Zimmer Biomet: Managing Our Reactions to Supply Disruptions

By: Chase Maser

In 2016, Zimmer Biomet, one of the largest orthopedic companies in the world, was hit with a series of violations from the Food & Drug Administration (FDA) for issues with quality control and their overall supply chain. 

As a result, market growth levels fell, their CEO at the time, David Dvorak resigned, and the following year, the company spent $170 million to optimize their supply chain and manufacturing systems at their main campus in Warsaw, IN. However, fast-forward to two years later and Zimmer Biomet has made enhancing operational efficiencies their main priority under the guidance of their new CEO, Bryan Hanson. 

Altogether, Hanson explains that their approach to managing their reactions to supply disruptions involves a three-step process

First, our supply recovery efforts have continued on-schedule and without interruption over the past [few years]. Second, we've also de-risked some of our key recovery milestones as time has progressed. And finally, we will benefit from the recent additions of high-level leadership and operations.

Following FDA Regulations and Managing Supply Recovery

Along with making a $170 million investment for improvements on their supply chain, former CEO, David Dvorak, claimed that poor demand planning and production planning contributed to the FDA's involvement of sending form 483 their way in 2016. 

According to the FDA's investigation, there were 14 observations made in the form that required immediate attention. Primarily, these violations included technical inefficiencies within Zimmer Biomet's Warsaw manufacturing center, as well as safety issues involving products that may not have been thoroughly sterilized and supply chain managers not properly monitoring procedures to ensure safety.   

Now in 2019, substantial progress has been made to manage supply chain recovery under the guidance of Hanson's two-year recovery plan.  Such areas of focus include:

             Reducing backorders from the previous year

             Increasing safety stock levels

             Hiring new talent and leadership roles for manufacturing and operations teams

             Rebuilding trust with the company's commercial organization and fortifying supply stability

More than anything, Hanson has stressed the importance of working alongside the FDA and taking their warning as constructive feedback to help steer Zimmer Biomet in the right direction. 

Setting Goals and Milestones

With a strategic plan in place for their supply chain recovery process, the next step to mitigating supply chain disruptions involves setting goals and milestones to gauge progress. 

By upkeeping communication with the FDA, Zimmer Biomet makes it a point to set realistic goals and milestones to ensure quality remediation. Overall, this involves a wholistic strategy of maintaining "patient safety, quality, and integrity [as] guiding principals of [the] organization and [continuing] to put resources behind this effort," Hanson explains. In addition to prioritizing these standards, another important goal for the company is to drive an overarching company culture that inspires sustainability and quality supply chain management throughout every organization involved. 

For instance, one of the strategies that Zimmer Biomet deploys is a questionnaire that they distribute to suppliers, asking them how they handle risk management throughout their infrastructure. Based on their answers, Zimmer Biomet will either assist them with developing a successful plan or find ways to amplify their current one. Based on Zimmer Biomet's past experiences, running out of supply and not being able to meet client demands is the initial domino that causes everything else to fall. From a lack of supply, quality begins to suffer due to higher demand, and once quality is compromised, regulations are breached and success falters. 

That being said, implementing a strategic supply chain disruption plan is a critical part of Zimmer Biomet's goal of a revamped supply chain. 

Staying Innovative with New Leadership and Operations

Finally, Hanson's vision for Zimmer Biomet aims to reengage the organization with a clearer company agenda and overall global impact. 

"I want every team member to feel connected to our mission and culture, including the direct impact they have on patients' lives which is why this outreach will continue to be a top priority throughout 2019."

Staying innovative with new leadership and operations has a lot to do with pursuing this vision head-on. In fact, 70% of Zimmer Biomet's leadership roles are filled by new hires over the past year. Plus, Hanson has made it a point to host numerous mission ceremonies around the globe, interacting with thousands of team members to get everyone on the same page. 

"Last year, we also restructured our businesses to streamline reporting and decision-making with team members at every level driving a more agile and results-driven organization. These were obviously our priorities in 2018 and continue to be our focus areas throughout 2019."

Despite setbacks in the past, Zimmer Biomet has even managed to produce some new devices with FDA approval. Rosa Knee, a personalized knee system, is a robotic offering a part of the Rosa platform that plans to have future clearance for a partner-product called the Rosa Spine in the near future. The company has also released a new digital platform called mymobility that better connects patients with their physicians in real-time data tracking and communication. 

The goal is to provide robotic procedures alongside digital software platforms in order to make patient care more accessible and easy to understand. The initiative is even supported by Apple, suggesting that Zimmer Biomet is well on its way to building market growth and regaining a competitive edge after years of supply chain disruptions. 

Taking proactive measures to work with FDA regulations is set to be a hot topic at LogiMed 2019, taking place in March at the Rancho Bernardo Inn, San Diego, CA.

Download the agenda today for more information and insights.

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