Best practices to improve quality in medical devices...Best practices to improve quality in medical...
Transcript of Best practices to improve quality in medical devices...Best practices to improve quality in medical...
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Best practices to improve quality in medical devices
Presentation to MDICOctober 26, 2016
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This material will be used by McKinsey & Company during an open forum presentation to MDIC; it is not a complete record of the discussion. McKinsey & Company makes no warranties regarding the use of this material for any purposes
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2McKinsey & Company
Context and approach
We initiated a study to refresh McKinsey’s 2011/2 analysis of the cost of quality and research on practices that lead to improvement of quality and reduction of quality cost
The study uses 3 lenses to characterize cost of quality:
• Direct cost of ensuring good quality – the organizational costs involved in preventing or detecting quality issues, including quality personnel and operations staff involved in quality work
• Direct cost of poor quality – including labor costs to remediate failures and material and financial costs of internal and external quality failures
• Indirect quality costs – including revenue loss and risk exposure from non-routine compliance issues, as well as market cap losses
The study estimates capturable quality savings opportunities through applying a set of best practices to bring industry to median or top quartile performance levelsWe relied on a broad array of data sources in calculating quality costs and savings, including McKinsey’s POBOS quality benchmarking tool for devices, MDIC industry survey responses, annual financial reports and other publically-available data, and interviews with McKinsey and industry experts
Focus of today’s presentation
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3McKinsey & Company
Overview and impact
Quality improvement
practicesCase examples
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4McKinsey & Company
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We identified 5 broad sources of maturity that correlate with good quality
Product and process design
Operational maturity - people
Operational maturity - assets
Quality system maturity
Quality culture maturity
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3
4
5
SOURCE: POBOS Quality – 2016 update
CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
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5McKinsey & Company
Overview and impact
Quality improvement
practicesCase examples
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6McKinsey & Company
Device manufacturers can leverage different practices across these sources of maturity to improve
SOURCE: POBOS Quality – 2016 update
NOT EXHAUSTIVE
Product and process design practices:▪ Quality controls (CQAs defined and tied to CCPs)▪ Product simplicity (number of different materials in the BoM)Operational structural factors related to people, e.g., ▪ Sufficient production support staff▪ Better retention activities▪ Shared quality targetsOperational structural factors related to assets, e.g.▪ Spend on preventive maintenance and calibration▪ Investments in assets renewal Quality system maturity aspects:▪ Supplier usage of CQA and CCP▪ Fast but thorough investigationsCulture maturity aspects: ▪ Involving operations personnel in quality activities▪ Management presence and daily quality dialogue on shop floor
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3
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7McKinsey & Company
Product and process design: Critical to Quality Attributes and their link to Critical Control Points is a key driver of quality for medical devices
Disposables, N=24
Companies that have a high share of products with defined CQAs – and CCPs tied to those CQAs – have a significantly lower share of low quality product in the market
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SOURCE: POBOS Quality - 2016 update
5063
84
Poor performers
40%
High performers
Average performers
% of CQA products that have CCPs tied to the defined CQAs
4054
71 44%
Share of products that have CQA defined (percent)
= 3346
7053%
High performers
Poor performers
Average performers
% of products that have both CQA defined and CCPs tied to those CQAs
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8McKinsey & Company
Operational maturity - people: Improving employee retention and adding quality targets to incentives structure leads to better quality
Average employee turnover, %
Sites with higher product quality have lower employee turnover
High share of employees with quality targets correlates with better quality outcomes
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10.2
7.8
3.5
Average performers
Poor performers
+191%
High performers
Disposables and implants, N = 38
908030 602010 40 70 10050
4,000
3,000
2,000
1,000
0
5,000
0
Share of low-quality products, per 1 mm units
Employees with quality targets% of total FTEs
R2=0.47
Disposables, N= 24
SOURCE: POBOS Quality – 2016 update
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9McKinsey & Company
Operational maturity – assets: Healthy level of preventative maintenance results in fewer deviations
Well performing sites spend over 1.9% of their COGS on preventative measures related to equipment
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0.5 2.0 2.51.51.00 6.05.54.5
40
15
7.5
30
7.0
35
6.55.0
25
10
4.03.53.0
5
20
0
Number of deviations related to equipment, per 1 MM unitsDisposables, N=24
Preventative maintenance and calibration spend% COGS spent
The preventative maintenance spend must be balanced with appropriate levels of asset renewal (capital investment should be at 1.3-1.4x of annual depreciation)
SOURCE: POBOS Quality – 2016 update
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10McKinsey & Company
% of suppliers that have translated product CQAs into their processes and linked them to critical control points
Quality systems: Supplier quality as well as investigations speed and robustness are drivers of good quality
Disposables, N=24
Assessing suppliers based on their capabilities in relation to product CQAs, sharing CQAs with suppliers, and translating CQAs into supplier CCPs helps improve product quality
Too fast and too long investigations both drive high recurrence of non-conformances
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10.019.0
56.0
82%
Highperformers
Poorperformers
Average performers
6040 8020 100
80
0
20
4050
30
120
6070
010
% recurring non-conformances
Average time to close a deviation investigationDays
Implants, N=14
SOURCE: POBOS Quality – 2016 update
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11McKinsey & Company
Culture maturity: Higher involvement of non-quality employees in quality work helps improve quality outcomes
5.15.9
10.4
High performers
Average performers
51%
Low performers
Non-quality FTE involved in quality, % of total headcount
Quality work should be shared across multiple functions to deliver good quality outcomes
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Disposables, N = 24
SOURCE: POBOS Quality – 2016 update
CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
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12McKinsey & Company
Overview and impact
Quality improvement
practicesCase examples
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13McKinsey & Company
Device manufacturer launching a holistic quality improvement initiative after a corporate WL
Device manufacturer automating data collection to drive quality improvements
Examples of how companies have applied some of these best practices to reduce the cost of quality (1/2)
Field actions reduction from baseline
70%
10%CAPA cycle time improving annually
>8.5%
Cost improvement across the quality system annually
Product and process design▪ Replace manual systems with an automated MES▪ Remove human intervention and control over labelling
(key issue for field actions) through automation featuring MES and SAP
Global standardization of QMS, complying with global regulations and standards
Improving investigations and CAPA effectiveness product and process design▪ Implement a closed loop manufacturing execution
system (MES)– Early issue detection / prevention – Speed and visibility in finding / correcting root
causes– Continuous improvement current dashboards
for key metrics – Consistent data across plants and supply chain
Impact
Best practices applied
Production NCRs41%
Overall complaints58%
Workmanship complaints65%
Document errors100%
6-10%Operationimpact –productivity
41
1
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SOURCE: McKinsey
CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
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14McKinsey & Company
Examples of how companies have applied some of these best practices to reduce the cost of quality (2/2)
Device manufacturer using quality initiatives to drive manufacturing line improvements
Improving investigations and CAPAeffectiveness, product andprocess design▪ Thorough complaint investigation
and identification of critical quality attributes
▪ Appropriate design of process controls
▪ Improve the product by design and process changes
▪ Process automation to improve quality & repeatability
Product and process design
▪ Increase production through lean manufacturing
▪ Increase quality yield through analytics to understand yield loss, issue trees to prioritize resources, experiments to prove/disprove root causes, and acceleration of yield drivers
Device manufacturer facing shortages due to insufficient product yield
Throughput increase in less than one month
50% 18xProduct 2
Red. In footprint
50%
Product 2
75%
12xProduct 1
Incr. in capacity 210%
Product 1
38%
Reduced ppm complaint rate
Headcount reduction
Capacity and footprint improvements
Yield increase100%
Impact
Best practices applied
Device manufacturer leveraging a predictive model for parts failure
▪ Enhance product and process design through predictive model for parts failure– Predict probable part failures
and replacement needs ahead of planned maintenance and permit preventive maintenance
– Proactive replacement and maintenance, minimizing warranty costs in long run
– Focus on customer feedback by eliminating key dissatisfactions
20%
3%+
Field failure (breakage) and negative customer feedback rates fell significantly
41 1 3
1
Field service calls rate
Financial returns of initiatives (% of sales)
SOURCE: POBOS Quality – 2016 update
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Best practices to improve quality in medical devicesContext and approachSlide Number 3Slide Number 4Slide Number 5Device manufacturers can leverage different practices across these sources of maturity to improveProduct and process design: Critical to Quality Attributes and their link to Critical Control Points is a key driver of quality for medical devicesOperational maturity - people: Improving employee retention and adding quality targets to incentives structure leads to better qualityOperational maturity – assets: Healthy level of preventative maintenance results in fewer deviationsQuality systems: Supplier quality as well as investigations speed and robustness are drivers of good qualityCulture maturity: Higher involvement of non-quality employees in quality work helps improve quality outcomesSlide Number 12Examples of how companies have applied some of these best practices to reduce the cost of quality (1/2)Examples of how companies have applied some of these best practices to reduce the cost of quality (2/2)Slide Number 15