Featured on the Lean Enterprise Institute website

4/1/2014 - Phase 2 has been featured on the Lean Enterprise Institute regarding our transformation utilizing the Lean Business System.

Phase 2 Medical Manufacturing, Inc., a precision medical device manufacturer, had been pursuing a lean transformation for nearly five years and had a lot to show for it. The company had small lot production, elements of visual management, ongoing training in lean tools for everyone, and an open, respectful culture. But when profit margins took a hit to meet a threat from offshore competition, the company had to get its lean effort to a much higher level – fast.

"It was time to make some big changes and make sure that they would stick," said Adam Prime, Phase 2 president.

The situation began when main customer Medtronic Advanced Energy (MAE) put out for global bidding the combined volume on single-use medical devices made by Phase 2 in Rochester, NH, and by an MAE facility just 25 miles away in Portsmouth, NH. The disposable medical device is used in various types of surgery.

"You had manufacturing here at Phase 2 that was being duplicated by manufacturing at Medtronic in Portsmouth," explained Prime. "We were making the same products." 

Duplicate production facilities meant duplicate engineering and management resources. Plus, the core competencies of each facility were sub-optimized. Portsmouth's forte was new product development while also manufacturing roughly 50% of the volume. Phase 2, the larger production facility, specialized in contract medical device manufacturing, but also did some new product development.

For MAE, combining production and seeking a global price from a single overseas source made sense in the highly competitive medical device manufacturing market. But it would also make Phase 2's life precarious. The loss of manufacturing MAE's products would have been a significant negative impact on Phase 2's revenue.

Losing the MAE work – and the companion jobs – "would have hurt," said Prime. "It would have been painful but we would have survived."

His biggest fear was that losing the MAE business would be the first step in losing everything to overseas competition. "Once that door is open, it's only a matter of time," he said.