Sever Hall Consulting Group Instrumentation Laboratories Medical Device Manufacturing Process December 9, 2010 Presented by: Sever Hall Consulting Group Rita Distel Dustin Esposito Kathryn Holmes Winston Kuo Michael Snitkovsky Davide Zocco

Background Instrumentation Laboratory (part of Werfen Group) Headquartered in Bedford, Massachusetts. Founded in 1959 has operations worldwide. Market leader in diagnostic instruments for real-time blood testing - 40% market share. Primary stakeholders are hospitals. Innovative technology - GEM Premier 4000 cartridges. 285,000 GEM 4000 cartridges projected to be sold in 2010.

Project Scope Background: GEM 4000 cartridges are used during surgery to measure patients physiological parameters and provides real-time information to a surgeon. Scope: Identify the root cause of the source(s) of fiber contamination of cartridge. Propose solution(s) to mitigate fiber contamination. Definition: Intubation is the process of inserting a tube, called an endotracheal tube, into the mouth and then into the airway. This is done so that a patient can be placed on a ventilator to assist with breathing.

Impact of defective cartridge Actual incident: 10/16/2010: Infant at local hospital was intubated due to a cartridge malfunction – improper/inaccurate Oxygen reading. Cartridge evaluation: Fiber contamination on Oxygen sensor.

Impact of Fiber Contamination Cartridges returned by costumer (35%) Cartridges manufactured/yr: 285,000 Defective cartridges/yr: 99,750 Defective cartridges due to fiber contamination/yr: 24,938 Loss: $ 2M/year $80.20/cartridge

Stakeholders

Impact of Key Stakeholders Name Interest Influence Project Support (Verbally) (Actions) (Desired) Expectations Ways to Manage Expectations Michael Project Manager High Strong Plan, schedule and coordinate detailed phases of the engineering work in a multi-departmental initiative to reduce manufacturing variability and increase quality. Mark Director of Operations Needs to gain influence with engineers to validate proposed changes and provide support to obtain financial backing. Doug VP of Operations Weak Provide financial backing and influence from company owners Need to find a more effective method to show a need to spend money to improve the process. Doug expressed strong concerns about the quality but feels that R&D is responsible to propose changes. R&D is currently running an 18-month study. Werfen Group Parent Company, Sponsor Medium Provide financial backing The company is financially stable and profitable. Name Interest Influence Project Support (Verbally) (Actions) (Desired) Expectations Ways to Manage Expectations Michael Project Manager High Strong Plan, schedule and coordinate detailed phases of the engineering work in a multi-departmental initiative to reduce manufacturing variability and increase quality. Mark Director of Operations Needs to gain influence with engineers to validate proposed changes and provide support to obtain financial backing. Doug VP of Operations Weak Provide financial backing and influence from company owners Need to find a more effective method to show a need to spend money to improve the process. Doug expressed strong concerns about the quality but feels that R&D is responsible to propose changes. R&D is currently running an 18-month study. Werfen Group Parent Company, Sponsor Medium Provide financial backing The company is financially stable and profitable. Name Interest Influence Project Support (Verbally) (Actions) (Desired) Expectations Ways to Manage Expectations Michael Project Manager High Strong Plan, schedule and coordinate detailed phases of the engineering work in a multi-departmental initiative to reduce manufacturing variability and increase quality. Mark Director of Operations Needs to gain influence with engineers to validate proposed changes and provide support to obtain financial backing. Doug VP of Operations Weak Provide financial backing and influence from company owners Need to find a more effective method to show a need to spend money to improve the process. Doug expressed strong concerns about the quality but feels that R&D is responsible to propose changes. R&D is currently running an 18-month study. Werfen Group Parent Company, Sponsor Medium Provide financial backing The company is financially stable and profitable. Name Interest Influence Project Support (Verbally) (Actions) (Desired) Expectations Ways to Manage Expectations Michael Project Manager High Strong Plan, schedule and coordinate detailed phases of the engineering work in a multi-departmental initiative to reduce manufacturing variability and increase quality. Mark Director of Operations Needs to gain influence with engineers to validate proposed changes and provide support to obtain financial backing. Doug VP of Operations Weak Provide financial backing and influence from company owners Need to find a more effective method to show a need to spend money to improve the process. Doug expressed strong concerns about the quality but feels that R&D is responsible to propose changes. R&D is currently running an 18-month study. Werfen Group Parent Company, Sponsor Medium Provide financial backing The company is financially stable and profitable. Name Interest Influence Project Support (Verbally) (Actions) (Desired) Expectations Ways to Manage Expectations Michael Project Manager High Strong Plan, schedule and coordinate detailed phases of the engineering work in a multi-departmental initiative to reduce manufacturing variability and increase quality. Mark Director of Operations Needs to gain influence with engineers to validate proposed changes and provide support to obtain financial backing. Doug VP of Operations Weak Provide financial backing and influence from company owners Need to find a more effective method to show a need to spend money to improve the process. Doug expressed strong concerns about the quality but feels that R&D is responsible to propose changes. R&D is currently running an 18-month study. Werfen Group Parent Company, Sponsor Medium Provide financial backing The company is financially stable and profitable. Click through slides to see each row highlighted individually.

Project Timeline and Tasks The first step in creating a accurate and achievable Project timeline was to define the Scope and determine Goals and Objectives. Having a solid understanding of what we were trying to accomplish allowed us to Detail out the requirements and test plan. Using these documents we were able to capture the necessary tasks, assign resources and ensure the schedule was realistic. The team reviewed the timeline in detail internally and with the customer. This limited the risk of scope creep. The team stayed focused on the Critical Path to ensure we met our objectives. Because we took the time up front to plan the work we had no changes to schedule and there fore no Change Management. The project stayed on track, within scope and met the deadlines. 8

Project failure may lead to loss of Market Share Risk Analysis High Risk Identify root cause but not able to determine satisfactory solution. Resource constraints to identify and complete testing. Medium Risk Failure to identify root cause of fiber contamination. Not able to complete the project within the required timeline. Low Risk Identify root cause but not able to obtain financial support to implement the changes. Training required to implement changes maybe too time consuming or IL may be required to modify employees' skill set. Automation equipment does not exist in market place and would need to be custom designed. Required changes may render product no longer financially feasible. Project failure may lead to loss of Market Share

Process Mapping

Performance Metrics What do we measure? Fibers Colorful Transparent Clothes Cardboard boxes Workers (hair, make-up etc..) Transparent Manufacturing process Dust Ventilation system

Implemented Pilot Testing Phase I - Hygiene & Work Environment Hypothesis: Colorful fibers from clothing and paper fibers from cardboard boxes are transferred to the product Wear jump suits instead of lab coats Gloves must be worn at all times No make up/lotions policy Beard nets Cardboard boxes cannot be stored near the cleanroom Sweaters and jackets cannot be stored near the cleanroom Phase II - Work Environment Hypothesis: Frequently opened door allows dust particles to enter the cleanroom and contaminate product Process glass disks in the hood Relocate operation further away from the door Phase III - Process Change Hypothesis: Operators are rushed which may negatively impact quality Decrease batch size by 10% Eliminated rejects due to colorful fibers during in-process inspection Significantly reduced rejects due to dust particles during in-process inspection, from 5.5% to 1.2% The reject rate during in-process inspection increased by 11%

Impact of short-term “pilot study” Defective cartridges due to fiber contamination/yr: 24,938 (8.8%)/ (20,699)(7.3%) $ 2M/year (loss) $ 1.66M/year (loss) Cartridges returned by costumer (35%) Overall fiber contamination rate decreased by 17% upon testing by the simulation lab, translating into potential ~$340,000 annual savings.

Follow-up Retraining of personnel Review current inspection criteria (quality control) and modify SOP/workstation based on more data in conjunction with quality control department Modify new employee application guidelines Conduct brainstorming exercise to identify further process improvement opportunities

Questions?