Siemens Ultrasound gets clearance to resume U.S.-bound shipments

December 14, 1994

Issaquah plant waited months for FDA go-aheadSiemens Medical Systems officials realized that sunny days wererare in Issaquah, WA, when they selected the often rainy Seattlesuburb in 1992 for the world headquarters of its ultrasound

Issaquah plant waited months for FDA go-ahead

Siemens Medical Systems officials realized that sunny days wererare in Issaquah, WA, when they selected the often rainy Seattlesuburb in 1992 for the world headquarters of its ultrasound marketing,manufacturing and R&D efforts. But they didn't anticipatethat a dark regulatory cloud would hover over its Washington-basedfacilities for most of 1994.

The company announced Nov. 7 that the ultrasound group hadreceived Food and Drug Administration approval to resume manufacturingand shipping to U.S. customers from its Issaquah plant (SCAN 11/23/94).Siemens voluntarily ceased domestic shipments in February afterthe FDA uncovered possible violations of good manufacturing practicesat Issaquah and two other U.S.-based Siemens facilities (SCAN3/2/94).

The moratorium did not affect shipments of transducers andthe Siemens Q2000 color-flow system to customers outside the U.S.Deliveries of these products continued without incident.

The agency's concerns centered around procedures for handlingand documenting customer complaints, according to Lothar Koob,ultrasound group vice president. The other sites affected wereSiemens' radiation oncology equipment plant at Concord, CA, anda patient monitoring plant in Danvers, MA. Manufacturing resumedat Concord after FDA approval was received on Nov. 3. Domesticoperations at the Danvers facility were still suspended as ofDec. 8.

The episode cost the Siemens Ultrasound group $10 million to$15 million in lost sales and chilled Siemens' plans for U.S.market share growth, according to Koob, who estimated that theintangible costs of the shutdown will exceed its actual financialramifications.

"How much this is worth is difficult to tell, but if Ihad to judge, I'd say losses from not achieving our strategy arethe major portion of the total," he said.

Costs measured in lost customer confidence were also a majorconcern for Siemens officials, who responded proactively to minimizethe impact. Although the consent degree applied only to its oldmanufacturing site, the company voluntarily extended the agreementto its new $20 million manufacturing facility after it openedfor business in April, Koob noted (SCAN 6/29/94).

Still, Siemens officials may have underestimated the lengthof the self-enforced shut-down. They expressed confidence thatproblems would be resolved by the time ribbon-cutting ceremoniestook place in early July. When that date passed, they said FDAclearance would be imminent after completion of a consultant'squality assurance audit in September.

The environment under the constraints of the consent degreewas psychologically depressing, according to Koob.

"We had always thought that we achieved a level of compliancethat was a very good example for the industry. Therefore, it wasdifficult to explain to employees why we were still not open,"he said.

Major organizational and procedural changes were implementedduring the hiatus, according to Koob. Customer communicationsprocedures were overhauled to address FDA concerns about complaint-handling.

"We went through extensive training, including our fieldservice, all the in-house people and anyone who could have a potentialcustomer relationship," he said.

New processes were implemented, including self-managed teamsof workers who do their own scheduling, manufacturing, qualitycontrol and hiring. Cross-functional groups, called barrier-removalteams, were formed to avoid roadblocks to optimal operations,according to the company.

Other improvements, according to operations vice presidentJude Johnson, included tighter integration between engineeringand manufacturing, better definition of product performance characteristics,better diagnostic measurements on the floor with improved capabilitiesfor corrective actions, better supplier performance and more focuson material management.

Product line changes include the introduction of the SonolineVersa, the first new ultrasound platform designed by Siemens sincemoving to Issaquah (SCAN 11/23/94). The mid-tier color-flow systemwas launched in Europe in October and was a featured work-in-progressat this month's RSNA show.

Nearing completion is a new high-performance version of theSonoline system, Koob said. The company is also working on ISO9001 certification. A certification pre-audit was completed inOctober, to be followed by a formal audit, he said.