Manufacturing Processes Making The News

Manufacturing has been in the news.  Not that we are making more things and employing more people, but, that a number of well known companies are having quality issues with their products.  Major players like Johnson & Johnson, which had numerous recalls of many of its OTC products, Toyota with numerous recalls, the Peanut Corporation of America (PCA), a major supplier of peanut butter to institutions and food manufacturers and the recall of over two million cribs by seven manufacturers in 2010 alone have made the news!  These recalls are just a few that are easily remembered.  There isn’t a day that goes by that the FDA does not issue a notice of a voluntary recall of something, either food, drugs or a medical device and the USDA’s Food Safety and Inspection Service website maintains a listing of both current and archived recalls.  How is all of this happening?

Our first thought is these companies lack Good Manufacturing Practices (GMP) but that may not always be the case.  Many companies’ problems originate from their supply chain... a parts or material supplier or in the food industry, the farmers themselves.  Some can be remedied easily while other solutions are much more complex.

McNeil Consumer Healthcare, Division of McNEIL-PPC, had to recall product that contained a musty odor.  An investigation determined that the smell was the result of the breakdown of a chemical that is used in the manufacture of its shipping pallets.  In addition to the product recall, McNeil Consumer Healthcare ceased shipping products produced using materials shipped to them on the pallets and told their suppliers to discontinue the use of those pallets when shipping to their plants.

More and more we are seeing manufacturers set requirements for their suppliers. Lean manufacturing principles are utilized in the many industries and often Lean companies demand their suppliers also implement Lean in order to continue doing business with them.  Lean saves an average of 20% of the time, effort, or costs associated with manufacturing processes so requiring its suppliers to go Lean ensures a company is getting a well priced and well manufactured product from them.

In spite of the stringent regulations of the pharmaceutical industry many companies still run into trouble.  A major pharma company is closing one of its plants in Puerto Rico.  Although the facility is being closed due to declining sales of its product, the plant has had a history of quality issues.  The company had been obligated to invest in new manufacturing equipment and training for the facility under an agreement with the FDA to meet federal quality standards.  FDA inspections in 2004 and 2005 found the company had not done enough to address complaints about one of its products.

An FDA inspection recently found quality control problems at three manufacturing facilities by another major pharmaceutical company.  Originally reported in the Washington Post, Federal officials inspecting one of the plants documented problems with the company’s manufacturing practices, including sloppy record keeping, failure to clean and maintain equipment and lack of an established laboratory standard to ensure drug quality.

The impact of these recalls and shut downs are costly. Natasha Singer reported in her article in The New York Times, the recent recall and shut downs cut Johnson & Johnson’s sales by $200 million and its earnings by 5 cents a share in the second quarter.  According to the article, CFO Dominic J. Caruso, during a conference call, estimated the annual sales would decline by $600 million as a result of a plant closing.  

As a result of its recent experience, J&J announced that it planned to revamp its quality controls, creating a single framework for its drug, medical devices and consumer healthcare divisions.

Standards have become synonymous with quality.  ISO is the granddaddy of all standards.  ISO provides clear identifiable references that are recognized internationally.  The standards facilitate trade through enhanced product quality and reliability, greater interoperability and compatibility, greater ease of maintenance and reduced costs.  ISO certification provides assurance that the product meets established standards, just as in the U.S. UL Marks indicate products have been tested and meet standards for safety.

ISO certification and Lean methodologies have almost become requirements for a company to successfully compete in certain global markets.  Companies that have invested in themselves by becoming certified and implementing Lean practices want to be certain that they do not have problems as a result of their suppliers’ practices or their own practices.  They wish to be the best supplier in their markets.  Some do this before any problems occur while others do so as a result of manufacturing problems.

Chipmaker ANADIGICS, is both a Lean manufacturer and ISO certified.  The company was having problems with yields and quality excursions so introduced Lean to address those issues.  Now the company intends to roll out Lean to its supply chain and business partners as part of its commitment to continuous process improvement. 

As Director of the American Metal Stamping Association, now known as the Precision Metalforming Association, then HK Metalcraft’s Vice President Raymond Hopp visited Japan in 1981.  Hopp was immediately impressed with the quality controls that were in place there.  Seeing the implications of it, Hopp set out to incorporate those principles into his company. When ISO certification became prominent in 1994, HK Metalcraft was on the forefront and was certified two years later in 1996.  The company has been current ever since.  It’s continuous improvement process included adding QS9000 and ISO/TS 16949 certification (specific to the automotive industry) and Lean manufacturing to its TQM toolbox.  HK’s successful implementation of TQM was a result of genuine commitment to it by management and a complete buy in from its workforce.  When HK started the process they experienced a high reject rate, which was inline with industry standards at the time. Recently, HK had shipped approximately 170 million pieces with zero defects over a thirteen month period. 

Based on the recalls we have been reading about, it would be wise for more companies to implement the measures that Anadigics and HK Metalcraft have adapted to assure they are delivering a quality product to their customers.  Not only does TQM impact product, it creates a culture of quality within the company which is the foundation for good manufacturing practices.  If you are interested in reading about Anadigics, check out its success story in this newsletter or visit success stories on our website.  To learn more about how HK reached a zero defect rate watch for our December issue of Manufacturing Matters.

If you are evaluating your manufacturing processes and considering introducing ISO or Lean into your organization give us a call at 973-998-9801 or email manufacturingmatters@njmep.org.  We’ll be happy to answer any questions you may have.


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