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Mani, Inc.

2008 8th Porter Prize Winner Medical tool manufacturer
Specializing in small medical consumables made of stainless steel

Industry Background

The small-sized medical tool industry is fragmented, and One of the reasons for this is the variety of products handled. For example, surgical needles vary in terms of length, shape of the tip, curvature of the needle, diameter of the eyelet, and stiffness, according to the type of human tissue and surgical applications involved, and the surgeon's preferences. Mani sells 10,000 kinds of surgical needles and 3,000 kinds of dental instruments. As a result, most companies in this industry are small-sized firms. The exception is Johnson & Johnson's presence in surgical atraumatic needles, a segment in which it boasts a 70% share of the world market, covering the entire range from low-end to high-end market segments.

Company Outline

Mani, founded in 1956, specializes in the manufacturing of medical and dental small-sized, light-weight consumables made of stainless steel, such as surgical needles, knives for eye surgeries, and reamers and files for dental treatment. Sales in 2007 were 8.1 billion yen, with sales in 120 countries and international sales reaching 68% of total sales. Some Mani products have as much as a 49% share of the world market.

Unique Value Proposition

Mani's target customers are doctors and dentists who require superior touch and the best possible instruments for use in surgery and treatment.

The first value element offered by Mani is to provide the safest surgical products. Mani defines quality by two aspects: safety, and mechanical properties that respond to the demanding needs of top physicians. One important way Mani provides safety is to offer needles that hardly ever break and hence do not leave broken pieces in patients' bodies. Mechanical properties include sharpness、strength of the stem、suppleness、etc. In general, when hard metals are used, sharpness can be achieved, but the expense of greater risk of breakage.

Mani has developed stainless steel that features a unique chemical composition and unique manufacturing processes, which contributes to its products' safety and high performance.

Mani dominates the market with its precision technology - Mani is the only company that can mass-produce atraumatic needles with an outer diameter of 0.14 millimeter, and the surgical needles used for Mr. Bill Clinton's heart surgery were produced by Mani. As evidenced by this event, Mani's products are favored by doctors. Sticking steadfastly to its value proposition, Mani offers the same quality products and a world standard price even to developing countries and regions where low priced products predominate. By contrast many of the company's competitors offer lower-quality, lower-priced products in those markets.

The second element of Mani's value offering is providing products that are optimized to meet the applications, methods and preferences of physicians. Mani provides a wider selection for customers, which is the second widest selection a company offers after J&J. This is unlike its competitors, many of whom severely limit the number of products in order to achieve cost reduction.

In the field of surgical needles where Mani has a 50 year history and a well established reputation for superior quality, Mani's surgical needles are 50% to 100% more expensive than others on the market.Recently the price difference decreased to 20% after competitors raised prices because of rising metal costs. Mani sets prices for its dental drill and surgery products at levels comparable or slightly lower than those of its competitors because Mani was a latecomer to these segments. It entered the dental segment in 1976. Although some of its leading competitors in the dental segment lowered their prices, Mani maintained its prices at the original level.

Unique Value Chain

Technology development
In order to ensure the world's highest levels of safety and performance, Mani improves its stainless steel and develops manufacturing machinery and measuring instruments。In 1967 and again in 1988 Mani developed stainless wire using its own technology. Mani also develops nickel-titanium that have characteristics similar to its proprietary stainless steel. The company has patents on its own technologies in areas such as materials, precision processing and laser drilling.

In order to judge if its products are the best in the world, Mani collects and analyzes its own objective data. Twice a year Mani subjects its products to a painstaking comparison with competitor's products in a meeting called "Are we world's best or not?" and starts action programs for points where Mani has fallen short. Also each department has a monthly morning development meeting where the development team, sales people, production staff and top management decide direction and solve problems. Mani consistently invests 6% to 8% of sales in R&D.

Procurement
Since 70% of Mani's products use a common stainless wire, the cost and effort of procurement are extremely low. Also materials cost represents on average only 7.8% of the sales, and transportation and storage costs are thus quite low.

Production
Mani's manufacturing processes starts overseas, continues in Japan and ends again overseas. Pre-processing of the stainless wire is done in overseas factories in countries such as Vietnam (since 1996, with second factory since 2003) and Myanmar (since 1999). Processes requiring proprietary technology such as precision processing and laser drilling are performed in Japan. Then final processing and final quality inspection are preformed in overseas factories. The manufacturing processes in those countries are identical, and the quality of manufacturing is comparable, excepting the core manufacturing processes, which are kept in Japan to prevent the diffusion of this technology. Inspections for maintaining manufacturing quality are made on all products and include optical inspection during processing, quality inspection by machine as well as visual inspection by human staff. Since Mani produces over 100 million surgical needles per year this whole system might seem on first glance quite inefficient, but since the products are quite miniature, the benefits of having proprietary technologies in Japan and final visual quality inspection of every single product by human eye in overseas factories outweigh the added cost of having factories both in Japan and overseas.

It is preparing to commence production in Laos in December 2009.

Most of Mani's products have a long product life, and Mani improves its manufacturing processes continuously.

Outbound logistics
Since Mani's products are miniature, they can be easily transported by plane or truck allowing quick deliveries tailored closely to customer's requirements.

Marketing and sales
Mani provides customers with quality and performance data, drawing a comparison with its competitors. No other company does this. Mani believes that because Japanese doctors have the world's highest technical skill level, products accepted in Japan will meet requirements worldwide. Mani works closely with physicians in Japan, offering them data and developing trial products for those doctors and dentists requiring new tools for devising new methods.

In order to increase its interactions with dentists, the company conducts development, manufacturing and marketing of stereo microscopes and laser treatment equipment for dental treatment using new technologies. Detailed reports are required of all meetings with customers, without fail, and e-mails lists of selected groups of customers are used.

To help surgical thread manufacturers to caulk thread to the needle, Mani provides them with caulking equipment. Through this service, Mani ensures the quality of the final products and establishes a relationship with thread manufacturers.

Human resource management
The primary feature of Mani's HR management is to support its goal of world's best product quality. Mani limits its domestic workforce to about 300 people in order to train them face-to-face in the skills needed to maintain that quality. Maintaining and improving quality are important factors in performance reviews, and presentations to other staff about one's ideas on product quality are a required part of applying for a promotion. Commendations and bonuses are given for quality improvements and new product ideas.

Mani invites doctors employing leading-edge surgical techniques to educate its employees. It also has created a video library to educate others about these new techniques.

Mani keeps employees motivated by inviting them to submit applications for managerial posts. Mani evaluates the company's performance against its best-ever performance, instead of against the previous year's results.

Mani chose not locate its overseas factories in industrial complexes to keep the employee turnover rate low. By doing this, some convenience is lost and extra expense incurred, but by dominating the human resources in one area they prevent other firms from coming in. Thus Mani reduces loss of its staff to other firms, allowing it to build and maintain a workforce that receives sufficient training in the technical skills needed for manufacturing of precision specialty medical tools and training in Japanese language. The company also invites non-Japanese employees to work in Japan, sharing time with them both at and outside work to build human relations.

Fit among Activities

Mani's activities are designed to achieve the core goal of "world's best quality". Specific activities include product development activity driven by clear standards, accumulation of objective data through comparison with competitors' products at the "Are we world's best or not?" meetings, various systems for sharing information, staff evaluation system, etc.

Also, since Mani has selected the long product life, small consumable medical device market, it has been able to tightly integrate the fit of its activities. Long life products allow the recouping of the costs of internal efforts to develop materials, manufacturing equipment, and measurement and testing systems which themselves allow long term differentiation of Mani's products in the market. Since the company uses specialty materials it developed internally, it must develop some of its manufacturing equipment internally as well. Because it develops manufacturing equipment internally, it can tailor the equipment to allow efficient production of a wide range of products. Because the materials cost for miniature products is quite low, the inventory cost of even a wide range of product manufacturing processes can be kept to a low level. Since the raw materials portion of the cost of products is quite low, the loss from the waste that accompanies developing many new manufacturing processes is minimal and outweighed by the benefits gained from the new processes. Because miniature products are so light, a manufacturing process that involves both domestic and overseas factories is possible, allowing both the protection of proprietary technologies in Japan and labor- and time-intensive production.
(See "Mani Activity System Map")

Innovations that Enabled Strategy

  • Technology for making needles out of stainless, a materials which has the advantage of resistance to breaking but is difficult to process (1961, world's first)
  • The development of stainless steel wire that is hard to break (1967, 1988)
  • Technology for nano-size processing of the cutting edge of ophthalmic sutures and ophthalmic knives where the world's best sharpness is required
  • Laser drilling technology enabling 140 micron needles
  • Developed its own quality rating standards and shared the evaluation data. Extends open invitation to employees to apply for managerial posts, including the position of CEO.

Consistency of Strategy Over Time

Since 1961 when Mani succeeded in offering the world's first stainless surgical needles, solving the problem of previous needles which could rust and introduce thus introduce foreign substances into the body, the company has maintained a consistent strategy. It sells into a worldwide niche market the world's top quality small, consumable medical devices that have long product life, using its own unique technology centered on stainless wire. The company had some failures before committing to this strategy. In the 1970's it developed a surgical cutting device, but the quality was poor and the product failed. The cause was that rather than using stainless wire, sheet material was used. The making and processing of such materials are completely different for wire and sheet. Currently all scalpels and knives sold by the company are made by pressing stainless wire.

Trade-offs

  • Does not enter product markets outside of the medical tool market.
  • Does not introduce a product unless Mani maintains the proprietary technology.
  • Does not introduce products with a short product life (less than 20 years).
  • Does not introduce products for which the size of the global market exceeds ¥200 billion.
  • Does not introduce products if sales are limited to a small number of countries.
  • Does not develop products that will not exceed annual sales of ¥100 billion and an ROS of 10% within four years after the market launch.
  • Does not develop products that will not exceed an ROS of 30% within ten years.
  • Does not introduce products that have not realized the best quality in the world or do not have the potential to become so.
  • Does not introduce products for new techniques that have not yet been established. New techniques under development are less reliable and would pose a conflict for Mani, which makes safety its first priority.
  • Does not provide developing countries with products of inferior quality for the sake of lowering costs.
  • Does not open factories in industrial complexes overseas, where labor mobility is high.
  • Does not increase the number of employees at the headquarters beyond a limit of 300.
  • Does not conduct marketing activities by itself outside of Japan.
  • Does not try to increase profit through financial engineering.

Profitability

Return on invested capital (ROIC)   (Unit = percentage point)
Difference from industry averag
over 5 year period
Difference from industry average, by year
2003 2004 2005 2006 2007
32.2%P 14.8%P 21%P 22.3%P 25.7%P 21.6%P
Return on invested capital = Operating income / Average invested capital

Return on sales (ROS)   (Unit = percentage point)
Difference from industry average
over 5 year period
Difference from industry average, by year
2003 2004 2005 2006 2007
37.2%P 23.2%P 26.3%P 27.4%P 29.8%P 24.9%P
Return on sales =Operating income / Net sales

Activity System Map

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