Technology and Innovation Management: Teleflex Canada Case Study

Types of innovation that are carried out at Teleflex Canada

Teleflex Canada mostly practices three types of innovation. These are:

1. Incremental Product Innovation

Incremental Product Innovation is the most common product innovation. In this form of innovation, improvements are made in the components to refine and improve the existing design of the product. Only minor changes are considered incremental.

Example from the case study: Under ‘SeaStar Development’ on page 4, forth paragraph says that Teleflex Canada always kept innovating and that their competitors copied their designs. But by the time the competitor launched their product, Teleflex Canada used to launch an even better product to the market, increasing the performance of the product incrementally.

2. Architectural Product Innovation

The components and associated design of the product remain unchanged in the case of Architectural Product Innovation. Only the configuration of the system is changed as new linkages are instituted. Some new components are used which have the same function as the previous component. Most architectural innovations change the overall design of the system and the way the components interact.

Example from the case study: Under ‘Innovation, Technology, and Product Development’ on page 3, a Teleflex Canada Executive says that they don’t use technology that is not proven. They take pride in calling themselves ‘product developers’. They take the existing technology and tweak it to make it better and usually they don’t invent anything radically new.

3. Process Innovation

Teleflex Canada also uses Process Innovation. Process innovation can be described as the innovations in the way an organization performs its business. The biggest example of process innovation in Teleflex Canada is where the Energy Product Development (on page 5, paragraph one) is being discussed. The company never builds a product before taking orders for it. They start with selling concepts along with their credibility in the market. Another example is the military cook stove called MBU. The development of ProHeat, the truck and bus heater provided Teleflex the expertise required for combustion technology and this led to the development of MBU. So Teleflex also looks at platform products where possible in order to lower their costs and utilize the already available expertise.

Reasons for success in launching new products

There are several reasons for successful launches of Teleflex products. These are detailed below:

1. One of the major reasons for the successful product launches of Teleflex Canada is that they don’t just start building a product and say that the customers will come. They first try to sell their ideas and concepts to their consumers and when the consumer places the order then they start producing. This reduces their risk.
2. Another reason is the risk taking appetite of the company. For example, when the SeaStar product was being developed, the CEO was prepared to take certain amounts of risks. The project required substantial amounts of investment and he went ahead. This is also shows the sound decision making skills from the management.
3. Understanding the needs of their consumers. Teleflex Canada understands the needs of their consumers and puts in extra effort to make a product which is low maintenance. Their product sells because the end consumer wants it. This can be illustrated by the example of ProHeat, on page 7, under Pull-Through Strategy. An executive explains that the reason why OEMs put ProHeat in their trucks is because the end-consumer demands it.
4. As described under SeaStar Development on page 4, another reason for the successful launches of their products is that they continuously keep innovating. By the time their competitor launches a similar product, 6 months have passed and Teleflex Canada launches a new, improved product thus, remaining ahead of the competition. And since their products utilize economies of scale model, their products are cheaper than the competitor’s product.
5. The company promotes using the best and latest tools for production and development.
6. The company has a culture of admiration for innovative engineering talent. This is one of the reasons why the employees of Teleflex Canada are strongly motivated to excel in their field (Page 2, paragraph 2).
7. The company held interesting meetings between divisional and general managers. The meetings helped the managers to know where to go and who to call and the employees used to find an excuse to visit Teleflex offices.
8. Teleflex does not believe in re-inventing the wheel. This means that when a technology is available to be used, they do not waste precious time in developing that technology from scratch. This saves them considerable amount of time. Take for example their acquisition of a product line of Cummins Engine (Page 4, last paragraph). Teleflex knew that the Cummins product was not any good but still bought it because the product got them into the market and they thought that Teleflex could serve better with the new products. Similarly when they wanted to enter the US market, they bought a company in Ontario.

Threats to continued innovation and growth

The major threats to the continued innovation and growth at Teleflex Canada are:

1. Vertical Integration

Previously, whenever Teleflex Canada needed parts which were not built according to their specifications, they started developing the products themselves. Teleflex Canada didn’t need to develop these parts and they wasted a lot of their time and money on it.

Solution: Buy technology instead of developing it where possible and viable. The company has also divided their process under core and non-core processes. Now that this is done, the company can focus on the core processes and think about outsourcing the non-core processes to cheaper locations like China and India. This might result in substantial savings for the company.

2. Relationship with Teleflex Incorporated

It’s a generally accepted fact that the more a company centralises, the less innovative it will become. Given the fact that Teleflex Canada has been so successful in the past, corporate has been trying to centralize all the Teleflex subsidiaries into one so that Teleflex Canada’s innovative approach can be applied to the other subsidiaries as well. But then, the centralizing Teleflex Canada will mean losing innovation and defeating the whole purpose of the move.

Solution: Centres of Excellence are created in divisional units to maintain autonomy. A certain amount of centralization is important and a mix of centralization and a degree of autonomy will make sure that Teleflex Canada continues to innovate and grow.

3. Managing size

Teleflex Canada has grown at a very fast pace and getting too big can serve as a hindrance for the company. The company starts focussing on cutting costs rather than promoting innovation and entrepreneurialism. This may negate the company’s competitive advantage over its competitors. And in all this, the customer might be forgotten and the reaction time of the company will reduce.

Solution: It is of crux that the consumer gets quick and efficient service. The company should focus on assigning the best qualified people to the customer’s problem. And, solve the problems of the customers quickly and efficiently. Another important thing is that whenever a division becomes too big to handle, it must be sub-divided so as to maintain its reaction time and innovativeness.

4. Future of new product development

The case study explains that the biggest problem with new product development is that the existing products get replaced by the new technologies about which the company does not have the required expertise.

Solution: The solution for this problem is to help your customers sell their products to the end-consumers. Another thing that Teleflex Canada could do is to invest in forecasting. They need to know well in advance about any major changes that the industry may go through and will need time to prepare which forecasting can provide.

Can Teleflex Canada’s approach be implemented in other divisions or organizations?

I believe that Teleflex Canada’s approach to innovation can be implemented to other divisions or organizations. Their approach is too good to have and not implement in the other divisions. I can only imagine how much benefit it can bring to the company if implemented in all divisions and subsidiaries.

The company may function in a similar way by having a healthy mix of centralization and autonomy. This mix can not only enable the company to use the model created by Teleflex Canada in other divisions and subsidiaries, but can also help counter the negatives of growing too big too soon.

Although the company will need to take care of some things while incorporating the innovation approach of Teleflex Canada to the other divisions, the end result is too good to ignore. Some of the things to take care of are:

1. Be sure to maintain the culture of innovation from Teleflex Canada. The freedoms that the Teleflex Canada employees enjoyed played an important role in their thought process.
2. The support of the management is also a vital component in inheriting the Teleflex Canada’s approach. The management needs to keep promoting innovation like it does in Teleflex Canada and keep pushing to use latest and best tools available.
3. The combined company’s culture needs to be altered to support the new culture of Teleflex Canada. Without doing this, the combined entity may not be able to synergize.

If a division or group becomes too big, it must be sub-divided into sub-divisions so as to maintain the innovativeness and entrepreneurialism of the employees.

Operations Management: Custom Molds Case Study

What are the major issues facing Tom and Mason Miller?

Major issues facing the Miller family are:

1. The electronics industry to which they supply and their own business is changing. This is due to the fact that the electronics manufacturers have shifted their strategies; they are now developing strategic partnerships with their suppliers. Custom Molds has to adapt to these changes.

2. The demand for multiple molds is declining, contrary to the earlier days. Earlier they used to produce custom designed molds for producing plastic parts majorly and limited manufacture of plastic parts. Through the data provided in the case study we can conclude that during the last three years Custom Molds has been consistently getting more work in the mass production of plastic parts and the custom made molds have been decreasing.

3. The order sizes for plastic parts were increasing. The reason for this being an issue for Custom Molds is that traditionally they have concentrated on the custom molds. But since they are getting a lot more work to produce plastic parts, they probably need to change the job shop layout to something more suitable for mass production.

4. Delivery problems with plastic parts. The customers have been complaining about the late delivery of parts. Bottlenecks are springing during un-predictable production processes. If this goes on for too long, Custom Molds will lose credibility in front of their customers and some customers may decide to part ways. And the fact that they have still not been able to pin-point the cause is even more devastating.

5. In-efficient testing and inspection process resulting in orders being returned after delivery. The testing and inspection process has to be carried out as rigorously as possible. Sadly though, Custom Molds’ testing and inspection team has not been doing a good job. Two orders were recently returned to them because of the number of defective parts in the batches. The transportation, packing, shipping etc. costs have to be incurred by the company and could have been avoided if the testing and inspection been rigorous.

Identify the individual processes on a flow diagram. What are the competitive priorities for these processes and the changing nature of the industry?

Mold fabrication flow diagram

Figure 1

Flow diagram for manufacturing of plastic parts

Figure 2

Companies compete in the marketplace by virtue of one or more of the following competitive priorities (Hayes and Wheelwright, 1984):

1. Quality
2. Lead-time
3. Cost
4. Flexibility

Competitive Priorities of the fabrication process

• Quality
• Should be of top quality
• Should be consistent
• Lead-time
• Delivery should be on-time
• High development speed
• Cost
• Low cost
• Ability to reduce cost to at least competitor’s cost, if not lower.
• Flexibility
• Customization of the mould

Competitive Priorities of the parts manufacturing process

• Quality
• Should be consistent
• Lead-time
• On-time delivery
• Cost
• Low cost
• Flexibility
• Variable volumes without affecting the cost

As shown by the table provided in the case study, the industry now needs delivery of high quality parts with increased speed and low cost. This can be substantiated by the fact that electronics manufacturers were developing strategic partnerships with suppliers (The Changing Environment, Case Study, page 3). Customers today are increasingly moving towards a strategic supply chain management system, like the one used by Detroit based car companies.

What alternatives might the Millers pursue? What key factors should they consider as they evaluate these alternatives?

Short term alternatives

1. Hire consultants: Custom Molds needs to figure out the reason behind un-predictable bottlenecks popping up all over the production process and needs to do it quickly else they might lose some of their clients. Consultants have the advantage of looking at the bigger picture from outside and may be able to help Custom Molds figure out the reason behind the bottlenecks. Key factors: Cost of hire, consultants must be specialist in this field.

2. Change plant layout: Custom Molds also needs to change the plant layout from job shop to probably assembly line. This is due to the fact that they are getting more business in the plastic parts manufacture than the custom moulds and plastic parts are produced in large volumes. Key factors: Down time of the plant while changing the layout, cost of layout change, proper utilization of available space.

Medium term alternatives

1. Invest in a proper supply chain system: The Company needs a proper supply chain system which is agile, adaptable and aligned (Lee, 2004) to the interests of all firms involved. This will help them in managing expectations of the clients by knowing when they will be able to deliver the product. Key factors: Consent of all users/suppliers, cost of the SC system, reliability of the SC system, usage of the SC system.

2. Use of Information Technology in testing & inspection, and in calculating delivery times: Information Technology can help the company to automate the testing & inspection process thereby reducing the re-work. IT can also help Custom Molds to determine realistic delivery times. Key factors: Cost of the IT system, time frame of installation, inputs from the potential users of the IT system.

Long term alternatives

1. Prepare for a complete phase-out of custom moulds: It’s a long term alternative but is very much realistic. The company may start losing money producing custom moulds if their quantity reduces too much. The company would be better off in investing the same resources in producing plastic parts instead. Key factors: A proper market analysis of custom moulds, analysis of the return on investment and the minimum number of moulds to remain profitable, other avenues of diversification.

2. Invest in Research and Development: The Company would be better off to invest in R&D in order to stay ahead of its competition. R&D can often show ways to reduce costs by maintaining the same quality. Key factors: Cost involved, clear expected milestones

3. Start looking at expansion plans: As the company grows and starts taking orders for plastic parts exceeding 5000 order size, they will start feeling the need to expand, both in number of resources and space available. They are thereby advised to start looking at expansion plans, which can consume precious time. Key factors: Cost involved, thorough analysis of future/expected growth, type of growth (organic/inorganic), timeframe of growth, where to expand,

References

1. Hayes, Robert H., and Wheelwright, Steven C., Restoring Our Competitive Edge: Competing Through Manufacturing. New York: John Wiley, 1984

2. Lee, Hau L. “The triple-A supply chain.” Harvard Business Review 82.10 (2004) : 102-112, 157.

Business Ethics: What does sustainability mean to you?

My perception of sustainability

Sustainability is everywhere these days. Be it on the website of British Petroleum or on the homepage of a global manufacturing giant like Xerox. But does having a mere webpage for sustainability make these organizations ‘green’? I don’t think so. Sustainability to me is the art of using the natural resources of our beloved mother Earth in such a way so as to not waste any resource and to make sure that our next generations will also be able to benefit from the same resources.

Some organizations have really become ‘sustainable’. They have become efficient in the way they consume energy, in the way they manage their waste, in the way they operate (Example: Wal-Mart, Toyota and IBM). But on the other hand, most other organizations use sustainability just for publicity. But no one can refute the fact that sustainability is here to stay and that it is and will be a force to be reckoned with in the future. This is very easy to prove – just look at any major organization’s website. They all have a sustainability section these days.

Reasons not to have sustainability

My personal opinion is that there can be only two reasons as to why an organization does not have a sound sustainability policy. These are:

1. The company does not fully understand what sustainability is. Or they don’t really understand what affect it has on their business. This is the most common form of problem that I have noticed with some companies. Every company is unique and no matter how small or big a company may be, they can always have a solid sustainability policy. I think the point to be taken note of is that the organization’s leaders feel that they don’t need sustainability. They think it’s a fad like some other things in the recent past and that the hype about sustainability is short-lived. This thinking needs to be changed. Corporations in this time of high competition cannot survive without competing on equal grounds with their competition. If your competitor is practicing sustainability and you are not, you are bound to lose out at some stage in the near future.

2. The company’s implementation of the sustainability policy is incorrect or weak. Some companies do understand the need to go sustainable, but their interpretation of the level of sustainability or their sustainable policy is not correct. They might try to implement their flawed policy but fail or have minimum impact. Another reason could be that the policy may be correct and robust on paper but its implementation may be flawed or incorrect. This happens in organizations all the time is not the first occasion of incorrect implementation. This reason is far less critical to the first one discussed above for the simple reason that the organization at least has the right intent and will to become sustainable – they only need to get better at implementing it. On the other hand, there are a handful of organizations who get overawed by the situation and decide to throw the sustainability policy in the dumper just because they were unable to implement it in the first place. Organizations need to realize that sustainability is here to stay and that it has to be a long term policy. It cannot be used to deliver short term goals only and then forgotten about.

Reasons to support sustainability

There are many reasons to support sustainability, some of which that I could think of are:

1. Better company/brand positioning – Companies who are really sustainable and show it, are benefitting from the fact that the people recognize their effort and the company has a better brand image than before. People want to be associated with such brands.

2. Savings – Being efficient pays off. If the company operates efficiently, they save money by reducing their costs. This means that the company will make more profit than before. This also means that the company will have more money to pay its stakeholders.

3. Create competitive advantage – The companies who use sustainability fabulously have created a competitive advantage for themselves and their peers have been forced to follow in their footsteps half-heartedly.

4. Employee morale – There is no doubt that people like to work for a company that cares for its employees and customers, but also the environment, the society and the future. This is exactly why sustainability can raise the morale of a company’s workforce and cheer them up.

5. First mover’s advantage – A company that deploys the sustainability policy first will get the first mover’s advantage and all others will be followers. This generates awareness in the customer’s and potential customer’s subconscious and benefits the organization and its brands.

The role of government

The government plays a very important role in the formation and implementation of the sustainability policies of companies. Government releases guidelines as to what the sustainability policies should look like and what a company can do to help the cause of sustainability. But I think that mere guidelines are not enough to implement an important policy like sustainability. What we need is some concrete steps by the government to force all organizations into looking at themselves and finding out their most suitable sustainability policy.

The government can also make sustainability look more viable for firms by giving tax breaks or subsidies to companies which have a robust sustainability policy. This will encourage organizations to actually change and become sustainable instead of just pretending.

The role of customer

Even more powerful than the government is the customer. Over the years, customers have forced organizations to change drastically. The cases of IBM and Xerox come to mind when I think of successful change by organizations in order to cater to the changing demand of its customers and consumers.

In today’s high competition environment, customers have so many options. The products are being made to cater to his needs and the customer has become the master. So if the customer warms up to the idea of sustainability, there is very little that organizations can do apart from have a top class sustainability policy and stick to it.

The role of capital markets

The capital markets arguably play one of the most important role in the design and implementation of the sustainability policy. These days capital investors look at things like company’s sustainability, there CO2 emission, etc. before lending them money. Sometimes they even refuse to lend based on the fact that the company does not have a complete or comprehensive sustainability policy and hence, is less likely to survive and pay back.

This fact is not only true for starting new businesses but also existing businesses. Banks like HSBC, Barclays, etc. are shifting towards sustainable businesses and expect their clients to do the same. Banks have added a sustainability criterion to evaluate a company’s suitability for the loan and the risk attached to the loan. Banks are refusing loan requests from corporations which they think are not sustainable or are charging a very high interest. This will ultimately force the companies to turn sustainable.

The role of leaders

One of the most important roles in an organization is that of its leader, the visionary who guides the organization to its desired goal. The role may be called Chairman, CEO, Managing Director and so on but the huge role this leader has to play in the organization’s growth and development cannot be denied.

If the leader of an organization is visionary enough to see the immense role that sustainability has to play in the future of the organization, he or she is sure to work on creating an organization which will have a robust sustainability policy.

On the other hand, if the leader is not sure of the benefits sustainability can bring to the organization or is not convinced of its future, he will use it only as a ‘marketing stint’ to go with the flow till the time the hype about sustainability dies down (He thinks that the hype will die down eventually!). These organizations will eventually end up paying the price for the error in judgment of their supreme commander. Companies in the future cannot survive without sustainability and the sooner the leaders of organizations accept this fact the better it is for them and their organizations.

Conclusion

There is no dodging the fact that sustainability is here to stay. The sooner the organizations understand this simple fact the better it is for them and their organizations. Eastern countries like China and India are growing at a very rapid pace and are competing with the existing players. These countries are very flexible and are already applying the sustainability policies to play to their advantage. Organizations in the west are set up just right to adapt the sustainability policies, the time seems perfect too. It will be fascinating to see companies from different backgrounds and countries applying similar policies but differently.