Zimmer Biomet: Managing Our Reactions to Supply Disruptions
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.