Dj Ortho
Written and produced by James Buchanan & Patrick Harlow
DJO LLC uses a Kaizen-Blitz technique for quick strike continuous improvement in making leg and ankle braces
Sports have become an all consuming passion for more and more Americans. That fact has brought numerous health benefits, but also more than a few knee and ankle injuries.
Providing braces for the knees and ankles of this increasing number of sports enthusiast has grown into a multi-billion dollar industry.
“The situation we are in is that we are in a highly fragmented market where a lot of competitors tend to specialize in one particular modality,” says Jerry Wright, director, corporate quality assurance and operational excellence for DJO LLC. “We, on the other hand, work across all of the modalities particular to the non-operative market for orthopedic products.”
Rich Gildersleeve, VP of product development, adds, “By non-operative we mean to say that there are companies such as DePuy, Stryker, and Zimmer that work in the operative, or more invasive, side of the industry — where their products are implanted into the body. Our products are non-operative in nature and all of the modalities are external to the body.”
Begun in the garage of Philadelphia Eagles football player Mark Nordquist in 1978, the company has grown into a multi-site manufacturer specializing in rehabilitation and regeneration products for the non-operative orthopedic and spine markets.
The company’s headquarters is based in Vista, Calif., where some product manufacturing occurs. The bulk of manufacturing, though, is done at the company’s award winning facility in Tijuana, Mexico. DJO also has sales offices in Europe.
The company markets its products under the brand names DonJoy (the original brand developed by Nordquist and other company founders in his garage in Carlsbad, Calif.), ProCare and Aircast, which was acquired in 2006.
“DJO’s key customers are grouped by distribution segments of the company, which are generally the three brands the company owns,” says Wright. “The high profile segment is that of orthopedic surgeons and patients for which a product is shipped directly to the doctor’s office or clinic. This direct customer segment is primarily serviced by the
DonJoy brand name products.
“The largest segment for customers is those who receive products by third party distribution. These are usually hospitals, large purchasing or healthcare organizations, and other associations. The products that service this market are the ProCare and Aircast brand name products.”
Examples of the latter segment is the company’s long-term supply contract with Premier Purchasing Partners, part of a healthcare alliance owned by more than 200 not-for-profit hospitals and healthcare systems. DJO also has a long-term contract with Consorta, which represents more than 520 acute care facilities, 300 extended care facilities, and 1,650 non-acute care sites.
The company’s rehabilitation and injury prevention products include rigid knee braces, ankle stabilizers, post-op bracing, patellofemoral bracing, back braces, wrist and elbow bracing, cold therapy, and pain management products. Among the company’s pain management products is the Accufuser Plus, which with a bolus provides a continuous infusion of local anesthetic directly to the surgical site.
The company also produces regeneration products that includes bone growth stimulation devices to treat nonunion fractures and as an adjunct therapy after spinal fusion surgery.
“There is a $3 billion market worldwide that we compete in, and we are at about the half billion dollar level, so we have approximately one-quarter of the market, which makes us the biggest player by far,” says Gildersleeve. “We handle about 13,000 SKUs as far as our product line goes, but we are trying to get that down to about 10,000 as there are a number of products that are tying up inventory and production that we could eliminate.
Doing this would increase our operating efficiency and reduce our total inventory in raw and finished goods.”
Wright adds, “The average number of SKUs for companies in our industry is around four to five thousand, so we are more than double that average.”
Further, from 2004 to 2005 the company’s revenues grew 11.8 percent to $286.2 million. In the first quarter of 2007, revenues came in at $114.9 million, according to a press release issued by DJO.
Product Development
According to Michael Chunka, manufacturing manager for DJO, the company’s multi-building campus was consolidated in 2006 into an 110,000 sq. ft. world headquarters. The company’s domestic distribution center was also relocated to a 100,000 sq. ft. facility in Indianapolis, Ind.
This location, in tandem with the Tijuana facility, is also an award winning production site.
“We are vertically integrated in our manufacturing processes, which allows us to go from product concept to prototype to a marketable product in a relatively short amount of time,” says Chunka.
While the Tijuana facility is singularly focused on manufacturing, the Vista location is the heart of the company’s new product development and continuous improvement efforts. Testing, design, and industrial design are all done in-house at this one facility through a number of processes that are all designed with a focus on lean techniques.
Each new project is assigned to a core team, made up by members of the design engineering, manufacturing, marketing, quality and regulatory groups. These core teams are supported in their efforts by other segments of the company such as finance, purchasing, and tooling.
Further, each team is responsible for every aspect of the project from start to finish, which means it has control of tasks such as design goals, schedules, and status reviews.
Coordination of the teams on a management level is done by having every core team’s project schedule tied to a quarterly department goal, which in turn is connected to the company’s yearly strategy and objectives. This line-of-sight management process is intended to provide focus, meaning and accountability to the core groups.
The next— and arguably most important — tactical strategy initiative is its use of a lean continuous improvement methodology designed to reduce waste throughout the organization. Fundamental to this lean strategy is the use of “quick strike” events, known as Kaizen-Blitz. Kaizen is Japanese for continuous improvement and Blitz is short for Blitzkrieg.
According to Wright, this process transcends the company’s product development initiatives and is the driving force behind the company’s continual improvement program.
“We spend a lot of time on these,” he says. “Every week we are doing Kaizen-Blitz’s on some process within our company.”
If a process in the factory or office is not operating at an optimum level of efficiency, any employee may call a Kaizen-Blitz. It is a procedure where every detail of every function of the process is broken down into its distinct steps to search for inefficiencies and ways to reduce that waste.
The process is facilitated by a trained coordinator, and a Kaizen-Blitz team is made up of several process experts along with several process outsiders. The work begins with a mandate, which details aggressive and quantifiable goals for the improvement initiative.
Actions are brainstormed and implemented within one to three days, which bypasses weeks and months of analysis (paralysis by analysis), recommendations and management approval loops.
As a practical example, prior to a Kaizen-Blitz doctors would tape record their notes used by the company for appeals to Medicare regarding coverage of the company’s products, says Wright. These tapes would have to be sent to transcribers that would charge the company a fee for each one.
During a Kaizen-Blitz the company realized that voice recognition software could cut the transcriber from the equation, speeding the production of the appeals and cutting costs.
In 2005, use of the Kaizen-Blitz program led the company to release 24 new products, all on time and under budget with 30 percent less engineering and technical resources than in 2001. This in turn led to the company being presented with the 2006 Outstanding Corporate Innovator award by the Product Development and Management Association.
With the Kaizen-Blitz program the company also seeks to concentrate on value-added results. The company defines value-added as any activity that transforms material or knowledge into a product feature that meets the customers’ needs.
“If you buy a bicycle online it would be a value-added benefit to receive it assembled, as opposed to a box full of parts,” says Wright. “It would also be a value-added benefit to have it packaged in a nice looking box rather than a ratty bag with holes in it. These are value-added processes – assembling the product, shipping it safely, and packaging it well – that the customer sees and is willing to pay a little extra for.”
“What we are looking for are processes the customer doesn’t see, processes that either add costs or reduce efficiency,” he adds. “For example, we have to file regular reports to the SEC [Securities and Exchange Commission] because we are a publicly traded company, but it doesn’t mean we have to produce them in fancy packaging and add other elements that increase the cost and add nothing to the function or effectiveness of the reports.”
For DJO, value-added benefits include customer needs determination, design, testing, and tooling. While non-value-added issues include poorly facilitated meetings, iterative methods of problem solution, and overly broad signature approval requirements.
The challenging aspect of this is held in Wright’s example above – which is processes that are necessary functions, but do not add visible value to the customer. The solution is to do these necessary functions as efficiently as possible and perform Kaizen-Blitzes on them regularly.
Technology is also a critical aspect to DJO’s new product development and continual improvement capabilities. Technology is your friend so use it as such, he says.
On the front end of product development the company uses solid modeling coupled with an integrated Finite Element Analysis package. Add to this that industrial design is done in-house, the aesthetics of new products are fleshed out at the same time functionality is being developed.
Rapid prototyping tools are also critically important, and the center of these is the Selective Laser Sintering (SLS) machine by 3D Systems, because it has allowed for dramatic improvement in the mechanical properties of rapid prototypes.
With the SLS machine, rather than being limited to look and fit testing, prototypes can go through rigorous field tests because the machine – within a day or two – can produce three-dimensional prototypes, parts, molds, tools and casting patterns. According to 3D Systems’ website, by skipping the tooling step, SLS machines can create parts for prototypes directly from a CAD model.
“Suppose we are field testing on shapes for an ankle brace, which is a fairly complex shape as there are a number of undercuts and contours to fit around,” says Gildersleeve. “If we find an issue, a place where there is ware on the ankle or the brace, we can go to a computer and redesign some new contours and send those to the SLS machine and have a new part the next day.”
“Also, the company is moving toward SLS generated steel injection mold inserts,” notes Gildersleeve, “which the machine can create in one or two days, much less than a week, whereas before to create these casts, which are big steel molds, we could produce them in about six weeks if it was for a less complex part, or three to six months for one with more complexity.”
The company also has what it calls its “idea factory,” which is the biometrics and engineering department. This one area has received more than 100 patents.
Highly specialized software allows this area to explore ideas in a virtual environment. From there, prototypes are developed and tested on mechanical surrogates and in field tests.
The company’s Vista campus also houses its Clinical Education and Research Facility (CERF), which is open to surgeons and clinicians seeking continuing education on new procedures. The lab provides up-to-date arthroscopic surgical bays and cadaver research.
The manufacturing facilities in both Mexico and Vista are Lean cell based in bright open facilities. In the cells, team members take raw materials and produce completed products in one compact cell. Quality control is taken care of by each cell at every step of the manufacturing process.
With all that is happening on the manufacturing side, the company hopes to increase its sales.
“In the space we are working in, we are a globally oriented company and we are actively seeking to move into or expand our presence in China, Japan, some South American countries and Australia,” says Wright. “Just to give you a glimpse into why we see this as a very viable growth strategy; a few years ago our income derived from international sales was in the area of five to 10 percent of total sales whereas now it is approaching 30 percent of our total income.”
“The world is a lot bigger than just the United States,” adds Gildersleeve. “Our growth rate is high internationally and there is a lot of room left for us to grow. In the short term, we are looking to expand our growth opportunities in Europe and Asia over the next year or two in these areas where we are already fairly well established. But for the long-term, we are looking at expanding our market share in Australia and South America.”
As part of the company’s domestic marketing efforts, it has partnered with a number of sports organizations, including the U.S. Ski Team and the U.S. Snowboard Team. In addition, it is the official medical supplier to the Canadian Freestyle Team, and two of the company’s products have received commendation from the Arthritis Foundation due to the ease of use.
The company also has a number of high profile athletes endorsing their products. These include NFL quarterback Carson Palmer of the Cincinnati Bengals, big wave surfing champion Garrett McNamara, motocross rider Brett Metcalfe, aerial skier Joe Pack, and freestyle mogul skier Jillian Vogti.
“Moving forward the company is continuing to look for accretive acquisitions,” says Gildersleeve. “The company hopes to acquire a new company about every year depending on the size of the company and the work it will take to integrate it to DJO.”