iSixSigma

More than Profits

Last week GlaxoSmithKline agreed to pay $750 million to settle charges related to bad products. In their press release, they stated:

“We regret that we operated the Cidra facility in a manner that was inconsistent with current Good Manufacturing Practice (cGMP) requirements and with GSK’s commitment to manufacturing quality. GSK worked hard to resolve fully the manufacturing issues at the Cidra facility prior to its closure in 2009 and we are committed to continuous improvement in our manufacturing processes. Our commitment to compliance with cGMP is demonstrated by the fact that we have not received an FDA warning letter at any plant since the Cidra facility was cited in July 2002.”

As a consumer, I wonder, “Can I still trust them in product quality and safety?” As an investor, I would ask, “Is this a problem of not following cGMP at one factory, or something bigger?” As a Lean Six Sigma practitioner, I ask, “Are continuous improvement in manufacturing processes and compliance with cGMP sufficient to restore customer confidence? Or is something else missing?”

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What can we learn from this and recent J&J recall crisis? The two stories are remarkably similar. I thought Fortune’s reports on J&J (Why J&J’s headache won’t go away in August and Johnson & Johnson CEO Bill Weldon’s painful year in September) were quite thought-provoking, especially in contrast to their Tylenol recall in 1982.

What do they mean to Lean and Six Sigma? Lean Six Sigma can improve a product, a process, and even a person. However, by itself, Lean Six Sigma cannot improve an organization if not applied on a foundation of principles and a core ideology led by its leaders and shared by all stakeholders. This is one of the main insights in the book Built to Last by Jim Collins & Jerry I. Porras.

It’s challenging to sustain the improvement of a process. It’s harder to sustain the performance of an outstanding organization for years and even decades. In his more recent book (How the Mighty Fall), Jim Collins revisited some great companies struggling to sustain the historical performance, described the stages and symptoms of a decline, and suggested actions to prevent or reverse it.

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While we are disappointed by how J&J and Toyota handled quality and their recent recalls, I see good examples as well.Abbott Nutrition recently announced a recall on their Similac powder formula that I had.

I was impressed by how well they communicated and managed the entire process. An email was sent to consumers, and posters on grocery store shelves explained the product’s recall. After I heard of the news, I went to their web site specifically for this recall and entered the product code on the container. It confirmed that mine was being recalled and asked for my address for sending back the product and receiving a refund. Within a few days, I received a pre-paid FedEx box with detailed instructions for mailing the package, color charts showing what specific products were recalled and alternative products to use, and a letter assuring their commitment to quality from their SVP. A refund check and $15 coupon for products arrived in a few days. The entire experience was not perfect, but it was quick, simple, and pain-free. I can see that they put thought, energy, and resources into this – it was a priority.

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Mistakes happen. Things can go wrong. But it is how we respond to the mistakes and bad consequences that shows our character and builds trust in our customers, employees, and investors. I still have confidence in these great companies and hope they learn from the lessons and follow J&J’s credo:

“We believe that our first responsibility is to the doctors, nurses, hospitals, mothers, and all others who use our products.”

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