Phase 2 Golden Triangle Lean-Sustainment Case Summary

Case Context

The Phase 2 case centers on a major competitive threat involving Medtronic Advanced Energy (MAE), Phase 2’s main customer. MAE put the combined production volume of a single-use medical device out for global bidding, including options in China, India, and Mexico. This created urgent pressure for Phase 2 to match globally competitive pricing while preserving profitability.

The situation was complicated by the existence of duplicate production across two nearby facilities: Phase 2 in Rochester, New Hampshire, and a Medtronic facility in Portsmouth, New Hampshire. The duplication meant duplicated engineering and management resources, while each site’s core strengths were not fully optimized.

Why Keeping the Business at Phase 2 Mattered

The case explains that Phase 2 had deep product and process knowledge developed over many years. For Medtronic, shifting production to a new supplier would involve costs and risks associated with extending the supply chain, moving operations, and revalidating processes. Keeping the work at Phase 2 could be the best business decision if the company could meet global pricing, absorb the additional volume, and remain profitable.

Two-Part Improvement Strategy

The joint Medtronic–Phase 2 effort produced a two-part strategy:

1. Reduce material costs quickly to close the gap between current costs and global pricing through product-component savings and supplier price reductions.
2. Develop a lean Cell Operating System so Phase 2 could manage a major increase in consolidated volume with minimal added resources.

Golden Triangle and Lean Sustainment

The case presents the Golden Triangle as the framework for sustaining the lean business system. Rather than treating lean gains as temporary improvements, the company aimed to change behavior across staff and management so that the new system and culture would endure.

The broader message is that winning the business required more than a short-term cost concession. It depended on making the lean operating system stronger, scaling capacity effectively, and embedding new management and employee behaviors that would hold the gains in place.

Key Takeaways

• Phase 2 faced a serious global competitive threat from offshore manufacturing alternatives.
• The response combined cost reduction with lean system development, not cost cutting alone.
• Duplicate facilities created strategic pressure but also an opportunity to consolidate volume more effectively.
• The Golden Triangle is presented as a sustainment framework for preserving lean gains through system and behavior change.