A Business Case for Culture of Quality
Living & Sustaining Quality & Culture
Medical Device companies are required to have a strong focus on Quality. Rarely, however does it translate into a Culture of Quality across the organization.
This is because having a Quality System and simply following the rules is not the same as living Quality in all activities, especially where they are not directly supervised. When Quality is embedded in the organizational Culture as a core value, it can be seen, heard and felt without explicit instruction or requirement. Further, there is spontaneous transfer of best practices between individuals, groups and departments without any intervention or facilitation. This according to a 2013 benchmarking study done by CEB, now a Gartner Company, which led to the development of a Culture of Quality Index, CQI.
In a true culture of Quality, employees not only follow quality guidelines but also see others take quality-focused actions, hear others talk about quality, and feel quality all around them.
Truth is that in most medical device companies, the focus of Quality is on Compliance. This is particularly common in companies who have experienced quality issues, where Quality is considered to be the domain of a specific organization, rather than integrated across the organization. A study conducted by the FDA in 2011 found several barriers to medical device quality, both within companies and within the agency’s compliance practices.
As a result, the Medical Device industry continues to struggle with quality issues even as the industry has enjoyed strong market growth. In a vicious cycle, focus on compliance has not necessarily led to either better regulatory compliance or improvements in product quality.
Nearly 50% of FDA inspections consistently result in requiring official or voluntary actions. In 2016, there were nearly 1200 recall events and nearly 2900 products recalled.
As the industry continues to face speed-to-market and cost pressures, recent mergers and acquisitions have made the job even more difficult. Quality and Compliance departments, generally seen as cost centers, face an even bigger squeeze on their budget. Rapid advancements in technology and ever-changing regulatory requirements are widening the skill gap among employees while training dollars are increasingly scarce. Employee morale and engagement is lukewarm at best, and just one step away from hitting a new low should a major quality event were to occur.
Not a surprise then that Leaders in Quality and Compliance face a dual challenge of keeping the ship afloat while trying to change course towards a more strategic direction. The business case for change is strong and offers a huge upside potential in real financial value. This according to a 2017 McKinsey study which estimates the total direct cost of quality to be approximately 6.8% – 9.4% of industry sales. Out of this, the recoverable costs are about 1.5% – 3.0%, which translates to about $6 - $11 billion per year.
The medical device industry’s direct cost of quality is about 6.8 – 9.4% of industry sales or $26 - $36 billion annually
But focusing on cost avoidance alone is not sufficient to inspire lasting change. Maturity in Operations, Quality Systems and Quality Culture are needed to sustain a truly high-performing organization.
How do we start? Creating a culture of Quality requires both a top-down and a bottom-up strategy.
Although Compliance cannot be compromised, there is a need to improve real product quality, not just to avoid product failures but to enhance and sustain customer experience. Least burdensome, risk-based compliance policies can be implemented in the near term to gain efficiencies, which can free up resources to focus on quality improvement projects. As a result, gains in both Compliance and Quality can be achieved, which in turn will improve credibility and inspire trust in the overall strategy.
At the same time, there needs to be a renewed commitment to Quality, starting at the highest level of the organization, then permeating across different functions. Often, this happens in the wake of a quality event or regulatory action, but soon it dissipates as near-term corrections are implemented to fix the issue. A review of the Quality Policy and its effectiveness in gaining organization-wide commitment may be necessary. When different departments share expertise and resources for quality-related projects, the culture begins to change. Cross-functional collaboration improves engagement and gradually the mindset changes from following Quality to living Quality.
Changing culture is neither easy nor fast. It is, however, the only way to realize and sustain market-leading performance in a hyper-competitive ever-changing business environment.