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Baxter Mountain Home: A Small-Town's Claim to World-Class Fame

Tue, 10/09/2001 - 7:27am
Rick Carter, Editor-in-Chief

Baxter Healthcare, the giant, Illinois-based healthcare-product manufacturer, runs other award-winning facilities, but its Mountain Home plant in northern Arkansas may be the most exceptional. Here's why.

Plant manager Vick Crawley matter-of-factly explains the numerous achievements of his Baxter Healthcare facility in Mountain Home, AR, as if he's done it many times before. Which he undoubtedly has. The plant's strengths -- 14 quality and operational awards since 1989; successful lean and kaizen-based initiatives; low employee turnover; technologically skilled, around-the-clock operations and maintenance teams -- have long made the small community of Mountain Home proud of its world-class employer. The fact that the plant just won the 2001 Shingo Prize for Excellence in Manufacturing only reconfirms what many have already come to believe about this facility: that it is one of the best-run in the country, if not the world.

The energetic Crawley, a 29-year company veteran with six years at Mountain Home, takes it all in stride.

"Our focus is on manufacturing and trying to meet our customer's expectations," he says, a process that is built on the plant's adherence to continuous improvement. "We want to always be thinking we can do it better tomorrow than we did it today. We want to be focused on our customers, and we want our employees to have ownership of the processes, as well as have employee satisfaction. They're an important part of our team and we need them to be successful."

Crawley and his team also follow a definition of quality that's centered on strict conformance to requirements. "If we do a good job defining requirements and we meet those requirements," he says, "we know we have a quality product. It's not debatable."

That guideline helps the plant's 1,633 employees turn out product quantities that top 500 million units per year, ranging from complex peritoneal dialysis kits to simple plastic connectors, and untold miles of pvc tubing. Among Deerfield, IL-based Baxter Healthcare's 40 international manufacturing facilities, the Mountain Home plant produces the most diverse product mix, which makes its achievements all the more meaningful.

"Because of our diversity, we had to have a more decentralized management approach," says Crawley. "You couldn't control everything from the top, and that's when we got into departmental business and quality plans. This forced me to be much less involved in the details of how things were working in each area, as opposed to making sure that we have a good plan and that we're executing that plan."

Need for a mega-plant

By the time Baxter opened its Mountain Home facility in 1964, it was an established medical-products manufacturer, recognized for a number of key medical inventions. Founded in Illinois in 1931 as the first commercial preparer of intravenous solutions, the company (then called Baxter Laboratories) later invented the first sterile, vacuum-type blood-collection and storage unit, which played an important role in World War II. After the war, Baxter manufactured a growing range of blood-therapy products, aided by the post-war boom in plastics technology.

In the mid-1950s, Baxter entered the new arena of kidney dialysis, first focusing on the construction of artificial kidneys, then concentrating on dialysis. It eventually expanded into a full line of dialysis products for both hemodialysis (where a machine mimics kidney function by cleansing a patient's blood), and peritoneal dialysis (where the blood is cleansed by the injection of a dialytic solution into the peritoneum, the membrane that lines the walls of the abdomen, which eliminates the need for machine hook-up). Fueled by the growth of these products, the company stepped up its domestic and international expansion plans in the early 1960s. In the U.S., Baxter was looking for "primarily locations in rural communities with a good labor supply and a solid work ethic," says Steve Hall, director of human resources at the Mountain Home facility. The farmland Baxter chose on the north side of tiny Mountain Home, an Ozark Mountain community a dozen miles from the Missouri border, proved a good fit for the company right down to the fact that it was located in Baxter County (named after a former Arkansas governor).

The enormous 660,000-sq.-ft. facility was planned as -- and remains -- a Baxter mega plant. It makes complete products as well as parts and materials for use in products made at other Baxter facilities. Its efforts support three different company divisions: Renal (filters and kits for kidney dialysis); Fenwal (blood-cell separators, needles, and containers for umbilical-cord blood and bone marrow); and Medication Delivery (intravenous solutions and delivery sets, and polyvinylchloride film and pellets used at Mountain Home and other Baxter facilities to make medical bags and tubing).

A busy facility making a wide range of products, Baxter Mountain Home was always better than average, according to its tenured staff. The steps that led it to pursue a focused, quality-oriented approach to manufacturing had less to do with plant problems, they say, than with the exploding growth in healthcare competition.

"We weren't in a quality crisis and we weren't out of control," says 23-year company veteran Hall. "We were a good, strong manufacturing facility, but we had defects per thousand instead of defects per million. So even though we thought we were pretty good, there was room for improvement." They knew, for example, that the plant probably produced more scrap than it should, which led them to the conclusion that many aspects of their production processes could be more finely tuned. "We began what we called an 'evolution' of change," says Hall, "rather than a 'revolution' of change." Doug Rucker, manager of plastics and with the company for 26 years, adds that Mountain Home "needed something more stable," referring to its previous tendency to hopscotch from one improvement process to another, adhering to none. "We had to get out of that culture."

A 1985 corporate directive to improve quality company-wide put everything into gear. Baxter Mountain Home executives enrolled in private, off-site quality training courses and returned with a plan. Still followed rigorously today, the plan includes five standards. "The first standard we're looking for is zero defects," says Crawley. "Not that we won't ever make a defect, but when we do, we want to ask why we made it and what we have to change to keep it from happening again." Next is the company's belief in total employee involvement, he says, followed by its conformance-to-requirements approach to quality. Following that is its "attitude of ongoing improvement," says Crawley. "What do we have to do to make it better tomorrow? Finally, we include prevention. What do we have to do to prevent this mistake we made today from happening again and how do we change our process?" Management began to make changes on a small scale.

"A lot of our early focus was simply asking workers, 'What hassles do you have?" says Crawley. "What keeps you from doing your job properly every day? We started training every employee to 'do it right the first time.' That was a big part of our early campaign, and everyone could see a payoff. They were able to implement changes within those work areas that kept them from doing a good job, whether it was in accounting or out on the manufacturing lines." HR director Hall adds that, prior to the changes, most workers felt any hassles they had "were just part of the job. We had to get them to realize they weren't," he says. "It's not their job to make repeated adjustments, for example, every time something doesn't turn the right way. We used paradigm shifts in our training, and we discussed what it means to use a paradigm shift."

Early strategy-alignment sessions led to the comprehensive employee-training program the company now uses, says Hall, which includes a variety of specific components. "Some are regulatory requirement training, but a lot are things we just want our employees to keep a focus on," he says, such as behavioral-based safety, a key focus of the past two years.

"We teach our employees how to do audits," says Crawley. "They go into their own areas and look for behaviors, especially unsafe behaviors among their fellow employees. It's always easy to figure out why we had an accident after we had it, but we're trying to identify unsafe behaviors before we have an accident. Our data shows that 80% to 90% of accidents are due to an unsafe behavior. It didn't just happen. People were doing things that were unsafe." This has helped trim the facility's worker-compensation costs significantly: from $350,000 in 1993 to a projected $25,000 this year.

Training sessions, some of which are informal, company-wide events held in the cafeteria, are commonplace at Mountain Home. Many members of the workforce also take advantage of a more detailed training program that directly impacts incomes and careers.

"We offer a nine-month course that's focused on building the basics in technology," says Crawley. Called S.W.A.T., for Success With Advanced Training, the courses include college-level instruction in algebra, electronics, circuits, magnetism, pneumatics, hydraulics and other topics appropriate for a company that is becoming increasingly dependent on technology. "Employees spend six hours per week in the classroom, three on our time and three on their own time," says Crawley, who estimates that some 360 employees have graduated from the program since its inception in 1989. "That's the basis for becoming a production technician within our facility."

Becoming a production technician makes sense for Mountain Home employees, not only for the improved pay they'll receive (at least $3 more per hour), but for job security. One way the facility has regularly increased the value of its production output (from $160 million in 1999 to a projected $195 million this year and $212 million in 2002), is by "improving our inventory turns and freeing up space," says Crawley, "so we can add new products without adding to our facility." To continue building production value, however, Crawley says the facility needs to become more automated.

"We can't compete with other Baxter locations around the world who employ people working with their hands," he says. "Company plants in China, the Dominican Republic, Costa Rica and other countries have a fully loaded labor cost that is probably a tenth of what it is here. So we must invest in technology and in our people to raise their skills and increase their productivity so we can compete with all those locations."

A broad-based 'evolution'

Technological improvements have been efficiently interwoven with others at the facility. In addition to the company's training program and a strong employee recognition/communication program, for example, the company focused early on implementing TPM (total productive maintenance) practices.

"It started in the late '80s in the plastics area," says Gary Balentine, plant engineer and an 18-year company veteran. "We trained all of our people on TPM concepts and then implemented it into the extrusion area, then into blending and into tubing. It's been an ongoing process."

Plastics manager Doug Rucker says full-scale TPM began after a supervisor got the idea to pass less-complicated maintenance tasks to machine operators. "Now," he says, "a lot of the routine PMs are done by the hourly person on the line _ things that don't endanger them, like lubrications, cleaning and inspections. This frees up Gary's maintenance crew to perform the more involved tasks."

Balentine credits TPM-related efficiencies for enabling him to trim his staff by 15 people over the last decade. He now manages a crew of 75 for the plant, which works three weekday shifts and two on weekends. Amazingly, says Rucker, as the plant has become busier, more productive and has added large amounts of new equipment, its maintenance requirements have lessened.

"In 10 years, we have increased our output in the plastics area by 45%, maybe more," he says. "And we're doing that with fewer maintenance people than we did before. All that has been taken up by TPM."

After learning the benefits of TPM, it was natural for the plant to move into benchmarking, lean manufacturing methods and, most recently, kaizen events. Even after having won numerous quality awards (see box, left), the Mountain Home staff saw room for improvement. Employees attending a Shingo Prize presentation in 1999 "learned about kaizen and kaizen blitz, and we thought that was something that would help us improve faster," says Crawley. That year, the plant performed a kaizen blitz event with the help of an outside facilitator.

"He assembled a team within the facility and we took on a cell-separator product line that we had been making for 15 years," says Crawley. "We asked how we could improve productivity on this product because we were now selling it in China and Mexico and we had to drive down costs. We were no longer able to sell it for the price we had, but needed to maintain our margins."

Within one week, says Crawley, the kaizen team identified changes that would produce a 19% productivity improvement on the cell-separator. "We implemented those changes during that week, and within four weeks we were up and running at the new standard. We were able to take a lot of cost out, and it showed us the power of getting a team of employees together and letting them focus for an entire week on making changes."

That positive kaizen experience led to others, prompting Crawley and his team to hire a full-time kaizen coordinator. When efforts to hire an outside specialist for the position failed, the company trained one of its own. "We identified a supervisor within our facility who had a lot of potential and good interaction with people," says Crawley. "We sent him away for 13 weeks to learn how to conduct kaizen blitz events and the Toyota lean-production system. In March 2000, we began conducting events every other week."

The kaizen events have become firmly intertwined with company culture. Employees understand how effective the events are, they are interested in participating in them, and, most importantly, the events produce results. On a recent August morning, two kaizen events were underway at Mountain Home, one of which was a pre-production planning or "3P" event.

"This is where you do a lot of brainstorming before you ever lay out how you're going to build a product," says Crawley. "Then you mock up everything in cardboard. You cut out cardboard to represent the machines and how they're located so you don't wait until you actually install everything and start running it to start improving it. There's a lot of opportunity to improve the process on the front end."

For this type of event, new to Baxter, an outside consultant was hired to guide the efforts of three Baxter employees. The group was sequestered in a cleared, 24,000-sq.-ft. former warehouse area where the machinery will be placed to build the new product. It included a Baxter engineer who will help design the new machinery. Surrounded by cardboard cutouts and Gehry-like cardboard assemblies, the group toiled in the not-yet-air-conditioned space with pencils, paper, rulers and calculators to visualize as accurately as possible the production process many months before it would begin. Today's goal _ sandwiched in the middle of a five-day kaizen blitz _ was to determine if the amount of floor space allotted to the project could be trimmed. By early afternoon, the engineer and consultant confidently reported that by making a few changes to existing machinery designs, they believed the product could be manufactured in 12,000 sq. ft. _ half the originally anticipated space. If they hadn't held the 3P event, says Crawley, months of possibly inefficient production would have been required to reach this conclusion, if it was reached at all.

Managing the process

Upfront planning of this nature is evident in other Mountain Home initiatives. Last year, the plant began what it calls process-management teams, a group effort to plot out procedures, requirements and expectations for all job functions. "We got the idea when we benchmarked another Baxter facility," says Crawley. "It helps us make sure we're controlling the process, rather than just looking at the product that's coming off the end."

The goal for this year, he says, is to have process-management teams in place for all manufacturing areas. Next year the plan will be broadened to include support areas such as human resources, accounting, materials management and engineering. Crawley says that in time, "We'll all have processes. Even if I'm paying the bills, I've got a process to go through. Our goal is to have the best understanding we can of each process, and know how to take waste out of it or loss due to scrap or rework."

This level of thoroughness is already instilled among those entrusted with the plant's environmental responsibilities. For example, the plant's variety of waste products _ from small quantities of hazardous chemicals to large quantities of ethylene-oxide emissions, plastic scrap and isopropyl alcohol _ are subject to intense reduction and/or re-use efforts before anything truly becomes waste.

"The first step is reduction," says Carolyn Walker, Baxter Mountain Home's environmental administrator. "Then we look for ways to recycle. Disposal is the last. Our sterilization process alone is a huge challenge," she says. "We use 200,000 lbs. of ethylene oxide in a year to sterilize products, and our challenge is to reduce air emissions from this gas to less than one part per million coming out of the stack." The company, which became ISO 14000 certified in 1997, has so far invested more than $1 million to control the emissions, both at the stack and in aeration chambers where oxidizers burn emissions from newly made plastic products as they off-gas.

Liquid wastes, including plastic solvents and isopropyl alcohol, present other challenges. Walker explains she was able to find vendors that can use the company's leftover isopropyl alcohol (a 70/30 alcohol-to-water mix, used for routine equipment and surface wipe-downs) as is. Normally, she says, the liquid would require disposal at the end of each day. She also devised a plan where Baxter Mountain Home sells some 8 million lbs. of pvc scrap per year to recyclers who make it into products such as garden hose, carpet runners and cove molding. It generates the company more than $1 million in revenue.

The company's most extensive recycling effort may be its mixed-plastic scrap parts program. Walker has linked five handicapped service centers over a 70-mile radius that provide the handwork needed to separate the parts. "Parts might have flexible pvc on them or might be a polycarbonate pieced together," says Walker, "so you have to segregate these in order to recycle them. The handicapped workers separate that for us. We then market the parts for them through our vendor who takes the parts that we generate here. The money we receive, the full amount, we donate back to the facility, which uses this to pay the workers. It keeps all of that material out of landfills," she says, "and it gives us a wonderful feeling when we go to the centers because these people are so pleased you can give them this job."

Further proof of the company's environmental commitment, says Walker, is the fact that any project planned for the Mountain Home facility must receive approval from both an environmental committee and the pollution-prevention team before it can proceed.

Embracing future technology

Good times or bad, the Mountain Home facility is well positioned. "We're kind of recession proof," says Crawley. "People are always going to get sick, and when the economy's worse, people tend to get sick more often." While that trend doesn't have an immediate impact on Mountain Home, Crawley says demand for its dialysis products is predictable and growing.

"We don't see a lot of up and down in demand for our products, but you'd expect that. If somebody goes on dialysis, they're going to need three dialyzers a week, or seven of our Home Choice units a week if they're on peritoneal dialysis, so the demand is pretty predictable. But the number of people on dialysis is growing about 8% or 9% a year," he says. "If we take share from our competitors, we can grow faster than this."

This trend is expected to continue for some time, particularly as the frequency of diabetes, one cause of kidney failure, continues to escalate as it is in the U.S. The growing standard of living in other countries will also build demand for kidney-dialysis products, says Crawley, particularly peritoneal dialysis that does not depend on expensive machinery. But the day might come, he says, when even dialysis will be a thing of the past.

"I think in 10 to 15 years you'll be able to grow kidneys, maybe from stem cells," he says. "The technology will be there. It might be possible to grow kidneys in pigs and transplant them into people. Once you have an unlimited supply of transplants, this business goes away. If you want to stay in this business, you better figure out how to play in it from a transplant perspective."

Hall says that's why one of the company's "key pushes is to continually increase our technical knowledge at this facility, as well as training production technicians and recruiting a skilled maintenance staff." With regard to getting enough help to meet expected technological challenges in its isolated location – 100 miles from the nearest major metropolitan center – Hall isn't worried.

"People feel good, emotional even, that they're able to make a product here that will save another human's life," he says. "We attract a lot of people from higher-paying jobs who will work here in an entry-level job because they know of the educational process we have, the investment we make in our people, and that people are promoted from within. And we still feel good about the work ethic and the people from this area. It's one of the primary assets we have. To think of a facility this size," he says, "and that we have 60 or more people per year that will volunteer to go to a nine-month education program and put forth a lot of discretionary effort to go to class, study at home, take the tests, improve their skills ... to me that's really unique."    

Sidebar

Recognition for Baxter Mountain Home

The Mountain Home facility was among the first Baxter facilities to win the Baxter Quality Award when it was initiated in 1989. Based on criteria similar to that used for the Baldrige Quality Award, this award can be won by more than one Baxter facility. Other Baxter awards on this list can be won by only one plant.

The plant's win of the 2001 Shingo Prize for Excellence in Manufacturing followed a 2000 win of the same award by Baxter's North Cove facility in Marion, NC. Established in 1988, this prize honors Shigeo Shingo, the late Japanese industrial engineer who helped create just-in-time manufacturing processes and systems that make up the Toyota Production System. The award promotes world-class manufacturing by recognizing companies that have achieved superior customer satisfaction and business results. The philosophy of the Shingo Prize is that world-class business performance may be achieved through focused improvements in core manufacturing and business processes.

1989 - Baxter Quality Award
1991 - Baxter Quality Award
1993 - Baxter Quality Award
1994 - ISO 9002 Certification
1995 - Baxter Pollution Prevention Award
Arkansas Pollution Prevention Award
Baxter Best Environmental Program for Large Facility
1996 - Baxter Patterson (president's) Award
Arkansas Governor's Quality Award
1997 - ISO 14001 Certification
1998 - Baxter Environmental, Health & Safety Award for Large Facility
Baxter Pollution Prevention Award for Large Facility
1999 - Baxter Patterson Award
Baxter Health Promotion Award for Large Facility
2000 - Baxter Environmental, Health & Safety Award for Large Facility
2001 - Baxter Environmental, Health & Safety Award for Large Facility
Shingo Prize

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