technically unsound? This is the type of frank question a company must ask when deciding who will approve ECOs.

In many companies, it is often desired, and sometimes required, that the technical or design team work with the execution (i.e., manufacturing) team when designing a product or change. However, such joint planning can cause delays and other unintended side effects. By asking the execution team to constantly review the design team's work, a company might unknowingly inhibit good ideas from forming, thus frustrating creative engineers. The charge of the design experts is to constantly improve products and processes; once an improvement is justified, it is the charge of the execution team to establish it. In other words, engineers order a change, and execution teams make it happen.

The flip side of this argument is that engineers might design something that is not workable or is much too expensive, in which case the purchasing department must review and approve an order up front.

What is important is to assess the benefits and drawbacks of each approach. If the purchasing department very rarely returns an approved ECO because it can't execute the order, then asking that department to intervene early on doesn't make sense. On the other hand, if engineers request products and parts that are very complex and difficult to find, requiring purchasing approval on some ECOs might be necessary.

Overall, companies must take a close look at who is approving their change orders and take the time to ask, "Why?" They should then try to shift some of the approval responsibility from management to knowledgeable and experienced employees in their individual departments.


The Team Approach. As with most major improvement initiatives, assembling a diversified team to create a new ECO process is a good idea. It is imperative to include representatives from all departments that take part in the change-order process. Individuals who provided the most ideas or input during the initial interviewing process are good candidates for the team. QA must be adequately represented as well, to ensure all regulatory commitments are met. It is important to note that the QA department does not have to approve every ECO, although in many companies it does.

Categorization. Before starting, the ECO team should categorize the different types of ECOs it has, since the procedures for processing each will be different. The team should devise criteria based on safety concerns, regulatory requirements, and technical complexity. This is an important place to start, as many companies have too-broad categorizations of ECOs, or perhaps only one. The categorization of each ECO will dictate who will approve it.

Breaking It Down. To create a new ECO process, the team should ask, "What are the basic steps for getting a change order processed?" ECO processing can be viewed as three basic steps: creation, approval, and implementation.

The person desiring the change creates the change order and completes the initial paperwork, data justification, and validation (if necessary). Once this step is completed, knowledgeable experts from the necessary departments evaluate the ECO's technical and regulatory merits. When all of these departments agree that the change order makes sense and is compliant, then the order is executed, or implemented. Implementation consists of scrapping old material, purchasing new parts, distributing new procedures, and updating legacy systems.

Using the three-step process as a baseline, the team should methodically study each step to determine the simplest way—given the resources and technology available—to accomplish it. This approach is similar to the so-called "lean manufacturing" methodology, where one does only the minimum work necessary to produce the exact amount of high-quality output needed. Taking this approach with each category of ECO is wise, since requirements are different for each.

Using the lean approach, the team should eliminate unnecessary paperwork, unessential approvals, ECO-document errors, poor validations, and other wasteful phenomena. This is a challenge because it requires a real willingness to change existing practices and behavior. Change is even tougher in regulated industries because of the ever-present fear of FDA's looming hammer. In spite of these challenges, however, a focused, diligent approach can yield significant reductions in paperwork and an increase in efficiency.

Setting Time Limits. If a company wants to set cycle-time goals, it needs to hold people accountable to some hard numbers. After deciding on the new process, the ECO team will know with near certainty the required time for each process step. From there, the team can establish cycle-time goals for each step. This is a bit difficult for the approval and implementation steps, because approving or implementing ECOs is often just one of many responsibilities of those who perform these tasks.

To start, the team should evaluate the current ECO demand to determine the work required of the approvers and implementers. Using this estimation, the team will determine the required turnaround time. Leaving too much slack time should be avoided, as this just creates more inefficiencies and pending ECOs in the system. Time goals should be set as low as possible.

Two other important aspects of time-limit setting are escalation procedures and default approvals. Many companies will interpret an approver's absence of approval within the required time frame as a "default approval." Assuming default approval is dangerous in regulated industries, however; so another option might be to notify the appropriate supervisor about an approver's failure to meet his or her deadlines. Whatever the method used, the intent is to promote and enforce accountability and responsibility.

Going Electronic. An obvious approach to improving paperwork-intensive ECO processes is to convert them to electronic systems. This not only saves trees, but improves processing speed and quality as well. Making "smart" forms (i.e., those that function only when all required fields are complete) available on a network or the Web and routing them electronically to approvers and implementers are two of the basic steps companies can take.

A fully electronic ECO process also includes the use of electronic signatures, which poses an obstacle in regulated industries but yields a significant return on investment when implemented properly. As a transitory stage to electronic signatures, companies can have documents reviewed on-line and keep a hard-copy approval sheet in a central location for approvers to sign after their reviews are completed.

While going totally electronic can cause a giant leap in productivity, it's just as important to remember that the basic business processes behind the automation need to make sense and be efficient. So the analysis and work required for any hard-copy ECO still needs to be done. Otherwise, companies run the risk of automating an inefficient, defective process.

Getting It Done. From an implementation standpoint, there are various departments involved—purchasing, production control, warehouse, operations, and others—that have to make sure the proposed change happens on time and without material or process discrepancies. By this time, the ECO creation and approval steps are complete, so the parties involved in those aspects are not needed.

One way to expedite ECO implementation is to have an "implementation owner" be responsible for seeing the implementation through. Usually this person should be a member of the production-control staff, since he or she will be the one controlling and planning the production activities on the manufacturing floor.

Other recommendations include electronic distribution of new procedures, and writing up and adhering to a simple implementation checklist to ensure that all the proper implementation steps have been completed.

For updating legacy systems such as SAP software, installing programs in which information entered on a spreadsheet can be automatically downloaded into the legacy system increases efficiency and accuracy. Since the legacy system will require input from various parties, a company can choose to have individuals enter their relevant information into an on-line smart form, after which a person fully trained on the legacy system's operations can take the forms and enter the data directly into the system. This helps avoid providing data-entry access to too many people.


Rolling out a new process is always tricky, especially one involving something as ubiquitous in the manufacturing environment as ECOs. It is usually best to use a pilot program, which only a handful of people are trained and begin to use the new ECO process. Their experiences will provide a real-world test and permit feedback from actual users. Companies should plan on at least two to three months for a pilot program. Any attempts to speed up this process will likely result in failure, and all of the great ideas generated will go to waste.

As with any new primary process, iterations might be necessary, and the ECO team might need to tweak and improve the original design. This is fine, unless the changes are drastic and sweeping. Significant changes to a newly implemented process might alert a company that it didn't do enough homework or analysis up front and may have to go back to the drawing board.


With most ECO process changes, it is not uncommon for companies to see significant reductions in cycle times and paperwork and increases in quality. Change-order process improvements beyond those outlined here do exist; companies might want to research other methods better suited to their own operations. Regardless of which particular methods a company chooses, however, with focus and effort the common complaint of, "By the time I see my ECO implemented, my change is obsolete!" will be a thing of the past.

Gregory Lanides is a manager at Tefen USA (Foster City, CA). Karen Watson is former QA director at Becton Dickinson (Franklin Lakes, NJ).

Copyright ©2001 Medical Device & Diagnostic Industry

NIBIB Web Site Launched

Originally Published MDDI November 2001


The National Institute of Biomedical Imaging and Bioengineering (NIBIB), the newest of the NIH research institutes, was mandated by legislation that was signed into law in December 2000. According to the NIBIB, its mission is "to improve health by promoting fundamental discoveries, design and development, and translation and assessment of technological capabilities in biomedical imaging and bioengineering enabled by relevant areas of the physical, engineering, and computational sciences."

An NIBIB Web site can now be found at The site provides information on NIBIB's structure and operations, and on activities related to biomedical imaging and bioengineering in general. Among the topics addressed on the Web site are biomedical imaging and bioengineering activities, articles describing breaking news and events realted to imaging and bioengineering, links to NIBIB research and training opportunities and NIH extramural grant information, and items of general interest to the biomedical research community—including reports, news articles, and links to other Web sites.

In addition, the Web site for the NIH Bioengineering Consortium (BECON), which contains information on BECON activities and funding opportunities, has been made part of the NIBIB Web site. The BECON consists of representatives of all NIH research institutes and centers as well as other federal agencies. Its site is intended to serve as a focus for bioengineering activities at the NIH.

Copyright ©2001 Pharmaceutical & Medical Packaging News

Global Data Privacy and Security

Originally Published MX November/December 2001


Global Data Privacy and Security

Part 2: The Impact of Privacy Laws on Medical Product Development

By implementing privacy and security programs, medtech manufacturers can turn compliance with patient data laws into a competitive advantage.

Edward J. Green and Lisa J. Acevedo

In the United States and abroad, public concern about the privacy of personally identifiable health information has led to a variety of new laws and regulations governing the use and disclosure of personal data.

The first installment of this article (MX, September/October 2001) provided an overview of both U.S. and international laws governing data privacy and security, including the Health Insurance Portability and Accountability Act (HIPAA), the European Union’s Data Privacy Directive, and U.S. safe harbor principles.1-3 This installment offers practical tips on how medtech manufacturers can effectively meet data privacy and security legal challenges, avoid pitfalls, and use these

Warning Signs

Originally Published MX November/December 2001


Many signals of potential alignment or incentive issues take the form of comments from sales reps and medtech customers. Company leaders should be attuned to such remarks that might indicate some realignment is necessary.

"How am I going to win the sales contest if you take away my most valuable accounts?" Such a quote is likely to come from a sales rep in a disproportionately high-potential territory who is paid and measured on sales volume.

"Other reps are overpaid," or "I’m not making enough money." Comments like these from sales reps indicate that territories in a heavily commissioned sales force may be out of balance.

"I’m working harder than anyone. I can’t possibly handle more accounts." This comment could come from a sales rep whose territory is geographically too big. The rep is probably spending most of his or her time traveling and little time selling. Conversely, under a market-share-based compensation

Outsourcing: Staying Afloat in the Transition Process

Originally Published MDDI November 2001

Outsourcing: Staying Afloat in the Transition Process

What it takes to avoid the rocks when moving some or all of an in-house manufacturing process to a contract manufacturer.

Larry Strauss

There is a popular quality management analogy that goes like this: A boat is attempting to navigate a body of water full of submerged rocks. The water is lowered very slowly, so the largest rocks beneath the surface are gradually exposed. After the boat passes those rocks, the water is again slowly lowered to expose the next set of rocks, which are then dealt with. This process continues until all rocks have been revealed and the conditions are safe for the boat to travel.

In this analogy, the water represents the manufacturing process and the rocks are quality problems or inefficient production steps. And of course, the boat represents the manufacturer.

If the process of transferring a production line to a contract manufacturer (CM) followed this cautious, incremental process, there would seldom be a problem. Unfortunately, outsourcing is more often analogous to dropping the water level all at once. When a primary manufacturer suddenly begins relying entirely on a CM for its product, rocks that went undetected prior to the transfer abruptly jut from the water, endangering the success of the outsourcing initiative. Extensive planning and preparation is required to avoid hitting those rocks.

Medical device and diagnostics manufacturers (henceforth "primaries") have outsourced the manufacturing of certain relatively simple products for a number of years. But three new trends have become increasingly evident over the past few years. The first is that primaries are outsourcing more products than ever, and as a result are forming more relationships with CMs. The second and more important trend is that CMs are upgrading their technical and supply chain capabilities. Whereas in the past they may have been limited to simple operations—such as assembling tubing sets—they are now developing the capabilities to manage entire supply chains, and to assemble or even help engineer more-complex products. Finally, there is the sheer growth of contract manufacturing capacity. Some medical device CMs are expanding their operations in excess of 20% per year.

The increase in manufacturing outsourcing is driven by reduced margins in the industry, strategic focus, and the search for growth in new markets around the world. Some primaries are concluding that their strengths reside in design and marketing, making selective manufacturing outsourcing a logical move. Others are realizing that their core competencies lie in certain technical manufacturing capabilities, and so they outsource other parts of the production process.

For example, a medical device maker might decide to outsource some of its older, more stable products so it can focus its operations on newer, more technically complex products with higher margins.

A primary contemplating manufacturing outsourcing must consider which operations it will outsource and which it will retain, how the relationship with the CM will be managed, the incentives to put in place to obtain the desired behaviors from the CM, and how the outsourcing will affect future product changes and improvements.

Because medical device and diagnostics enterprises are ultimately responsible for any product they sell, regardless of whether it was manufactured by a CM, quality assurance and legal liability issues also come prominently into play. How tight and reliable are the CM's quality systems? How well did its operations fare in its last FDA audit? How does the CM manage suppliers, inspections, labeling, and sterilization?

Once the production-line transfer to a CM has started, there is often little or no time to respond to unforeseen issues, such as quality problems, supplier shortages, or inflexible regulatory lead times around the world. It is therefore crucial to have identified and worked around the rocks before the water level plunges.

The remainder of this article will examine what it takes to avoid the rocks in moving an in-house medical device manufacturing operation to a contract manufacturer. The observations and advice are based on a long record of success in planning and implementing successful production-line transitions for medical device and diagnostics firms.


  1. Define purpose for outsourcing—cost, strategic focus, access to new markets.
  2. Define the scope of what will be outsourced (e.g., which products, quality and supply chain functions, manufacturing operations, etc.).
  3. Enlist senior management support.
  4. Build a cross-functional core team that will manage the selection and transfer process.
  5. Identify potential contract manufacturing partners.
  6. Narrow potential partner field down to a few semifinalists.
  7. Develop a detailed request for proposals (RFP) and submit to semifinalists.
  8. Conduct contract manufacturer reviews, including detailed site visits and reference checks.
  9. Evaluate RFP responses and findings from contract manufacturer reviews (keep in mind the purpose for outsourcing defined above).
  10. Select contract manufacturing partner.


First and foremost, the primary must clearly define for itself what it intends to gain from the outsourcing relationship, be it lower cost, access to new markets, technology or scale advantages, or the ability to tighten its strategic focus.

The second key to success is the selection of an appropriate CM partner. The winnowing process should be handled by a small, cross-functional team that performs progressively more-detailed due diligence as the pool of candidates is narrowed. This due diligence should include site visits, reference checks, and detailed requests for information from all prospective candidates.

What are the company's key criteria for a successful relationship with a CM? Is lowest cost of prime importance? How important are the partner's engineering or technical capabilities? How important is the CM's location?

If the outsourcing strategy includes gaining inexpensive access to new markets and the technical capabilities required of the CM are moderate, then the partner's location might be the most important consideration. A number of medical device companies with significant markets in the Far East have product manufactured in the region to avoid trans-Pacific distribution costs.

Organizational compatibility is another important issue. Primaries should meet with managers at various levels within the CM's company to get a reading on organizational fit, compatible styles of communication, and so on. Is the fit close enough that the CM under consideration could become a partner in the planning process?

Define the Operational Scope. The first step in successfully transitioning operations to a CM is deciding which manufacturing operations will be outsourced and over what time frame. Will every part of the manufacturing process be outsourced at once, or should the outsourcing be accomplished in logically time-phased stages? Which support operations—planning, sourcing, or distribution—will be outsourced, and which will remain with the primary? How, for example, will postmanufacturing operations such as sterilization and distribution be handled? Which company will procure components and take responsibility for component quality (supplier audits, annual inspections, etc.)? How much flexibility will the CM have in setting its own manufacturing schedule? These are all questions that must be asked—and answered.

Manufacturers must start thinking early about the organization within their company that will manage the CM partnership after the transition is complete. If at all possible, the same people who are responsible for managing the transfer at both the primary and the CM should be responsible for the ongoing relationship after the transfer is made.

Define Operating Rules and Responsibilities. It is critical to work through, in advance, how all of the elements of the product's supply chain—production planning, materials and components sourcing, manufacturing, product sterilization, and distribution—will work, both during and after the transition. Pay special attention to the specific operations that are going to change, which will obviously include manufacturing-line and distribution operations. Who will be responsible for sourcing components, providing suppliers with forecasts, and qualifying or auditing suppliers?

One way to ensure that all operations have been thoroughly reviewed is to map the supply chain processes. Manufacturing operations are relatively easy to map, since they are usually embodied in the primary's standard operating procedures (SOPs), but it is equally important to map the processes for managing planning, sourcing, and distribution.

In addition to a formal contract, primaries should write a joint service agreement (JSA) that clarifies how the joint operations will work. This is to make doubly sure that both parties clearly understand their roles and responsibilities before the transition begins. A primary's written contract with a CM tends to be a static document that focuses on launching the relationship—and on dissolving it, should that prove necessary. It does not usually focus on how the relationship will work, how difficulties will be redressed, or how the relationship can be strengthened and expanded over time if all goes well. The JSA is the ideal instrument for addressing those issues.

Plan Customer Supply. Determining how the transition team will handle product supply to customers during the transition is vital in avoiding one of the most dangerous rocks. Customers will not accept service interruptions of any kind. Furthermore, any supply problem, whatever its nature, will be blamed on the primary's "obviously ill-considered" decision to move to a CM.

Essentially, there are two options for keeping customers properly supplied during a production-line transition. One is to build extra manufacturing capacity pretransfer, so that sufficient manufacturing capacity will be available at any time to unfailingly meet customer demand. The second option is to stock extra inventory in advance of the transfer in order to cover any supply shortfall that might occur while the manufacturing lines are down during transfer.

The choice depends on the cost and time required to build and qualify new production equipment, the level of excess capacity of current production operations, and the product shelf life (versus the planned transition time). Creativ- ity in combining the choices can have significant benefits, both in terms of reduced capital outlays and increased transition speed.

For example, during a manufacturing transfer operation, a set of transfer "waves" could be established, in which the CM deploys limited staff among just the critical receiving and validation operations. This would effectively allow the primary to transfer multiple sets of operations in parallel, rather than serially, potentially speeding the transfer by months.

It is important to remember that the supply of components going into production (whether from the primary or the CM) also has to support the selected transfer strategy.

Also, if multiple production lines are going to be transferred, primaries should work through how the waves of transfer will be scheduled and how they interrelate. For example, if the transfer of one line is late, will it affect the transfer of the next? If so, how? Whatever plan is developed for transitioning, the product supply needs to be robust enough to absorb delays in the transition and to cover sudden increases in consumer demand.

Moving the first production line is rarely a gradual process. Once the first line moves, the company is suddenly and conspicuously vulnerable to demand spikes. Planning must be thorough before each production line is moved.


Staff the Transition Team. Appropriately staffing the core outsourcing transition team is critical to locating the rocks before the water level plunges. The team should be cross-functionally staffed with people whose schedules allow them to commit for the duration of the transition project. The transition team leader should expect to devote 100% of his or her time to the project, and most of the core team members should plan on devoting at least half of their time.

The team should include members from both the primary and the CM, as well as members from all of the internal operations that will be affected by the transition, including IT, finance, and marketing. Even though they are not directly involved in transferring production lines, IT and finance will need to change their processes to support the transferred operations. It is obviously important for marketing personnel to understand the transition's operational details and timing so that they can confidently answer questions from concerned customers.

If at all possible, each team member on the primary side should have a peer at the CM company. These "peer pairs" can work out how their respective operations will function during and following the transition, and then report their solutions to the core team at large.

The transition team must be empowered by senior management to manage all aspects of the transition, including its timing, the sequence of moves (if multiple lines are being moved), and the development of protocols for line validations, to name just a few aspects.

In addition, the team will almost certainly discover in the course of the transition that some operations are not fully defined in terms of how they will work during or after the transition. In order to avoid slowing the transition process, the team should be empowered to make these operational decisions as they arise. For example, if improvements were planned for the products to be outsourced, the transition team may need to decide whether to complete those improvements before transitioning the production line or after the transition, or to postpone the improvements until a more operationally stable time.

Manage the Transition. Regular and frequent core team meetings are important in tracking the progress of the manufacturing transfer and quickly resolving problems as they emerge.

The detailed master plan created at the start of the project should include all the major steps performed by all the functions in the transition process. Most any project-management software will do for creating such a master plan. Enough detail should be incorporated so that the plan reflects all of the operations that need to be performed, especially the interdependencies among the operations involved.

The entire core team should review this plan until everyone's "buy-in" is secured, and then review and update the plan regularly throughout the transfer project. If any tasks are slipping, or if management decides to speed up or slow down the transfer for some reason, this plan is the first place to look in determining how the transfer, and the interdependent operations, will be affected. Reviewing the master plan at each core team meeting is a good idea as the transition proceeds.

Make "Go/No-Go" Decisions. The object of go/no-go decision meetings is to determine if the team is truly ready to move the first production line, or if additional work needs to be done before the line is transferred. Appropriate senior representatives from the key functions should attend, as well as the entire transfer team. The topics at these meetings should include not just the status and details of transition planning, but also supply planning and risk-mitigation planning.

Setting fixed dates for go/no-go decision meetings—and sticking to them—can be a forcing function that keeps the team on schedule. If the transition team has done its work effectively and has adhered to schedule, no-go decisions will be rare.

Ideally, the core transition team should report to a steering committee made up of representatives from both the primary and the CM. This way, there is assurance not only that the primary is ready to transfer the production line, but also that the CM is ready to receive it. If multiple lines are being transferred in waves or phases, a go/no-go meeting should be held before each line is transferred.


Both the primary and the CM need to view their relationship as a partnership from the outset. The sides must treat each other as equals, as they will win or lose equally. There must be no holding back of relevant manufacturing or supply chain information. The CM must fully understand the operation it is taking over, and know where the potential problems lurk. Early on, the primary and the CM should structure a gain-sharing agreement that addresses such issues as how the two parties will split the gains from reengineered production operations, and how they will deal with—and who will absorb—any component cost increases, should they occur. A good gain-sharing agreement is extremely important to forging a successful relationship.

Both the transition to contract manufacturing and the posttransition period should be monitored using a set of performance metrics. Metrics help ensure that everyone agrees on what is important to track and measure. When properly employed, metrics maintain the momentum of progress toward well-defined goals, and expose problems as early as possible so that corrective action can be taken. Metrics typically monitored in the course of a manufacturing outsourcing project include finished-goods inventory levels, production rates, product quality and yield, actual versus planned ramp-up schedules, transition dates for production lines, and capital, operating, and transition costs.

One idea is to build a scorecard that depicts the critical transfer metrics in graphical form. Each graphic depicts a specific goal or target versus the actual performance toward that target to date, giving managers a quick and clear picture of how the transfer is proceeding in critical terms.


Moving a production line to a CM without negative impacts on product supply or quality requires diligent planning and careful management. Every party involved in the transition, whether on the primary manufacturer or contract manufacturer side, must understand that no one is succeeding if anyone else is failing. With the right frame of mind, the right management processes, the right staffing, and the right planning, the rocks that are bound to emerge during transition can be spotted and avoided, with time to spare.

Larry Strauss is a principal in the Waltham, MA–based headquarters of management consultancy PRTM.

Copyright ©2001 Medical Device & Diagnostic Industry

Medical Device Manufacturing Groups Address National Preparedness Issues

Originally Published MDDI November 2001

Medical Device Manufacturing Groups Address National Preparedness Issues

The tragic events of September 11 drew prompt responses from medical manufacturers, as well as from organizations representing the device industry. The Association for the Advacement of Medical Instrumentation, for example, notes that affected medical facilities received offers of equipment and supplies from healthcare facilities, equipment rental companies, and vendors across the country. Because most aircraft were grounded, supplies and equipment were transported by truck from as far away as Michigan, Wisconsin, and Dallas.

The federal government did permit an emergency shipment of a bioengineered skin substitute for treating burn victims. The Medical Device Manufacturers Association (MDMA) noted, however, that while the product was made available in New York City and Washington, DC, the company was unable to serve facilities in other parts of the country.

Industry associations have also attempted to identify a number of key issues they believe should be addressed in preparing for disasters of this nature and scale. While MDMA developed points to be considered by the Department of Health and Human Services (HHS) in planning for various contingencies, AdvaMed established a new council to assist federal agencies in responding to additional crises that may arise.

Recognizing the efforts made by member companies after the attacks, AdvaMed president Pamela G. Bailey announced that the group is following up with a sustained commitment to ensuring that healthcare needs can be met in times of natural disasters or military mobilization. AdvaMed's new Medical Technology Preparedness Council will help federal agencies ensure that the healthcare delivery system and the military are fully prepared to respond to crises.

Bailey said the Medical Technology Preparedness Council will include leaders from the medical technology industry with expertise in such areas as emergency care, supply-chain logistics, and science and technology development. Among the council's specific goals will be ensuring there is an adequate supply and distribution of needed medical technologies, including basic commodities and more advanced products—both domestically and to the military.

The council will work with federal officials to identify and address potential barriers that could impede distribution and access to needed medical technologies in emergencies. It will also work to foster development of new medical technologies to meet domestic and military trauma-care needs.

One week after the attacks, MDMA president Stephen Northrup sent a memorandum to HHS assessing the impact of the current crisis on its members and outlining recommendations for contingency planning. Northrup noted that member companies had been able to "keep products moving," although they had to curtail same-day and next-day deliveries because of government-imposed restrictions on cargo shipments on commercial flights from airports.

Northrup said an evaluation of emergency transportation mechanisms would be appropriate, and he identified a number of key issues that should be addressed in national emergency contingency planning. He also suggested that such plans allow for secure overnight air shipments of perishable and critical medical supplies in the event that passenger planes needed to be grounded, and that cargo space be provided on commercial passenger airlines for same-day deliveries.

Northrup also recommended that steps be taken to ensure that federal stockpiles of medical products include the latest critical trauma and emergency technologies and that these be located in logistically efficient locations for both air and ground transportation.

Copyright ©2001 Medical Device & Diagnostic Industry

On the Asian Front

Originally Published MX November/December 2001


On the Asian Front

For medtech manufacturers, the key to exploiting business opportunities in Asia is an understanding of cultural differences.

Ames Gross and Shawna Lepage

Asia offers U.S. medical device companies an attractive market that should not be ignored, for several reasons. First, Asia’s population of 3.5 billion people represents about 60% of the world total. In addition, Asia is becoming increasingly wealthy. Average economic growth rates through the 1970s, 1980s, and 1990s have been in the neighborhood of 10% for most Asian countries. Per capita incomes in Hong Kong and Singapore match those in the United States.

A Stryker Corp. session in Japan, at the company’s newly opened training center.

The Asian market is huge and growing. In contrast to the 3.5 billion in the East, only 310 million people live in North America; that amounts to 5% of the world’s population. The European markets are big but not, even cumulatively, in Asia’s league. Moreover, while they are fairly wealthy, they are also mature, with little room

Balancing Incentive Compensation Plans

Originally Published MX November/December 2001


Balancing Incentive Compensation Plans

For medtech companies, a good incentive plan can mean higher sales and a more motivated sales force—but only if it allows for effective territory alignment.

Marshall Solem and Songjun Luo

Many executives of medical technology companies count on incentive compensation plans to align their sales representatives’ goals with the goals of the company, but this oftentimes isn’t the result. Some very common types of incentive plans, when coupled with poorly balanced sales territories, can actually hinder a medtech company’s ability to maximize sales. Faced with today’s consolidating healthcare marketplace as well as a proliferation of competitive products, medical technology executives cannot afford to have their sales incentive plans work against them.

This article explores how incentive compensation plans can backfire, and explains how medical technology executives can determine whether such a phenomenon is at work at their company (see sidebar). The article

Wrong Again: Disputes Panel Decides against FDA

Originally Published MDDI November 2001


Unanimous vote calls device center review process into question.

James G. Dickinson

DEHP Poses Risk to Children | Cracking Hip Implants Recalled | Should FDA Ban These Devices? | Needle Destructor Needs 510(k) | Ortho Development Cited for MDR Failures | Cooper Companies Also Cited

A striking echo of the flawed decision making by FDA's device center staff in the TMJ Implants case was heard in a milestone decision against the center on September 6, 2001. Benefiting from the first-ever meeting of FDA's new Medical Devices Dispute Resolution Panel was Lifecore Biomedical Inc. (Chaska, MN).

The fresh eyes of incoming Office of Device Evaluation director Bernard Statland were able to see something wrong in the staff work on TMJ Implants' PMA review, and Statland reversed its effect. The fresh eyes of the new panel members also saw something wrong in CDRH's reliance on arcane statistical analyses to disapprove Lifecore's device. The four-member panel unanimously recommended reversing the staff decision against the company's postsurgical adhesion prevention product, Intergel. CDRH director David Feigal watched in apparent discomfort as his staff's recommendations unraveled. No outside speakers defended the CDRH position.

The dispute resolution panel was established under the 1997 FDA Modernization Act to resolve scientific disputes between manufacturers and the agency. Lifecore had sought appeal to the panel following earlier unsuccessful efforts to persuade an FDA medical devices advisory committee, and the agency, to approve a PMA application for Intergel. Lifecore describes the product as an "intraperitoneal instillate for reduction of adhesion formation following gynecologic pelvic surgery."

Speaking for Lifecore, Karen Becker, PhD, emphasized the importance of developing interventions to prevent or mitigate the occurrence of adhesions in gynecologic pelvic surgeries. "More than three million gynecologic surgeries are performed annually in the United States," she said. "Of these, 60% to 90% result in adhesions, which can lead to infertility, bowel obstruction, and chronic pain." She pointed out that Intergel is now approved for use in Canada and Europe, with favorable results.

The initial PMA application for Intergel was submitted by Lifecore in March 1999, with a subsequent amendment in June 2000. Both were denied by FDA. The agency based its decisions on recommendations of the General and Plastic Surgery Devices Panel of the Medical Devices Advisory Committee. In a "not approvable" letter issued on November 15, 2000, FDA concurred with the advisory panel's opinion that data from Intergel-treated patients did not show a clinically significant benefit over control patients. The letter also expressed concern over a "higher infection rate," allegedly inferred from data submitted by Lifecore in support of its application.

CDRH statistician Richard Kotz presented FDA's interpretation of data from a double-blinded, randomized clinical trial of Intergel. More than 200 patients were enrolled at multiple clinical centers in the United States and Europe. Kotz contended that the data showed no statistical difference between the incidence or severity of adhesions in patients on Intergel and control patients. In particular, he said that data from the U.S. and European clinical centers were "not combinable." From a statistical standpoint, he concluded, pooling the data would tend to "skew results of the trial toward success and away from failure."

CDRH clinical reviewer Roxi Horbowyj, MD, also expressed skepticism about the efficacy of Intergel, because there was "a statistical difference of less than one adhesion between patients on Intergel and controls." Further, she expressed concern over data indicating a 4.9% infection rate for patients treated with Intergel compared with 2.0% for patients who did not receive the product.

The dispute resolution panel heard from a number of witnesses in support of the product. Theodore Colton, ScD, of Boston University's School of Public Health, described the trial as "well designed and scientifically sound." According to his interpretation of the clinical trial data, there appears to be "a five-fold lower risk of adhesions" for patients who received Intergel.

Lifecore's Becker took special issue with the CDRH contention that trial data cast doubt on the safety of Intergel. "The number of patients who suffered postoperative infections was very small (a total of five) and, of these, one had a head cold and the other was diagnosed with chicken pox," she pointed out. "Clearly, neither infection could be associated with the use of Intergel."

Several practicing physicians also spoke in support of the PMA application for Intergel. Melvin Thornton, MD, assistant professor at Columbia University School of Medicine, said the gel form of the Lifecore product is easier for surgeons to employ than competing products. He said this fact constitutes encouragement to its use, and would thus likely benefit larger numbers of patients.

Mark Martens, MD, a physician practicing in Baltimore and a self-described patient advocate, gave especially moving testimony on his experience with Intergel, which he said he has been able to employ on a "compassionate use" basis. Martens said his advice to patients suffering chronic pelvic pain related to adhesions who are denied the use of Intergel in the United States is that they should go to Canada, where it is both legal and available.

Panel members agreed that there were some weaknesses in the design of the clinical trial. Gerald Shirk, MD, of OB/GYN Associates in Cedar Rapids, IA, pointed out that there were no controls on surgical techniques and materials used in surgeries in the trial. Ralph D'Agostino, PhD, professor of mathematics/statistics and public health at Boston University, noted the relatively small number of patients enrolled in the trial. On balance, however, panel members found no reason to vote against premarket approval.

Perhaps the most unusual testimony came from Bess Weatherman, representing the National Venture Capital Association. The organization represents more than 400 of the nation's largest venture capital firms, including those providing financial support for the development of new drugs and medical devices. Weatherman, a medical device specialist for Warburg Pincus (New York City), said the availability of venture capital depends on the "consistency and predictability" of regulatory decisions. For this reason, she said, FDA's opposition to the Intergel PMA was "very disturbing," given that it seemed to discount the successful results of a randomized, double-blinded Level I clinical trial. She told the panel that its actions would be scrutinized and widely noted within the investment community.

The panel's decision against the center's disapproval decision now is before director Feigal. According to FDA's July 2, 2001, final guidance on dispute resolution, he has 10 days after receiving the official transcript of the meeting (usually about a month after the panel meeting) to take one of the following actions:

  • Concur with the panel recommendation(s).
  • Concur with the panel recommendation(s) with specified exception(s).
  • Not concur with the panel recommendation(s) and direct that specified action(s) be taken (e.g., determine that additional information, evidence, or deliberation is necessary and remand the matter to the dispute resolution panel, or to another panel of the Medical Devices Advisory Committee, with instructions for further consideration); or conclude that the matter was not an appropriate matter for review by the dispute resolution panel and that a separate investigation is required, and refer the matter to an appropriate FDA or other governmental investigative unit.

DEHP Poses Risk to Children

Children, particularly neonates, and other subpopulations undergoing certain medical procedures may be at risk from DEHP, a plasticizer used in polyvinyl chloride (PVC) medical devices. This warning was given by CDRH on September 5, 2001, in a document titled "Safety Assessment of Di(2-ethylhexyl)phthalate (DEHP) Released from PVC Medical Devices."

The center's report says the available reproductive and developmental toxicity data are limited but suggestive. Human exposures in some situations approach toxic doses in rodents, raising concerns about the possibility of harmful side effects, particularly on the developing reproductive tract of young boys.

The report notes three findings that supported its conclusion:

  • Children undergoing some medical procedures receive a higher dose per weight than adults do.
  • Pharmacokinetic differences in metabolism may result in a greater absorption, leading to an even more toxic metabolite of DEHP, MEHP, and reduced excretion of MEHP in children compared with adults.
  • Children may be more sensitive to the adverse effects of the chemical than adults are.

The report also says its conclusion is consistent with that of an expert panel recently convened by the Center for the Evaluation of Risks to Human Reproduction of the National Toxicology Program.

Neonates undergoing extracorporeal membrane oxygenation (ECMO) in particular may be exposed to more than 20 times the safe-exposure limit, but other groups may be at risk as well, the report says. "Lipid in enteral nutrition solutions can leach out considerable doses of DEHP from PVC bags and tubing," it states. Patients may be put "at an increased risk of developing DEHP-mediated effects if PVC bags and tubing are used to deliver the enteral nutrition solutions."

Also at possible risk are infants undergoing exchange transfusions and adults undergoing ECMO and cardiopulmonary bypass. Furthermore, the report points out, DEHP dose estimates typically do not take into account exposure of patients to multiple PVC devices, such as neonates in the NICU environment who are typically exposed to the substance from multiple sources.

A spokesperson for industry association AdvaMed said it is reviewing the report, but expressed disappointment that CDRH released the assessment without first obtaining public comment on a draft version.

The full report is available at

Cracking Hip Implants Recalled

St. Gobain Desmarquest zirconia ceramic femoral head hip implants are experiencing a higher fracture rate than expected 13 to 27 months after implant, according to an FDA talk paper issued September 14, 2001. The paper said the problem component is the ball portion of the hip prosthesis that connects the femoral stem to the pelvis. Eight American companies are involved in the recall: Apex Surgical (Lakeville, MA), Biomet (Warsaw, IN), DePuy Orthopedics (Warsaw, IN), Encore Orthopedics (Austin, TX), Osteoimplant Technology (Hunt Valley, MD), Smith & Nephew (Memphis), Stryker Howmedica Osteonics (Allendale, NJ), and Zimmer (Warsaw, IN).

The FDA paper said there are no tests that can predict which patients will experience failure of their hip implants because of defective femoral heads. According to the document, "Fracture of implants with this component is usually signaled by a sudden pain in the implanted hip joint, sometimes preceded by an audible 'pop' from the hip just before the onset of pain. If a hip implant fractures, surgery to replace it will be necessary."

The current recall is the second major hip implant recall this fiscal year, FDA said. Sulzer Medica announced last December that it was recalling certain of its hip implants because the presence of a lubricant residue prevented the devices from bonding with a hipbone. The paper says that problem also was related to manufacturing.

The talk paper may be accessed at

Should FDA Ban These Devices?

FDA intends to issue an advance notice of proposed rulemaking to solicit industry comments on whether a ban on unsafe blood devices is necessary. In denying a Public Citizen petition requesting an immediate ban on the devices, the agency also said it will ask if labeling changes are needed and whether the agency should take action to reduce needlestick injuries. FDA said it shares the Ralph Nader organization's concerns about such injuries but does not believe a product ban is needed.

FDA told Public Citizen it does not yet have sufficient information to justify such a ban on the devices. The agency also declined to develop a performance standard incorporating the design criteria requested by the petition. Instead, it will invite interested persons to submit any data to FDA that will help develop a standard. In addition, it will invite organizations to develop their own standards.

The most effective risk-reduction efforts, FDA said, will result from user education and training, increased use of products that have risk reduction features, and compliance with OSHA's existing blood-borne pathogens standard. Additionally, it intends to hold a public meeting following the comment period to gather information on the topic and revise and reissue its August 1996 guidance, "MDR Guidance Document No. 3—Needlestick & Blood Exposure." FDA also said it will review a previous safety alert to healthcare workers on the risk of injuries to determine if it should be rewritten, among other measures.

In its November 2000 petition, Public Citizen said needlestick injuries should be minimized to prevent the spread of infectious diseases such as HIV and hepatitis. It said that healthcare workers sustained over 500,000 injuries from needlesticks a year. "An estimated 100 to 200 healthcare workers die annually from hepatitis B," the petition said, a number that does not include deaths from HIV and other blood-borne pathogens.

Public Citizen requested that FDA ban unsafe blood collection materials and require additional labeling that recommends not using the equipment for standard blood draws. It also asked FDA to issue five criteria as performance standards, among them fixed safety features providing a barrier between the hands and the needle after use and a feature allowing the worker's hands to remain behind the needle at all times.

Needle Destructor Needs 510(k)

FDA has recommended that PDC Innovative Industries (Coral Springs, FL) submit a 510(k) for its Hypo-Pro 2000 device-decontaminating product. The company met with FDA in September because the device's construction raised issues relating to the type of premarketing application it should file with the agency.

The Hypo-Pro 2000 is a container for use in a medical setting that holds contaminated, disposable syringes and other smaller devices after use on a patient. When filled, the container is subjected to very high temperatures followed by a compacting process that reduces the materials to the size of a U.S. quarter.

Ortho Development Cited for MDR Failures

A four-day FDA inspection of Draper, UT–based Ortho Development Corp. in June found significant quality system and GMP deviations at the device maker's facility, according to an August 22, 2001, warning letter. In the letter, FDA also said the orthopedic hip, knee, and spinal implant maker failed to submit reports under the medical device reporting (MDR) regulation.

For example, Ortho Development did not report two injuries caused by its B2 bipolar cup hip system. FDA said the firm should have reported these because both events required "medical intervention to preclude permanent impairment of a body function." The agency also charged that the company did not report a recall of the product initiated in February 2000.

FDA's warning letter said the company did not have adequate corrective and preventative action procedures. "For example, your firm does not conduct failure investigations or determine the root cause of complaints of defective and returned devices," the letter charged.

FDA's letter also said that Ortho Development had failed to validate processes that could not be fully verified by the firm's inspection or test methods. In addition, FDA said the company did not conduct periodic management reviews of the firm's quality system, and did not perform adequate design control reviews.

Cooper Companies Also Cited

Cooper Companies (Lake Forest, CA) failed to report at least 19 complaints of device failure to FDA, according to a recent warning letter issued to the company. The letter said the agency considered the device to be misbranded because the firm had failed to furnish information required by law.

According to the letter, an inspection of the company's Shelton, CT, facility found that the firm, which manufactures the HUMI Harris-Kronner Uterine Manipulator Injector, had records of at least 20 incidents of breakage where the distal tip of the HUMI device broke off in use (inside the patient). Only one of these was ever reported to the agency, the letter said. The letter also told the company it must report any still-unreported instances of tip breakage and report any such event in the future as required.

James G. Dickinson is a veteran reporter on regulatory affairs in the medical device industry.

Copyright © 2001 Medical Device & Diagnostic Industry

Larry R. Holden Named to Lead MDMA in the Coming Year

Originally Published MDDI November 2001

Larry R. Holden Named to Lead MDMA in the Coming Year

Named as the new MDMA president, Larry R. Holden will assume office at the end of the years.

The Medical Device Manufacturer's Association (MDMA) has selected Larry R. Holden to serve as the next president of the association. Holden will replace Stephen J. Northrup, who plans to step down at the end of the year to pursue other opportunities.

Noting some of the key achievements of MDMA under his leadership, Northrup says, "I'm particularly proud of what we've done during my tenure to open up the Medicare coverage decision-making process and to build a new partnership with FDA based on implementation of FDAMA."

He adds, "I'm glad to see that our campaign for fair and equitable market access for entrepreneurs is starting to have some effect on the way the major group purchasing organizations conduct their business, though they've still got a long way to go before we'll be convinced that they've truly changed and aren't just making cosmetic alterations to try to stave off government investigations or actions."

Although Holden is originally from Colorado, he has worked in Washington, DC, since 1989. He has held several congressional and political advocacy positions. Most recently, he served as chief of staff for Congressman Christopher Shay (R-CT). Holden also worked on the staff of former Senator Hank Brown (R-CO), where he was responsible for national security issues.

Holden states, "I originally came to Washington because I hoped to make a difference in people's lives. By pursuing [its] agenda to eliminate burdensome regulations, streamline reimbursement systems, and ensure open access to closed healthcare marketplaces, [MDMA] will ensure public health is served by providing rapid delivery of cutting-edge medical technologies to the market. I look forward to this new and exciting opportunity."

Copyright ©2001 Medical Device & Diagnostic Industry