Responsibility in the Marketplace

Our decision to add a new citizenship pillar – Responsibility in the Marketplace – reflects the essential role customers and suppliers play in the long-term sustainability of Medtronic. By integrating this pillar in our citizenship strategy, we improve our ability to manage the significant impacts of ethical business practices and sourcing, product quality, customer service, patient privacy and responsible marketing.

Electronics Industry Citizenship Coalition

In May 2010, Medtronic joined the Electronics Industry Citizenship Coalition. EICC promotes an industry code of conduct for global electronics supply chains to improve working and environmental conditions. The code provides guidance on five critical citizenship performance areas: labor practices, health and safety, environmental practices, management systems and ethics.

As an applicant member, Medtronic must adopt the EICC code of conduct and achieve full membership within two years. The process includes completing a self-assessment questionnaire, engaging key Medtronic sourcing professionals in EICC training, incorporating EICC tools (e.g., risk assessment process, audit checklists) in our corporate activities and meeting the requirements outlined in the EICC Membership Compliance Program. In addition, our goal is to have our top 100 suppliers complete the self-assessment questionnaire and adopt the code.

As part of our EICC commitment, we are also determining the exposure of our supply chain to conflict minerals and following the protocol being developed by the coalition.

Medtronic became an EICC member to gain access to an industry-wide code of conduct, supplier self-assessment tools, audit criteria, commodity and supplier manager eLearning and industry benchmarking. Our membership also provides additional visibility to emerging issues related to sustainability.

Supplier Advisory Board

In response to feedback from suppliers, Medtronic recently created its first Supplier Advisory Board comprised of a cross-section of companies representing several key commodities. The board, which meets quarterly, helps Medtronic benchmark best practices and provides instrumental feedback regarding development and execution of supplier best-in-class strategies. Nine companies committed to participate for two years; as we move forward new companies will be rotated onto the board to ensure fresh perspectives.

Global Quality Strategy

Our quality vision is to be the company most trusted to deliver products, processes, services and relationships.

Quality is integral to patients, physicians, hospital administrators, Medtronic’s corporate reputation and business performance. As such, Medtronic adopted an enterprise-wide quality strategy in fiscal year 2010 and increased investments in personnel, training, IT tools and automation. The company adopted a systemic approach to quality and product risk management, centralizing oversight of quality processes, resources and standards in the Global Quality function. This approach ensures full alignment of our strategy, which has three focus areas: strategic initiatives, culture and oversight/governance.

• Strategic initiatives. We use formal initiatives to drive best practices, standardized metrics and harmonized procedures across the company. Major initiatives in fiscal years 2010 and 2011 include:
  • Design, Reliability and Manufacturability (DRM) to decrease field actions resulting from design and manufacturing issues and improve product reliability.
  • Supplier quality processes and functional excellence to reduce field actions linked to supplier controls and improve product quality.
  • Global complaint management processes and supporting technology to enhance efficiency, scalability and global capability.
  • Corrective Action Preventive Action (CAPA) timeliness, documentation, and effectiveness to improve issue resolution and prevention.

    We have made significant progress in executing these strategic initiatives. This is most notably evidenced by the closure of three FDA warning letters.

• Culture. Through formal, proven change-management methodology and robust communication about expectations for every employee, we drive behaviors that support a sustainable, quality-focused culture, including collaboration, prevention and accountability. Mandatory and consistent quality training for all executives and employees further strengthens our quality focus. During fiscal year 2011 all 45,000 employees were required to complete multiple quality training programs, which were available in 11 languages. In addition, our Global Quality Strategy was rolled out across the enterprise via town hall forums and each Medtronic executive, director level and above, established a quality objective.
• Oversight and Governance. We have established clearly defined roles and responsibilities across the enterprise and track common and consistent metrics for key quality programs that allow us to measure our performance against aggressive targets.

The quality function is centralized by having all business unit quality vice presidents report to a Vice President of Global Quality, who reports to the Senior Vice President of Quality and Operations.

Quality performance and compliance is monitored by the most senior leaders of the company via formal bi-annual Executive Committee management reviews. In addition, the Global Quality Vice President and Senior Vice President regularly review quality with the Board of Directors Quality and Technology Committee.

Our journey to improve quality and compliance is continuous. We have installed a closed-loop process for issue identification and resolution and continuously strive to reduce cycle time from identification to resolution. As issues are identified through internal and external audits, they are assessed for impact, not only on a local level, but also on a systemic level across the company. When necessary, improvement programs are developed, implemented and monitored through formal follow-up assessments such as Medtronic Corporate-wide Assessments for Regulatory Excellence (MCARE), performance monitoring and goal accountability tracking.

Please read our 2010 report for additional details on our approach to quality.

Patient Privacy

Medtronic hired a Global Chief Privacy and Data Protection Officer during the first quarter of fiscal year 2011 to develop a comprehensive set of corporate policies, procedures and programs that address risk assessment, governance, training and awareness, technology assessment, vendor management, government and industry relations, and product development and metrics. A Global Privacy and Data Protection Council was also established to implement programs across the corporation and assess their effectiveness. The council meets monthly and has completed initial risk profiles identifying the highest risk areas impacting the business, which will define and drive associated deliverables through the next fiscal year.

Please read our 2010 report for additional information on patient privacy.