Keith Smith is President of Vonco Products, a medical device contract manufacturer that works with some of the largest companies in the industry. In the first part of this episode Keith shares why companies decide to use contract manufacturers, what they look for when choosing one, the importance of transparency, and how Vonco transitioned from a job-shop serving many industries to focusing on high value industries, like medical device. The second half of the conversation goes deep into his personal story about the cost of going all-in on business, what he learned and how he has reprioritized his life, while maintaining a strong growth mindset in business.
Links from this episode:
- Keith Smith LinkedIn https://www.linkedin.com/in/keith-smith-725508b
- Vonco Products https://www.vonco.com
Connect with Mastering Medical Device:
- Website: https://www.masteringmedicaldevice.com
- LinkedIn: https://www.linkedin.com/company/mastering-medical-device
- Patrick Kothe LinkedIn: https://www.linkedin.com/in/patrick-kothe
- Patrick Kothe Twitter: https://twitter.com/patrickkothe
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Pat Kothe (00:30):
Welcome! I've got a very interesting episode for you
today.
We cover two completelydifferent topics in a
conversation with one person.
I know these topics will providemuch for you to learn, and to
think about.
The first topic covers contractmanufacturing, and the second is
(00:53):
more personal.
What causes our life to get outof whack when we focus more on
work than we should.
And what we can do about it.
Our guest today is Keith Smith.
Keith is CEO of Vonco Products,a medical device contract
manufacturer that works withsome of the largest companies in
(01:13):
our industry.
In the first part of ourconversation, we discuss why
companies decide to use contractmanufacturers, what they look
for when choosing one, theimportance of transparency, and
how Vonco transitioned from ajob shop serving many
industries, to focus on highvalue industries like medical
(01:36):
device.
The second half of theconversation goes deep into
Keith's personal story about thecost of going all in on
business.
What he learned and how he's nowreprioritized his life, while
maintaining a strong growthmindset in his business.
(01:57):
Here's our conversation.
Keith, the idea of verticalintegration, has been around,
forever, uh, where a companyowns its own supply chain.
But it's not quite the rightthing for all companies to do
with all products.
Sometimes it's, uh, you know,depending on where you are as a
company, it may not make senseto, to manufacture your own
(02:18):
products.
Sometimes when you're a largecompany, not all products would
you vertically integrate andbring all that inside.
So how do contract manufacturersfit in, in today's world?
Keith Smith (02:31):
Yeah, it's a great question and exciting to be a
contract manufacturer and seehow this process works and the
value that Vonco products cancreate through this process.
It's typically in theconversations we're having with
major med device companies andnew entrepreneurial med device
(02:52):
companies is around wherethey're at in the product life
cycle.
Uh, and there's, uh, really whatI would call three phases.
There's the introduction phasewhere it's high growth, there's
the, the mature phase whereit's, pretty steady growth,
moving into a slight decline,and then there's the decline
phase.
And I would say really at twoends of that spectrum are the,
(03:14):
what we hear is the mostimportant time to have a
contract manufacturer involved.
And it's mostly around keepingyour costs more variable than
they are fixed.
And so when you bring somethingin, in house, a product to, to
manufacture in house, you'regoing to inherit a fair amount
of fixed costs of whether youproduce it or not.
(03:34):
So when you're in the risky partof the high growth, it's great
to have those, products in avariable cost model because you
can depend on a contractmanufacturer to manage the fixed
costs and spread that acrossmany other, diverse
opportunities.
and likewise when you're in thedecline, believe it or not, you
(03:55):
want to shed the cost as soon asthe volume starts to decline.
And so a contract manufacturermakes sense on that end to help,
again, diversify those fixedcosts as the product declines.
Certainly, when the, you startto see a more steady state,
growth, and more competitors arebeing attracted, it might make
sense for, OEMs to manufacturethemselves.
(04:18):
It amortize the costs of a plantor find ways to get their own
cogs down when it's a, a steady,GDP type growth, three to 6
percent growth rate, makes a lotof sense to start figuring out
how to make
Pat Kothe (04:35):
That variable cost is interesting at the tail end
because it's fairly predictableas the curve is going down.
At the front end, it's reallydifficult to predict where
volumes are.
it makes sense from thecompany's standpoint to say,
Hey, we want somebody else totake that risk.
(04:59):
It's got to be risky for thecontract manufacturer because
the manufacturer comes in andsays, Hey, we're going to, we're
going to sell X amount of thesein year one.
And yeah, it doesn't happen andyou're stuck with the resources
and all the training that youdid to get the product up and
going.
So has that been, uh, is, is, isthat kind of the difficulty
Keith Smith (05:20):
life, that's the life of a contract manufacturer
and the way that, we're able totake on, let's call it more than
our fair share risk of the OEM,is diversifying that risk.
So by running multiple projects,we have a higher probability
that, some of those are going.
And we also have, products thatare in different life cycles
(05:43):
that are growing on top of it tohelp, absorb that risk on top of
it.
So.
I think that's really why theeconomic model works for
contract manufacturers becausethey're able to diversify that
risk.
Certainly, as we look at ourrisk profile, it comes down to
how much do we need to developversus how much could run across
(06:05):
certain equipment we alreadyhave in open capacity.
So as we evaluate that riskprofile, it's important we have
that diversity and balancewithin the profile as some of
them are, let's call it verycapital resource intensive, but
we also have some that, uh, Hey,we have capacity today.
How can we help you?
Pat Kothe (06:25):
So there are many different types of devices from
very complex pieces of equipmentto not complex pieces of
equipment.
Contract manufacturers can liveanywhere in that spectrum.
Where are you guys in terms ofthat spectrum?
Keith Smith (06:40):
Yeah, so the, our specialty across, all four of
our facilities is really aroundwelding flexible plastics.
We make, single use, products,typically that collect, fluids,
in and out of the body ortransfer fluids from one spot in
the hospital system or, ortransport products through, uh,
(07:00):
the air from one clinic to the,the lab.
And so welding these, films,making pouches and bags and tube
fixtures, uh, to, to move fluidsaround is certainly one of our
biggest, uh, uh, areas.
Some, personal protective,equipment, some PPE, some,
device covers, certainly, youwant to keep fluids on or off
(07:21):
certain devices, those tend tobe, our specialty.
But what we also do, to try tocreate value and simplicity for
our medical device OEMs is to,do a full turnkey process.
So we'll make the packaging aswell, whether it's a foil,
package, it's a Tyvek package.
Same core competency of weldingdifferent plastics together.
(07:44):
We'll make the pouches that thedevice might go into, and we
also do contract packaging, putthe device in, into the package,
as well as then weld it andmanage the sterility of that
project.
When we think about if you needa, a single use product, VONCO
could be someone thatpotentially eliminates three,
four, five supply chainpartners, which are very
(08:06):
difficult to maintain for mostmed device OEMs.
It's, there's a lot of rigor ineach, company that's named on
their approved supplier list.
Pat Kothe (08:15):
So going back to the original question about vertical
integration.
vertical integration, can occurat the process.
company manufacturing level.
But it sounds like verticalintegration within a contract
manufacturer is very importantas well.
Keith Smith (08:31):
It does exist.
Yeah.
The more we can simplify thework.
These projects that, ourcustomers, these medical device
OEMs have to go through, they'requite complex.
And so there's a myriad ofsuppliers trying to get a
project across the finish lineto launch a product or even
transition a product, that'smaturing or exiting.
(08:53):
To find, Simplicity in that, is,very, refreshing for the medical
device, world because there's somuch, so many moving pieces to
manage.
Pat Kothe (09:03):
So we described where someone would want to evaluate
whether they want to do arelationship with a contract
manufacturer.
When somebody makes thatdecision, I want to explore
this, there are a lot ofcontract manufacturers out
there.
How does somebody go aboutmaking a decision on which one
to choose?
Keith Smith (09:23):
I think the key, uh, is really we, we come down
to it as well.
We have this qualificationprocess ourselves and we've seen
it over the years.
It has to be a good fit and itcomes down, I think, ultimately
to a cultural fit.
In order for our best, projectsto work, is, are there multiple
stakeholders showing up forproject meetings?
(09:44):
I think ultimately that's what Ilook for in a good partnership
of whether we want to take onthe risk, with, a project.
And I would also, hope that, asthere's an evaluation process.
is there engagement fromengineers, operations, quality,
regulatory, the business, folksthat, are making the ultimate
buying and selling decisions?
(10:05):
And so that cultural fit on howthose teams gel together are
the, are the difference maker tome of whether projects actually,
are successful or they don't seethe light of day.
Pat Kothe (10:16):
From a manufacturer's standpoint, how are they
evaluating you?
What are the main areas thatthey're looking at to see
whether you're going to be agood partner?
Keith Smith (10:27):
Yeah, early on, it's innovation and speed to
innovation.
And so, you know, what type of,opportunities can we bring that
they didn't think of?
So that's early on.
second is the, opportunity toget their project across the
finish line.
So how do we manage the project?
and then third is really,another key differentiator is,
(10:48):
especially when we've got arelationship doing other
projects is understanding how werespond to the ever changing
demands.
It's constantly changing.
We were just talking about thechanging demand, uh, through
COVID and finding, amanufacturer that would help
move up and move down with thatchanging demand and, be flexible
(11:09):
in their operations to support,our customers end customer, the,
the hospital systems and, makesure that they don't stock out
or make sure that they have theappropriate service and quality
ongoing.
So I think those are really thethree key areas that we get
evaluated on and, and whether wecontinue to grow with a certain
(11:29):
customer or not.
Pat Kothe (11:32):
I've had the opportunity to engage with
contract manufacturers in thepast.
Some of the things that, thatyou look at is, does this
manufacturer do medical devices?
That's the first thing.
Do they have a quality system?
What is their quality systemlike?
Are they iSO certified, havethey, had FDA in, what other
companies are there, are theyworking with, what is their
(11:55):
workload look like, is theirproduct, is, are their
capabilities, match up with thetype of product, a product we
have, and then you start gettinginto kind of those fine tune
things, but it's like this bigfunnel and you got to start off
at the top if you're a medicaldevice and say, are these guys
in or out of, out of thatfunnel?
Keith Smith (12:13):
Yeah, I know it's a great point and, yeah, I jumped
into, and assuming that's putbehind us.
We did a survey, across, some ofthe major medical device OEMs
last year talking about what isthe most important thing, to
consider for, choosing acontract manufacturer and was
product quality.
And what was interesting, ofcourse, that makes sense.
(12:34):
It's not probably any surprise.
We're dealing with medicaldevice.
We all need to have these ISOsystems.
We need to have clean rooms.
We, we need to have, arelationship with the FDA.
So, GMPs, good manufacturingpractices.
So all those things are there.
But what was interesting issaying, as they look across the
world and they understand whothe contract manufacturers are
(12:56):
in this, in the medical devicespace, that's table stakes.
And so you end up not reallybeing able to differentiate
yourself much there.
Uh, the next one though wassurprising, was that, was this
flexibility in operations.
And so what they're saying isthat they're not able to get,
the transparency from contractmanufacturers that they're
(13:18):
looking for.
I want to know what's going onwith my order.
I want to know what's going onwith my project.
There's limited touch points,uh, within, these, the contract
manufacturers.
They only have a single point ofcontact, so it's hard for them
to understand how important theyare to the entire organization.
Pat Kothe (13:35):
When you say transparency, you gave a couple
examples.
Are they also interested in anymanufacturing issues that come
up?
Keith Smith (13:42):
Yeah, what, what might be my delays?
There's stories behind each oneof these surveys, and, the
biggest complaint wasdeprioritizing orders, and it's
not just that, hey, I gotta, Iplace an order, I gotta call a
week later, then I'm beingpushed back behind somebody
else.
They are expecting shipment on acertain day, and they're getting
(14:03):
a call then that, Hey, you'renot, it's not going to come in
four to six weeks.
We had to run other orders.
I don't know about you, but ifyou, not just in MedDevice or
Business2Business where I live,it's really anywhere I go,
whether it's retail,restaurants, anything like that,
it ends up being that serviceseems like it's really.
(14:24):
Since COVID and we haven'tgotten back to that level of,
Hey, there's other people thatneed something on the other end
of this communication.
And how do we help them besuccessful?
And we look at that at Vonco asreally a key differentiation
point that we can be veryresourceful to our customers to
(14:45):
help them win in theirmarketplace because they're,
they're dealing with constantchanges and, the more flexible
we can be with them, the moresuccessful they can be.
And, you know, in hopes they'llreward us with other projects
and other opportunities.
Pat Kothe (14:59):
Keith, there's been, horror stories within the
industry of single source itemsand a catastrophe, a hurricane,
a fire, an FDA issue andsomebody's supply chain is
wrecked.
How do you guys deal with dualsourcing from your manufacturers
as well?
Keith Smith (15:20):
Yeah.
So the big buzzword, you'reprobably more aware of it than
me, but it's supply chainresiliency.
We really can't have a strategicconversation any more without
that, that topic.
It started with the hurricanesin Puerto Rico and even today
we've got, uh, one coming intoTampa we were talking about.
And so the, ever changingweather patterns, certainly
(15:42):
creates, risk for the supplychain on a continual basis.
And then of course, COVID wherethings just shut down in certain
countries that, Uh, many of theorganizations were, over
leveraged in and, supply chainstopped.
And so it's, it really is, anational security risk,
certainly with the products thatwe talk about being able to
(16:02):
provide in these, in, in, inthese, certain, pandemics and,
climate, related, issues.
So that, is a common.
And certainly for us, we alsohave to be, diverse in our
supply chain as well.
I think the biggest, risk rightnow are these international
(16:24):
supply chains.
And that's been the mostchallenging.
and I get it, right?
the, it's a global marketplaceand we need to look for great
opportunities from a coststandpoint, new markets to grow
in.
but we end up getting tooisolated, in one area and there,
it creates a lot of risk.
And so for us as a contractmanufacturer, we do diversify
our risk, but I would say thatthere's also some security in
(16:47):
that we're, highly leveraged inthe U.
S.
The natural resources are beingpulled out of the U.
S., the manufacturing's beingdone in the U.
S.
And then, some of thesubcomponents and our sub tier
suppliers, and we diversifythere, and then we have multiple
plants across, the Midwest todiversify, the risk within our
(17:08):
own operation,
Pat Kothe (17:10):
Historically the pricing in the US or US
manufactured product is higherthan what you can get in other
parts of the world, but there'sthis trade off as we just talked
about.
have manufacturers started toembrace the change a little bit
more?
Keith Smith (17:28):
I would say that.
They're open minded.
I think we're having plenty ofconversations around, there,
there are some, movements ofproduct that, they have to trade
off towards, a potentiallyhigher cost area.
I am so committed to U.
S.
manufacturing.
it's just a passion of mine.
And to watch the evolution ofrobotics and AI and systems,
(17:51):
basically industry 4.
0 that we're going to get thereto automate as much as we can.
And I think, where we can win alot is where it's not that labor
intensive.
If you've got a lot of manualpicking and packing, and you're
going to put a lot of peopletowards it, it's certainly going
to be more difficult tomanufacture in the U.
S., but if we can put ouringenuity and, continuous
(18:14):
improvement, uh, mindset to,manufacturing in the U S we can
find ways, to still remaincompetitive.
That's what we like to do istake that risk away and also see
if we can, meet the economics ofthe project.
Pat Kothe (18:27):
I wanna go back a second and cover, the subject of
bringing a product in.
Let's assume that it's a, that'sa new, it's a new device from a
manufacturer and they've gonethrough and designed it.
They haven't manufactured it.
We know that when there'stransfer to manufacturing,
there's a lot of things thatneed to occur in that it's
(18:49):
building, the tooling, theinstruments that needed to do
it, the recipe on, on how tobuild, uh, build these things.
It typically doesn't come infully baked on how to
manufacture the, the product.
When you're talking to a companylike this, how does that work?
Keith Smith (19:06):
We will design for our medical device OEM.
So that's probably, I would saythat's the best way to manage
this process.
Let's start from the scratch todesign together so that we have
manufacturing in mind.
So you've got designers thatwill just design and then it
goes to somebody to manufacture.
But if your intent is to havethis contract manufactured
(19:29):
anyway, it'd be great to startwith that contract manufacturer
so that you can design formanufacturability.
So that's one way to preventsome of those challenges and not
get too far down the path with,with a design that may not be
cost effective to manufacture.
And that's my next point isthat, there's a high probability
that we could manufacture yourdesign as designed, but you may
(19:52):
not be so happy with that cost.
we want to lay out thoseoptions.
And so we talk about, and use aprocess, during, it's called a
spark session.
we're doing innovation plus alsodesigning for manufacturability,
a roadmap to commercialization.
So it's a process we'll worktogether to design with the
inputs and outputs that thecustomer is looking for and then
(20:13):
talk about how we can get thisto manufacturability, the
timeline, the cost to do so, aswell as, what we believe the,
finished cost will be.
And so if we end up in a designfreeze before manufacturability,
many times you're going to endup with some challenges on your
(20:34):
unit cost expectations.
If you come into that with openmindedness, okay, I've got a
design I want, but I have someleeway on this design because I
don't know exactly how it'sgoing to be manufactured, that
works best to hit both.
Pat Kothe (20:51):
Some of our listeners may not be on the manufacturing
side of things.
Uh, and when you're amanufacturer of a device, and
let's say you're building it on,in your buildings, you're
manufacturing the device, eachone of the components that comes
in is, going to be a supplier,and some are going to be
critical suppliers, and some...
Some are not, but each one ofthose suppliers you have to have
(21:14):
a relationship with.
You need to audit them.
It's all part of your qualitysystem, and you need to make
sure that each one of them isliving up to their commitments
from a quality standpoint.
That's if you are themanufacturer and things are
being built in your building.
Sometimes when you go to acontract manufacturer, now it's
(21:36):
Contracts, contractmanufacturer's responsibility to
manage all of thoserelationships.
And the company no longer saysthat plastic supplier is, is a
critical supplier for me.
It's a critical supplier for thecontract manufacturer.
And the contract manufacturer ismy critical supplier.
Is that the way that, most ofthe companies are working with
(21:58):
you?
Keith Smith (21:58):
It does, so the answer is yes, from the
standpoint of they'll typicallynot, have to do the audits on,
on my suppliers.
And so they are able to simplifytheir process, and, from a,
supplier quality engineer.
So the answer is yes.
but we are, an open, run an openbook, with, our suppliers.
(22:19):
We, we divulge who we're usingand why we're using them and the
audits we do so that, there'stransparency in how we operate
so that they can be assuredthat, we're doing our job.
Pat Kothe (22:30):
Is price, is pricing also open or is that something
that you hold in?
Keith Smith (22:34):
Yeah, you know, we, we share, uh, all the cost, uh,
buildups, uh, of our, um, youknow, of our products.
Uh, we give them basically inthe roadmaps commercialization.
Here's your pie charts.
If you want cost reduction, you,we need to pull it out of, you
know, here's your main costbucket.
Here's the other cost bucket.
Here's the price and here's thepie pieces, that make up that
(22:55):
price.
And so where do we pull it outof if we need cost reduction?
Pat Kothe (22:59):
So the manufacturer of the company is relying on
your quality system.
That's a critical component toanybody who is in, in, in our
business too.
So what makes a goodrelationship or how do you
manage the regulatory side ofthings with the companies?
Keith Smith (23:15):
The manufacturer record is typically the, my
customer, the OEM.
we have, certainly havingcertifications is important.
Step number one is having yourclean room certifications,
having your ISO certifications,your facilities that are
certified, your FDAcertifications, those are all
really important, parts of thatrelationship.
(23:36):
But for the most part, we arebeing audited, typically
annually by, many of our, top,customers.
Like I said, the more suppliersthey have, the more audits they
have to do, the more maintenancethey have to do.
The incoming inspections,certificates of approvals,
design history, recordstypically going back and forth,
so that, we can meet all the,regulatory, uh, hurdles to, to
(24:00):
manufacture products, formedical devices.
Pat Kothe (24:03):
In my experience, that's critical.
In my experience, that's notuniversally, available to
everybody or the ease is not, iseasy with, going from one
contract manufacturer toanother.
The ability to have thatopenness and the ability to
share that information in anorganized manner is a huge
(24:24):
benefit to the, to themanufacturer.
Keith Smith (24:27):
Yeah, our goal is, the vision of the company is to
have our valued customerspublicly declare the ease of
doing business with us.
So whether it's the service orwhether it's the way we help
them with their regulatory,challenges or, the way that we
communicate that information tomake it easy, on their supplier
quality engineers, that's, thatis our goal.
(24:49):
Number one.
I agree we, and we have a greatquality and regulatory team
that, stands by to help, withthe many different questions and
challenges that can come upwith, being in our industry,
Pat Kothe (25:01):
So Keith, how many employees do you have at Vonco?
Keith Smith (25:03):
we have 170.
Pat Kothe (25:04):
And what percentage of them are on the regulatory
side?
Keith Smith (25:09):
Yeah, I would say, I lump them all within the
quality and regulatory group,they can go over that, but
there's 10%.
It's a decent amount, right?
It's just way more than someother industries that I've been
in.
Pat Kothe (25:22):
Yeah, it's so critical for us.
Going back to what we're talkingabout early on the business side
of this, and, you've got, you'regoing through the design for
manufacturing, understandingwhat it is, and now you're
getting to starting tomanufacture, this product and
(25:42):
companies aren't real goodgenerally at forecasting.
How do you manage that whenyou're investing all of that
time into that, tell me fromyour side, how are you
evaluating whether somebody'sforecast holds water?
Keith Smith (26:02):
yeah, it's, it is a constant discussion because
it's, it is so important to ourcost structure to be mindful of
the resources we apply, and thatwe're actually going to get paid
for the resources we'reapplying.
It is an important process.
Our business development and,customer service groups spend a
(26:22):
lot of time with the peoplethat, uh, understand, our
customers that understand theseforecasts.
And again, our goal is to beresponsive to those changing
needs.
We ultimately want to know assoon as possible, so we'll be
the ones actually creating thetouch points to make sure we're
at the tip of the spear of theinformation that they have,
(26:43):
right?
We don't want to be, hey, I'vebeen sitting on this for a
couple months, and we could havebeen finding ways to redeploy
resources, two months ago, andnow we're caught flat footed.
So, we spend a fair amount oftime ourselves being proactive,
trying to, understand ourcustomers market demand for
these products.
But we do put in, what we callPlatinum Service Programs and
(27:06):
these Platinum Service Programscan...
Uh, a lot of this for them.
It's basically a Kanban programfrom finished goods back through
our supply, our suppliers on areplenishment models.
And it takes a little bit ofcommitment that you're committed
to this project, more than orderto order.
But, if you have that luxury, wecan buffer that changing demand
(27:29):
without impacting.
too many, costs on our side sothat we, I think it's a benefit
that you have very quickresponse for our customers and
our benefit is that it, levelloads our production.
Pat Kothe (27:41):
Tell me a little bit about your business model.
is it, a.
Project based at the front endwhen you're going through this
transfer to manufacturing andthen price per unit once you're
up and running.
Keith Smith (27:55):
Yeah, that's, that's typically the way the
model will work.
And it depends on where they'reat in their design process.
And in some cases, the designand manufacturability is not
that complicated.
we'll end up, just doing, asmall trial on a unit price all
the way through.
But the majority of theprojects, come in, that there
is, some, upfront, engineering,project work, based on hours
(28:19):
and.
And then we move intomanufacturing, at a unit, unit
price.
Pat Kothe (28:26):
Keith, how'd you get into contract manufacturing?
Tell me a little bit about yourcareer.
Keith Smith (28:30):
Yeah.
Yeah.
Well, it's, uh, again, this iswelding plastics and this,
believe it or not, it's, andit's hard for me, I guess I say
it to myself, believe it or not.
It's been 30 years, that I'vebeen in and around, flexible
films that, that are welded.
And it started in the foodindustry.
Uh, there's many products like,uh, uh, the company that I
(28:50):
worked for right out of highschool was the leader in making
potato chip bags.
There's a printing process andyou bring some different
plastics together that keepsthose chips crispy and not stale
and, and you turn it into a bagand voila, you're selling a lot
of those things across the U.
S.
Anyway, I started as a printer,just really trying to earn money
(29:12):
for college and the company thatI worked for had a education
reimbursement program.
So I stuck around for, insteadof just the summer, 12 years.
And so I got two degrees,through that and, did an
engineering stint.
And, after I finished my MBA,was really interested in
starting to lead my own,operation.
And so I changed companies and,that's where I started to meet
(29:35):
more entrepreneurial folks and,started building that, that bug.
I worked, for, that secondcompany, from 2005, seven years
to 2012.
And along that time, I just, hadthis, bug to continue on, doing
my own thing and...
started searching for companiesin 2011 and finally closed a
(29:56):
deal for Vonco in 2013.
So moonlighting, at my previousjob, as a general manager.
Since I was a kid, I just had a,basically a dream to, to run my
own business and, create valuefor the world, more value than I
can create myself.
So I, I'm not somebody that, istrying to just do consulting
hours on my own thing.
I like having a team that, wecan all work together and help
(30:20):
everyone within the organizationachieved their hopes and dreams
as well as help our customers dothe same thing through the
products that they're providing.
And so at first, I thought I wasgoing to keep going on in food
when I bought Vonco, but, weultimately had some really great
products for medical devices andwith very limited marketing, we
continued to grow in that thatsegment in industry.
(30:44):
And, after a few years, I maybewe should market in this area
and, lo and behold, we're about85%, medical device now, uh, 10
years later.
So it's, it's been a tremendous,opportunity that working in
medical devices way morefulfilling, than I ever, dreamt
it would be, with some of thethe work that we're doing and
(31:04):
products we're inventing withsome of our, customers, as well
as, the market information weget from a broad spectrum, we
can create, our own devices.
For instance, we've launched afew patents and our own devices,
510Ks that help our customersgrow in their marketplaces.
Enteral feeding, for instance,is a big, innovation that, we've
launched to help tube feedershave easier and better ways to
(31:29):
fight malnutrition.
And so that, to me, has been sorewarding in launching those
types of innovations in thisspace.
I can't believe it's justcoincidence that I ended up here
and that happened.
It was, it's what I was destinedto do.
And so, it was super exciting aswe've really Just become
(31:51):
passionate about, helping inthat medical device.
Pat Kothe (31:56):
So 2011, 2012, that's when you, you purchased the
company.
How, how old is Vonco?
Keith Smith (32:02):
Vonco's been around since 1955, I'm the third owner
of Vonco, and the, first twoowners were family, and so it
was somewhat of a, let's call ita job shop.
It was industry agnostic, so ifthey needed to, very specialty
welded, bags at first we startedactually making equipment to do
(32:23):
the welding and we tried to sellthe equipment and then the
second generation came in, intothe business.
It's named after the family,Vonco is named after the founder
and, he had, approached hisfather in law with a, we should
sell the consumable and not justsell the, the equipment, you get
lumpy sales and the equipment.
(32:43):
And we ended up in lots ofdifferent, uh, diverse, end
markets, doing that, um, or ona, a regional, basis.
But we were about 40 percent inmedical device when, in 2013.
And so they're, they started tosee that track.
But we were, we also were toodiverse and many other areas
(33:04):
that distracted and consumedsome of our resources.
When we found the opportunity tofocus, it's been a great, march
because now we can, move those,move all our resources in that
direction
Pat Kothe (33:17):
so you bought an existing business with, with one
focus and sounds like.
Early on, you need to, needed torefocus the business and refine
who your customers were.
Keith Smith (33:30):
for sure.
Pat Kothe (33:31):
Tell me about that challenge, because that's a
significant challenge,especially a company that's that
old, that has their old way ofdoing it.
Keith Smith (33:41):
Yeah, it's a great story, uh, Pat, uh, it's, uh,
really kind of the, the personaljourney I've been on.
Here I was, uh, general managerof a half billion dollar
division sitting on the thirdfloor with a nice view
secretary, uh, you know, and,uh,
Pat Kothe (33:59):
all of a sudden, welcome to startup.
Keith Smith (34:00):
two, 2, 000 people.
And I've worked as a plantmanager along my way and things
like that in some smallerplants.
And so I've understood that.
But, you know, it was kind of anawakening that first week of the
journey that we needed to go onto get to where we're at today.
And we're not done by anystretch of the imagination.
We have lots of opportunities tocontinue to grow and improve.
(34:25):
but that journey, did consume meand it was challenging and,
taking a family orientedbusiness and making it a bit
more of a corporate feel to dealwith some of the major med
device companies that we aretoday.
It was pretty much allconsuming, let's put it that
way, right?
So I'd wake up, in the morningand it'd be check messages and
(34:46):
get into the office as quicklyas I could and hope I can make,
my son's baseball game orwhatever's going on, after that.
It definitely consumed me andreally, even if I was engaged in
another conversation, businesswas on my mind, right?
What's going on?
And how are we going to get thistransitioned?
And how do we build the growththat we know, the potential that
(35:08):
the organization has so that,our customers in the world,
quite frankly, see it and feelit?
Pat Kothe (35:13):
When many of us get put into a situation like that,
our lives get out of whack.
I've had periods of time where,you know, the job just is all
consuming.
And it just takes over and youknow that you're suffering on
other parts of, of your life.
(35:34):
Did that happen to you as well?
Keith Smith (35:36):
Oh, for sure.
There's lots of, lots of reasonswhere, uh, certain areas of my
life didn't go the, the, to thesame.
Spot that I thought it would beat this point.
Uh, but I, I do believe, uh, youknow, that drive that
entrepreneurs have, for buildingsomething greater than
(35:57):
themselves, becomes so consumingthat it starts to chip away at
the foundations of many otherareas that something is going to
crumble.
For me it was in myrelationships, it was my
marriage.
Over time, it just, it becametoo difficult to, to, to manage,
uh, that, that marriage, um,and, uh, and it, it, we
(36:18):
ultimately ended up in divorce,uh, uh, some years back.
And so...
Uh, you know, I talk about it inreally many different ways now
in that reflection and myjourney and what I needed to go
through to, to understand thatis that there's this kind of
path of force.
I'm trying to force thisbusiness to be the potential it
is versus the business has a lotof potential.
(36:41):
It is today.
And so being versus doing is abig difference.
So you're trying to force it.
And then when you're being, whenyou're being that you're a bit
more attractive.
And so ultimately I look at thatin being is that I've got to
focus, I got to put enough fuelin my tank so that I can
overflow into everything elsearound me.
(37:03):
Not, I use this analogy on theother side of it is that I'd
wake up in the morning and I hada full tank of gas and everybody
was just consuming that from mefor that entire day until I left
my office exhausted.
And flipping that around, I needto do enough to keep my tank
(37:24):
full all the time that it'soverflowing so that when people
need me, and everybody is neededin my organization from time to
time, no matter where you're atand it's not consuming my
energy.
It's actually taking my overflowof energy.
And so I had to be verydeliberate and intentional at
starting with myself, quitefrankly, and saying I need to
(37:47):
make sure I do the right thingsthat fill my, bucket so that
it's overflowing.
So it starts with the rightamount of, reflection, the right
amount of reading, the rightamount of, morning routines has
been a, certainly a big thingbefore I get into work, it's
two, two to three hours I spendon myself and my health and
(38:07):
fitness, uh, so that I remain,energized no matter what, what
happens, uh, I, I can, I can gohome after 10 hour day now and
still be as excited to playcatch with my son, Jacob, as if
I just woke up.
And so it's just a big shift inthat energy.
And then really for myrelationships, I, I.
(38:29):
I need to find time.
I need to be deliberate,intentional to carve time out
for my son, my two daughters,uh, for, uh, my girlfriend.
I, I need to find those, thattime because it, I become a
better leader because I havethese people in my life.
And so it, it's, it doesn't needto work one or the other.
It's not a trade off.
(38:49):
it works together, to create,attractive energy.
Pat Kothe (38:54):
Can you be a stellar performer in one part of your
life, stellar, and still havetime to do other parts of your
life?
So for example, many of us haveApple products.
Steve Jobs was a phenomenalbusiness person.
Keith Smith (39:17):
Mm hmm.
Pat Kothe (39:18):
Personal life, not so much.
One of my, you know, you're aChicago guy, you're a Cubs,
you're a Cubs and
Keith Smith (39:27):
Yeah.
And bears.
Pat Kothe (39:28):
Bears guy.
Keith Smith (39:29):
can't even say bears, can you?
Pat Kothe (39:30):
I can't.
I'm a Packers guy.
And, and one of my favoritebooks is a book David Moranis
wrote, it's called When PrideStill Mattered.
And it's the biography of VinceLombardi.
And Vince, very similar.
Vince, obviously, everybodyknows what a great coach he was.
(39:53):
But a lot of people don't knowhis personal life was a
nightmare.
with his kids and his wife and,it just wasn't balanced out that
way.
So I've always, I've alwaysthought of that book.
and I thought of this,throughout my career is how do I
make sure that I'm successfuland am I willing to trade my
(40:14):
family for success in anotherarea of my life?
And I'm not, uh, you can stillbe successful, but that's always
the question that I wrestle withis do I need to sell my soul in
order to, you know, have thebest company
Keith Smith (40:32):
Mm hmm.
Pat Kothe (40:33):
and, and I don't think so, but I know that that
example is out there for otherpeople that have done it that
way.
Keith Smith (40:41):
Yeah, I, I, for an individual basis, I think it all
comes down to, I do, so first ofall, I do believe it's super
important to have a purpose andnot just, um, family, right?
Family, it, you hear that a lot,it's like, My family is my
purpose and I do think that is avery fulfilling part of life and
(41:03):
I, I, I would say that'simportant, but at least for me
personally, and what I've seenfrom, uh, other, other people
I've gone through this journey,networking I've, I've done
through this journey, It doesseem that there has to be some
purpose.
You get to define what thatpurpose is, and what you want to
create as maybe your legacy orhow you're impacting the world,
(41:26):
having both seems to be, theright way to actually be
fulfilled, right?
Because I don't know that, Hey,having that great success, Also,
when it comes down to that lastday, on this planet, I, I
believe Steve Jobs has beenquoted that, there's so many
(41:47):
different things that Iregretted, along that journey.
My goal would be to live withthe least amount of regrets at
that point in time.
And so, what is that purpose andwhat do you want from those
relationships?
So, if, uh, if, I think if, uh,Vince and I haven't read that
book, I am a, I'm a fan, winningis a habit, um, and I, I believe
(42:09):
in that wholeheartedly, that ifthat's what he intentionally
did, then fine.
If it was, hey, I'm going tohope to hold these relationships
together and do this.
But not be intentional anddeliberate about being a, being
better in those relationships, Iwould think that that would eat
at them.
And that's what, what happenedto me because that wasn't my
goal was to let thatrelationship deteriorate.
(42:31):
I, one, I, I, I didn't reallyknow how to fix it after it kind
of got off the tracks.
And two, I felt like I was doingthe right thing by building the
business.
And at some point I would beable to have the time to work on
that relationship.
And I always felt like there wasmore time.
There was more time.
I'll fix it when the business issettled, but guess what?
The business never really getssettled.
(42:53):
There's always something to do.
But I think it's a personalchoice.
Pick your mission and what doyou want that to be and how you
want those relationships to be.
And I do believe once you putthat out there and you're
intentional and deliberate aboutthat purpose, you can do both.
Pat Kothe (43:09):
I think what we're talking about here is, are you
managing your life or is yourlife managing you?
At some point in time, you justhave to stop and say, Hey, this
isn't good.
This isn't what I signed up for.
this isn't who I want to be.
Did you see that coming?
Keith Smith (43:26):
No, it took divorce to make me kind of say what,
what got my life so out ofkilter here?
And, And it really didn't haveto be the business.
I actually believe as I wentthrough this re...
alignment process of saying,what do I want in these facets
of my life?
What do I want for myself?
(43:47):
What do I want for my health?
What do I want for myrelationships?
What do I want for my, um,legacy?
Uh, and then what do I want formy business?
And when I actually wasdeliberate and intentional about
that, I was able to find thetime.
I don't know if you ever sawthat, parable kind of experiment
where there's these, uh, you putthe, you put the, um, sand in
(44:09):
first, then you put in thepebbles, then you put in the,
and then there's no room.
But if you put the rocks infirst, and then the pebbles, and
the sand around it, everythingfits.
And that's, uh, generally how Isee it now when, when I got
deliberate and intentional aboutthat, I now all of a sudden have
time for it all.
No different time, but I alsohave been managing my energy,
(44:31):
so, uh, I'm energetic for eachone of those things and I'm
mentally in flow with the goalsthat I want to achieve in each
one of those areas.
Pat Kothe (44:40):
Is that something that you did by yourself or did
you work with somebody?
Keith Smith (44:43):
I, yeah, I, I needed someone to kind of slap
me and say, wake up.
Um, you know, that, uh, you're,you're just, you just have your
priorities backwards.
You know, it, it really, thesimplest thing was that, um, you
know, I needed to start withmyself in the beginning of the
day so I can give to others therest of the day, and I started
(45:04):
with everybody else withbusiness and showed up there and
then tried to fit everythingelse around that.
So I would say, I don't thinkthere's any less time I spend at
business uh, than I did, fiveyears ago, but I would say that
I've already got the otherthings done that are important
to me before I start there.
Pat Kothe (45:23):
It's common to hear, leaders eat last, servant
leadership.
all of these things that we talkabout, but that doesn't mean
that, we shouldn't fillourselves up, as you said.
And you got a siphon hose inyour, in your tank, it's every
siphon you need a whole time,and you don't have time to fill
it up.
(45:43):
You're not going to be any goodto anybody when you're on the
side of the road and your tankis empty.
Your
Keith Smith (45:48):
it's the airplane example, you know, put your mask
on before you help othersbecause you pass out doing it.
Who's helping you?
So it's, it is, it's superimportant.
That transition is, probably,there's lots of little things
along the way, but that has beenprobably the biggest
reprioritization that's allowedme to live what I'd call a way
more fulfilled life and a waymore attractive, leader, instead
(46:13):
of forcing that, uh, Success.
It seems like, uh, success is,uh, attracted, uh, to, to us
now.
Pat Kothe (46:21):
Your employees saw you on both sides of the
spectrum.
What was that like for them?
Keith Smith (46:27):
Yeah, I'm, I'm a pretty open book, uh, about it.
I, I think that, uh, they've,they've noticed a lot of, like,
I look different physicallyeven, you know, uh, just
healthier and, and more vibrant.
I probably masked it prettywell.
I had a lot of energy cominginto work and most of the, the,
like fall off was more at home,right?
(46:47):
Less energy for home and doingthose things and committing to
those areas.
And, so I think some of that is.
is part of it, but, it happenedright on before, COVID and, the
way that we responded and COVIDand helped, it, it really
reshaped our organization.
And since then we've done threeacquisitions in three years.
(47:07):
We've expanded our building.
We've expanded our productlines, We've expanded our
customer base into, more toptier, medical device OEMs, so
that's what I believe the,employees started to see, hey,
there's a new person, here, butat the same time, we're starting
to see some growth.
Pat Kothe (47:25):
So you said you're, you're open and transparent
within the organization.
Is this a message that you'retaking, you're bringing out to
your employees?
Keith Smith (47:34):
Yeah, we do that through really, what we call
cultural operating principles.
Many of the things that I'vegone through, are what the
culture I would like to seeacross everybody, uh, within the
organization.
Each week we spend time invideos, across the four sites
and talking about it, amongstour leadership team of what
those, principles and culturesand behaviors all look like.
(47:56):
And, uh, transparency andauthenticity, are very
important, and inter interwovenin all those cultural, operating
principles.
So yeah, we're a very, we're apretty open book.
In many different facets.
but, uh, you know, I do a fairamount of these podcasts and a
lot of it, a lot of it's aroundthe balance, not as much around,
the actual company around theentrepreneurial journey.
(48:18):
And I, and I, I like to coach,uh, in that area as well.
I do some incubator classes withsome of the high schools and
colleges, and so it's, uh, it'sa passion of mine.
I like to have thoseconversations, uh, certainly
with my leadership team and thenas public as anybody wants to be
about, uh, that.
Pat Kothe (48:39):
So some people are out there struggling right now.
Some people are out there thatthink, geez, my life is not
quite what I wanted it to be.
What are a couple of the thingsthat you would tell them to help
them to turn things around?
Keith Smith (48:56):
Whatever those struggles and challenges are,
they're not you.
They don't make you.
They're just events.
The key for me is to define whoI am and what I want those
facets of life to be.
And manage your energy to focuson what's most important to you.
So ultimately what's, what'simportant to yourself?
(49:19):
What do you enjoy doing?
What fills your energy?
Make sure you spend time doingthat.
What's important for your healthso that you'll have the, have,
good fitness and nutrition anddefine that and do that.
You start stacking these littlewins that are controllable for
you.
Now you get into things whereit's two people relationships.
So what can you control there?
(49:39):
I can control that I, I'm goingto send a letter to somebody
each week at a certain time orin different people, or I'm
going to focus on my daughterto, uh, this week and take a
daddy daughter date.
And so I'll get that done, beintentional.
And you start stacking thesewins and, uh, all of a sudden
you now start seeing that inyour in your legacy, you start
(49:59):
seeing that in your business andstart stacking those wins.
I think that's what turns itaround.
But I, I, I felt like, uh, for along time, these problems and
challenges in these other areas,was, that was me, that, that
defined my being, and these werejust events and, I can control
different parts of my life andthe more intentional and
(50:22):
deliberate I got about what Iwanted, and then what's my next
step to achieve it.
Not, I don't need to know how toget all the way there, but
what's my next step?
And there's just power in takingthat next step.
And then when you do it, thenext step, and it just keeps
stacking.
Pat Kothe (50:39):
Now that conversation covered some ground.
Big, thanks to Keith for sharinghis thoughts on contract
manufacturing.
But also for his openness indiscussing his personal journey.
I was really appreciative of himsharing tough details of his
life.
But equally impressed that he'sdoing so to help others who may
(51:03):
be headed to where he was.
A few of my takeaways.
First contract manufacturing,and when to use it.
I found it interesting, hetalked about, you know, the
different phases that we havewith, uh, with our products and
contract manufacturing, beingappropriate at the front end,
when you really don't have agood understanding of, of.
Uh, kind of what your volumesare going to be.
(51:25):
And at the backend, in thatdecline phase, and kind of helps
to diversify fixed costs asvolume starts to decline.
And I think it's interestingfrom our standpoint, but also
from our, our, uh, partnerscontract manufacturers, they
have to look at these projectsalso in terms of risk and then
(51:45):
how, how they're going tomitigate their risk.
And Keith talked about managinghis risk profile.
So make sure you're a goodpartner.
Uh, when you approach contractmanufacturers as well.
The second thing was evaluatingcontract manufacturers.
And we, we discussed, you know,what the table stakes are.
Experience with medical device,experience with FDA and ISO, and
(52:08):
whether they manufactureproducts similar to yours.
But Keith took it a little bitfurther and talked about the
importance that, uh, OEMs placeon transparency with their
contract manufacturers,completely understanding when
something may not be going asexpected so that everyone can be
in the loop.
Every everyone can do theirplanning.
(52:29):
And it kind of leads also intothis issue of supply chain
resiliency.
You know, where are you strong,where you're weak with, uh, with
your supply chain and howcontract manufacturers can help
you in that area too.
The last thing was, you know,The second half of our
conversation and that's reallyliving a complete life.
(52:49):
And Keith was very open to thecost of imbalance in his own
life.
But We all have costs whenthings get out of balance within
our life.
Keith discussed, if you feelthat you've got that way, get
help.
Get somebody else to help youbecause you don't always see it.
See it yourself, what what'sbrought him.
Um, growth and satisfaction isdefining priorities.
(53:13):
What are the priorities?
And then developing an actionplan to be able to make sure
that you are dealing with theright things in the right order.
And I really liked him talkingabout keeping your tank full and
going to work with your tankoverflowing so that you would,
you don't get drained by the endof the day and got nothing left
for the people that are mostimportant in your life.
(53:35):
Thank you for listening.
Make sure you get episodesdownloaded to your device
automatically by liking orsubscribing to the mastering
medical device podcast whereveryou get your podcasts.
Also, please spread the word andtell a friend or two to listen
to the mastery medical devicepodcast, as interviews like
today's can help you become amore effective medical device
leader.
Work hard.
(53:56):
Be kind.
Welcome! I've got a very interesting episode for you
today.
We cover two completelydifferent topics in a
conversation with one person.
I know these topics will providemuch for you to learn, and to
think about.
The first topic covers contractmanufacturing, and the second is
(00:53):
more personal.
What causes our life to get outof whack when we focus more on
work than we should.
And what we can do about it.
Our guest today is Keith Smith.
Keith is CEO of Vonco Products,a medical device contract
manufacturer that works withsome of the largest companies in
(01:13):
our industry.
In the first part of ourconversation, we discuss why
companies decide to use contractmanufacturers, what they look
for when choosing one, theimportance of transparency, and
how Vonco transitioned from ajob shop serving many
industries, to focus on highvalue industries like medical
(01:36):
device.
The second half of theconversation goes deep into
Keith's personal story about thecost of going all in on
business.
What he learned and how he's nowreprioritized his life, while
maintaining a strong growthmindset in his business.
(01:57):
Here's our conversation.
Keith, the idea of verticalintegration, has been around,
forever, uh, where a companyowns its own supply chain.
But it's not quite the rightthing for all companies to do
with all products.
Sometimes it's, uh, you know,depending on where you are as a
company, it may not make senseto, to manufacture your own
(02:18):
products.
Sometimes when you're a largecompany, not all products would
you vertically integrate andbring all that inside.
So how do contract manufacturersfit in, in today's world?
Keith Smith (02:31):
Yeah, it's a great question and exciting to be a
contract manufacturer and seehow this process works and the
value that Vonco products cancreate through this process.
It's typically in theconversations we're having with
major med device companies andnew entrepreneurial med device
(02:52):
companies is around wherethey're at in the product life
cycle.
Uh, and there's, uh, really whatI would call three phases.
There's the introduction phasewhere it's high growth, there's
the, the mature phase whereit's, pretty steady growth,
moving into a slight decline,and then there's the decline
phase.
And I would say really at twoends of that spectrum are the,
(03:14):
what we hear is the mostimportant time to have a
contract manufacturer involved.
And it's mostly around keepingyour costs more variable than
they are fixed.
And so when you bring somethingin, in house, a product to, to
manufacture in house, you'regoing to inherit a fair amount
of fixed costs of whether youproduce it or not.
(03:34):
So when you're in the risky partof the high growth, it's great
to have those, products in avariable cost model because you
can depend on a contractmanufacturer to manage the fixed
costs and spread that acrossmany other, diverse
opportunities.
and likewise when you're in thedecline, believe it or not, you
(03:55):
want to shed the cost as soon asthe volume starts to decline.
And so a contract manufacturermakes sense on that end to help,
again, diversify those fixedcosts as the product declines.
Certainly, when the, you startto see a more steady state,
growth, and more competitors arebeing attracted, it might make
sense for, OEMs to manufacturethemselves.
(04:18):
It amortize the costs of a plantor find ways to get their own
cogs down when it's a, a steady,GDP type growth, three to 6
percent growth rate, makes a lotof sense to start figuring out
how to make
Pat Kothe (04:35):
That variable cost is interesting at the tail end
because it's fairly predictableas the curve is going down.
At the front end, it's reallydifficult to predict where
volumes are.
it makes sense from thecompany's standpoint to say,
Hey, we want somebody else totake that risk.
(04:59):
It's got to be risky for thecontract manufacturer because
the manufacturer comes in andsays, Hey, we're going to, we're
going to sell X amount of thesein year one.
And yeah, it doesn't happen andyou're stuck with the resources
and all the training that youdid to get the product up and
going.
So has that been, uh, is, is, isthat kind of the difficulty
Keith Smith (05:20):
life, that's the life of a contract manufacturer
and the way that, we're able totake on, let's call it more than
our fair share risk of the OEM,is diversifying that risk.
So by running multiple projects,we have a higher probability
that, some of those are going.
And we also have, products thatare in different life cycles
(05:43):
that are growing on top of it tohelp, absorb that risk on top of
it.
So.
I think that's really why theeconomic model works for
contract manufacturers becausethey're able to diversify that
risk.
Certainly, as we look at ourrisk profile, it comes down to
how much do we need to developversus how much could run across
(06:05):
certain equipment we alreadyhave in open capacity.
So as we evaluate that riskprofile, it's important we have
that diversity and balancewithin the profile as some of
them are, let's call it verycapital resource intensive, but
we also have some that, uh, Hey,we have capacity today.
How can we help you?
Pat Kothe (06:25):
So there are many different types of devices from
very complex pieces of equipmentto not complex pieces of
equipment.
Contract manufacturers can liveanywhere in that spectrum.
Where are you guys in terms ofthat spectrum?
Keith Smith (06:40):
Yeah, so the, our specialty across, all four of
our facilities is really aroundwelding flexible plastics.
We make, single use, products,typically that collect, fluids,
in and out of the body ortransfer fluids from one spot in
the hospital system or, ortransport products through, uh,
(07:00):
the air from one clinic to the,the lab.
And so welding these, films,making pouches and bags and tube
fixtures, uh, to, to move fluidsaround is certainly one of our
biggest, uh, uh, areas.
Some, personal protective,equipment, some PPE, some,
device covers, certainly, youwant to keep fluids on or off
(07:21):
certain devices, those tend tobe, our specialty.
But what we also do, to try tocreate value and simplicity for
our medical device OEMs is to,do a full turnkey process.
So we'll make the packaging aswell, whether it's a foil,
package, it's a Tyvek package.
Same core competency of weldingdifferent plastics together.
(07:44):
We'll make the pouches that thedevice might go into, and we
also do contract packaging, putthe device in, into the package,
as well as then weld it andmanage the sterility of that
project.
When we think about if you needa, a single use product, VONCO
could be someone thatpotentially eliminates three,
four, five supply chainpartners, which are very
(08:06):
difficult to maintain for mostmed device OEMs.
It's, there's a lot of rigor ineach, company that's named on
their approved supplier list.
Pat Kothe (08:15):
So going back to the original question about vertical
integration.
vertical integration, can occurat the process.
company manufacturing level.
But it sounds like verticalintegration within a contract
manufacturer is very importantas well.
Keith Smith (08:31):
It does exist.
Yeah.
The more we can simplify thework.
These projects that, ourcustomers, these medical device
OEMs have to go through, they'requite complex.
And so there's a myriad ofsuppliers trying to get a
project across the finish lineto launch a product or even
transition a product, that'smaturing or exiting.
(08:53):
To find, Simplicity in that, is,very, refreshing for the medical
device, world because there's somuch, so many moving pieces to
manage.
Pat Kothe (09:03):
So we described where someone would want to evaluate
whether they want to do arelationship with a contract
manufacturer.
When somebody makes thatdecision, I want to explore
this, there are a lot ofcontract manufacturers out
there.
How does somebody go aboutmaking a decision on which one
to choose?
Keith Smith (09:23):
I think the key, uh, is really we, we come down
to it as well.
We have this qualificationprocess ourselves and we've seen
it over the years.
It has to be a good fit and itcomes down, I think, ultimately
to a cultural fit.
In order for our best, projectsto work, is, are there multiple
stakeholders showing up forproject meetings?
(09:44):
I think ultimately that's what Ilook for in a good partnership
of whether we want to take onthe risk, with, a project.
And I would also, hope that, asthere's an evaluation process.
is there engagement fromengineers, operations, quality,
regulatory, the business, folksthat, are making the ultimate
buying and selling decisions?
(10:05):
And so that cultural fit on howthose teams gel together are
the, are the difference maker tome of whether projects actually,
are successful or they don't seethe light of day.
Pat Kothe (10:16):
From a manufacturer's standpoint, how are they
evaluating you?
What are the main areas thatthey're looking at to see
whether you're going to be agood partner?
Keith Smith (10:27):
Yeah, early on, it's innovation and speed to
innovation.
And so, you know, what type of,opportunities can we bring that
they didn't think of?
So that's early on.
second is the, opportunity toget their project across the
finish line.
So how do we manage the project?
and then third is really,another key differentiator is,
(10:48):
especially when we've got arelationship doing other
projects is understanding how werespond to the ever changing
demands.
It's constantly changing.
We were just talking about thechanging demand, uh, through
COVID and finding, amanufacturer that would help
move up and move down with thatchanging demand and, be flexible
(11:09):
in their operations to support,our customers end customer, the,
the hospital systems and, makesure that they don't stock out
or make sure that they have theappropriate service and quality
ongoing.
So I think those are really thethree key areas that we get
evaluated on and, and whether wecontinue to grow with a certain
(11:29):
customer or not.
Pat Kothe (11:32):
I've had the opportunity to engage with
contract manufacturers in thepast.
Some of the things that, thatyou look at is, does this
manufacturer do medical devices?
That's the first thing.
Do they have a quality system?
What is their quality systemlike?
Are they iSO certified, havethey, had FDA in, what other
companies are there, are theyworking with, what is their
(11:55):
workload look like, is theirproduct, is, are their
capabilities, match up with thetype of product, a product we
have, and then you start gettinginto kind of those fine tune
things, but it's like this bigfunnel and you got to start off
at the top if you're a medicaldevice and say, are these guys
in or out of, out of thatfunnel?
Keith Smith (12:13):
Yeah, I know it's a great point and, yeah, I jumped
into, and assuming that's putbehind us.
We did a survey, across, some ofthe major medical device OEMs
last year talking about what isthe most important thing, to
consider for, choosing acontract manufacturer and was
product quality.
And what was interesting, ofcourse, that makes sense.
(12:34):
It's not probably any surprise.
We're dealing with medicaldevice.
We all need to have these ISOsystems.
We need to have clean rooms.
We, we need to have, arelationship with the FDA.
So, GMPs, good manufacturingpractices.
So all those things are there.
But what was interesting issaying, as they look across the
world and they understand whothe contract manufacturers are
(12:56):
in this, in the medical devicespace, that's table stakes.
And so you end up not reallybeing able to differentiate
yourself much there.
Uh, the next one though wassurprising, was that, was this
flexibility in operations.
And so what they're saying isthat they're not able to get,
the transparency from contractmanufacturers that they're
(13:18):
looking for.
I want to know what's going onwith my order.
I want to know what's going onwith my project.
There's limited touch points,uh, within, these, the contract
manufacturers.
They only have a single point ofcontact, so it's hard for them
to understand how important theyare to the entire organization.
Pat Kothe (13:35):
When you say transparency, you gave a couple
examples.
Are they also interested in anymanufacturing issues that come
up?
Keith Smith (13:42):
Yeah, what, what might be my delays?
There's stories behind each oneof these surveys, and, the
biggest complaint wasdeprioritizing orders, and it's
not just that, hey, I gotta, Iplace an order, I gotta call a
week later, then I'm beingpushed back behind somebody
else.
They are expecting shipment on acertain day, and they're getting
(14:03):
a call then that, Hey, you'renot, it's not going to come in
four to six weeks.
We had to run other orders.
I don't know about you, but ifyou, not just in MedDevice or
Business2Business where I live,it's really anywhere I go,
whether it's retail,restaurants, anything like that,
it ends up being that serviceseems like it's really.
(14:24):
Since COVID and we haven'tgotten back to that level of,
Hey, there's other people thatneed something on the other end
of this communication.
And how do we help them besuccessful?
And we look at that at Vonco asreally a key differentiation
point that we can be veryresourceful to our customers to
(14:45):
help them win in theirmarketplace because they're,
they're dealing with constantchanges and, the more flexible
we can be with them, the moresuccessful they can be.
And, you know, in hopes they'llreward us with other projects
and other opportunities.
Pat Kothe (14:59):
Keith, there's been, horror stories within the
industry of single source itemsand a catastrophe, a hurricane,
a fire, an FDA issue andsomebody's supply chain is
wrecked.
How do you guys deal with dualsourcing from your manufacturers
as well?
Keith Smith (15:20):
Yeah.
So the big buzzword, you'reprobably more aware of it than
me, but it's supply chainresiliency.
We really can't have a strategicconversation any more without
that, that topic.
It started with the hurricanesin Puerto Rico and even today
we've got, uh, one coming intoTampa we were talking about.
And so the, ever changingweather patterns, certainly
(15:42):
creates, risk for the supplychain on a continual basis.
And then of course, COVID wherethings just shut down in certain
countries that, Uh, many of theorganizations were, over
leveraged in and, supply chainstopped.
And so it's, it really is, anational security risk,
certainly with the products thatwe talk about being able to
(16:02):
provide in these, in, in, inthese, certain, pandemics and,
climate, related, issues.
So that, is a common.
And certainly for us, we alsohave to be, diverse in our
supply chain as well.
I think the biggest, risk rightnow are these international
(16:24):
supply chains.
And that's been the mostchallenging.
and I get it, right?
the, it's a global marketplaceand we need to look for great
opportunities from a coststandpoint, new markets to grow
in.
but we end up getting tooisolated, in one area and there,
it creates a lot of risk.
And so for us as a contractmanufacturer, we do diversify
our risk, but I would say thatthere's also some security in
(16:47):
that we're, highly leveraged inthe U.
S.
The natural resources are beingpulled out of the U.
S., the manufacturing's beingdone in the U.
S.
And then, some of thesubcomponents and our sub tier
suppliers, and we diversifythere, and then we have multiple
plants across, the Midwest todiversify, the risk within our
(17:08):
own operation,
Pat Kothe (17:10):
Historically the pricing in the US or US
manufactured product is higherthan what you can get in other
parts of the world, but there'sthis trade off as we just talked
about.
have manufacturers started toembrace the change a little bit
more?
Keith Smith (17:28):
I would say that.
They're open minded.
I think we're having plenty ofconversations around, there,
there are some, movements ofproduct that, they have to trade
off towards, a potentiallyhigher cost area.
I am so committed to U.
S.
manufacturing.
it's just a passion of mine.
And to watch the evolution ofrobotics and AI and systems,
(17:51):
basically industry 4.
0 that we're going to get thereto automate as much as we can.
And I think, where we can win alot is where it's not that labor
intensive.
If you've got a lot of manualpicking and packing, and you're
going to put a lot of peopletowards it, it's certainly going
to be more difficult tomanufacture in the U.
S., but if we can put ouringenuity and, continuous
(18:14):
improvement, uh, mindset to,manufacturing in the U S we can
find ways, to still remaincompetitive.
That's what we like to do istake that risk away and also see
if we can, meet the economics ofthe project.
Pat Kothe (18:27):
I wanna go back a second and cover, the subject of
bringing a product in.
Let's assume that it's a, that'sa new, it's a new device from a
manufacturer and they've gonethrough and designed it.
They haven't manufactured it.
We know that when there'stransfer to manufacturing,
there's a lot of things thatneed to occur in that it's
(18:49):
building, the tooling, theinstruments that needed to do
it, the recipe on, on how tobuild, uh, build these things.
It typically doesn't come infully baked on how to
manufacture the, the product.
When you're talking to a companylike this, how does that work?
Keith Smith (19:06):
We will design for our medical device OEM.
So that's probably, I would saythat's the best way to manage
this process.
Let's start from the scratch todesign together so that we have
manufacturing in mind.
So you've got designers thatwill just design and then it
goes to somebody to manufacture.
But if your intent is to havethis contract manufactured
(19:29):
anyway, it'd be great to startwith that contract manufacturer
so that you can design formanufacturability.
So that's one way to preventsome of those challenges and not
get too far down the path with,with a design that may not be
cost effective to manufacture.
And that's my next point isthat, there's a high probability
that we could manufacture yourdesign as designed, but you may
(19:52):
not be so happy with that cost.
we want to lay out thoseoptions.
And so we talk about, and use aprocess, during, it's called a
spark session.
we're doing innovation plus alsodesigning for manufacturability,
a roadmap to commercialization.
So it's a process we'll worktogether to design with the
inputs and outputs that thecustomer is looking for and then
(20:13):
talk about how we can get thisto manufacturability, the
timeline, the cost to do so, aswell as, what we believe the,
finished cost will be.
And so if we end up in a designfreeze before manufacturability,
many times you're going to endup with some challenges on your
(20:34):
unit cost expectations.
If you come into that with openmindedness, okay, I've got a
design I want, but I have someleeway on this design because I
don't know exactly how it'sgoing to be manufactured, that
works best to hit both.
Pat Kothe (20:51):
Some of our listeners may not be on the manufacturing
side of things.
Uh, and when you're amanufacturer of a device, and
let's say you're building it on,in your buildings, you're
manufacturing the device, eachone of the components that comes
in is, going to be a supplier,and some are going to be
critical suppliers, and some...
Some are not, but each one ofthose suppliers you have to have
(21:14):
a relationship with.
You need to audit them.
It's all part of your qualitysystem, and you need to make
sure that each one of them isliving up to their commitments
from a quality standpoint.
That's if you are themanufacturer and things are
being built in your building.
Sometimes when you go to acontract manufacturer, now it's
(21:36):
Contracts, contractmanufacturer's responsibility to
manage all of thoserelationships.
And the company no longer saysthat plastic supplier is, is a
critical supplier for me.
It's a critical supplier for thecontract manufacturer.
And the contract manufacturer ismy critical supplier.
Is that the way that, most ofthe companies are working with
(21:58):
you?
Keith Smith (21:58):
It does, so the answer is yes, from the
standpoint of they'll typicallynot, have to do the audits on,
on my suppliers.
And so they are able to simplifytheir process, and, from a,
supplier quality engineer.
So the answer is yes.
but we are, an open, run an openbook, with, our suppliers.
(22:19):
We, we divulge who we're usingand why we're using them and the
audits we do so that, there'stransparency in how we operate
so that they can be assuredthat, we're doing our job.
Pat Kothe (22:30):
Is price, is pricing also open or is that something
that you hold in?
Keith Smith (22:34):
Yeah, you know, we, we share, uh, all the cost, uh,
buildups, uh, of our, um, youknow, of our products.
Uh, we give them basically inthe roadmaps commercialization.
Here's your pie charts.
If you want cost reduction, you,we need to pull it out of, you
know, here's your main costbucket.
Here's the other cost bucket.
Here's the price and here's thepie pieces, that make up that
(22:55):
price.
And so where do we pull it outof if we need cost reduction?
Pat Kothe (22:59):
So the manufacturer of the company is relying on
your quality system.
That's a critical component toanybody who is in, in, in our
business too.
So what makes a goodrelationship or how do you
manage the regulatory side ofthings with the companies?
Keith Smith (23:15):
The manufacturer record is typically the, my
customer, the OEM.
we have, certainly havingcertifications is important.
Step number one is having yourclean room certifications,
having your ISO certifications,your facilities that are
certified, your FDAcertifications, those are all
really important, parts of thatrelationship.
(23:36):
But for the most part, we arebeing audited, typically
annually by, many of our, top,customers.
Like I said, the more suppliersthey have, the more audits they
have to do, the more maintenancethey have to do.
The incoming inspections,certificates of approvals,
design history, recordstypically going back and forth,
so that, we can meet all the,regulatory, uh, hurdles to, to
(24:00):
manufacture products, formedical devices.
Pat Kothe (24:03):
In my experience, that's critical.
In my experience, that's notuniversally, available to
everybody or the ease is not, iseasy with, going from one
contract manufacturer toanother.
The ability to have thatopenness and the ability to
share that information in anorganized manner is a huge
(24:24):
benefit to the, to themanufacturer.
Keith Smith (24:27):
Yeah, our goal is, the vision of the company is to
have our valued customerspublicly declare the ease of
doing business with us.
So whether it's the service orwhether it's the way we help
them with their regulatory,challenges or, the way that we
communicate that information tomake it easy, on their supplier
quality engineers, that's, thatis our goal.
(24:49):
Number one.
I agree we, and we have a greatquality and regulatory team
that, stands by to help, withthe many different questions and
challenges that can come upwith, being in our industry,
Pat Kothe (25:01):
So Keith, how many employees do you have at Vonco?
Keith Smith (25:03):
we have 170.
Pat Kothe (25:04):
And what percentage of them are on the regulatory
side?
Keith Smith (25:09):
Yeah, I would say, I lump them all within the
quality and regulatory group,they can go over that, but
there's 10%.
It's a decent amount, right?
It's just way more than someother industries that I've been
in.
Pat Kothe (25:22):
Yeah, it's so critical for us.
Going back to what we're talkingabout early on the business side
of this, and, you've got, you'regoing through the design for
manufacturing, understandingwhat it is, and now you're
getting to starting tomanufacture, this product and
(25:42):
companies aren't real goodgenerally at forecasting.
How do you manage that whenyou're investing all of that
time into that, tell me fromyour side, how are you
evaluating whether somebody'sforecast holds water?
Keith Smith (26:02):
yeah, it's, it is a constant discussion because
it's, it is so important to ourcost structure to be mindful of
the resources we apply, and thatwe're actually going to get paid
for the resources we'reapplying.
It is an important process.
Our business development and,customer service groups spend a
(26:22):
lot of time with the peoplethat, uh, understand, our
customers that understand theseforecasts.
And again, our goal is to beresponsive to those changing
needs.
We ultimately want to know assoon as possible, so we'll be
the ones actually creating thetouch points to make sure we're
at the tip of the spear of theinformation that they have,
(26:43):
right?
We don't want to be, hey, I'vebeen sitting on this for a
couple months, and we could havebeen finding ways to redeploy
resources, two months ago, andnow we're caught flat footed.
So, we spend a fair amount oftime ourselves being proactive,
trying to, understand ourcustomers market demand for
these products.
But we do put in, what we callPlatinum Service Programs and
(27:06):
these Platinum Service Programscan...
Uh, a lot of this for them.
It's basically a Kanban programfrom finished goods back through
our supply, our suppliers on areplenishment models.
And it takes a little bit ofcommitment that you're committed
to this project, more than orderto order.
But, if you have that luxury, wecan buffer that changing demand
(27:29):
without impacting.
too many, costs on our side sothat we, I think it's a benefit
that you have very quickresponse for our customers and
our benefit is that it, levelloads our production.
Pat Kothe (27:41):
Tell me a little bit about your business model.
is it, a.
Project based at the front endwhen you're going through this
transfer to manufacturing andthen price per unit once you're
up and running.
Keith Smith (27:55):
Yeah, that's, that's typically the way the
model will work.
And it depends on where they'reat in their design process.
And in some cases, the designand manufacturability is not
that complicated.
we'll end up, just doing, asmall trial on a unit price all
the way through.
But the majority of theprojects, come in, that there
is, some, upfront, engineering,project work, based on hours
(28:19):
and.
And then we move intomanufacturing, at a unit, unit
price.
Pat Kothe (28:26):
Keith, how'd you get into contract manufacturing?
Tell me a little bit about yourcareer.
Keith Smith (28:30):
Yeah.
Yeah.
Well, it's, uh, again, this iswelding plastics and this,
believe it or not, it's, andit's hard for me, I guess I say
it to myself, believe it or not.
It's been 30 years, that I'vebeen in and around, flexible
films that, that are welded.
And it started in the foodindustry.
Uh, there's many products like,uh, uh, the company that I
(28:50):
worked for right out of highschool was the leader in making
potato chip bags.
There's a printing process andyou bring some different
plastics together that keepsthose chips crispy and not stale
and, and you turn it into a bagand voila, you're selling a lot
of those things across the U.
S.
Anyway, I started as a printer,just really trying to earn money
(29:12):
for college and the company thatI worked for had a education
reimbursement program.
So I stuck around for, insteadof just the summer, 12 years.
And so I got two degrees,through that and, did an
engineering stint.
And, after I finished my MBA,was really interested in
starting to lead my own,operation.
And so I changed companies and,that's where I started to meet
(29:35):
more entrepreneurial folks and,started building that, that bug.
I worked, for, that secondcompany, from 2005, seven years
to 2012.
And along that time, I just, hadthis, bug to continue on, doing
my own thing and...
started searching for companiesin 2011 and finally closed a
(29:56):
deal for Vonco in 2013.
So moonlighting, at my previousjob, as a general manager.
Since I was a kid, I just had a,basically a dream to, to run my
own business and, create valuefor the world, more value than I
can create myself.
So I, I'm not somebody that, istrying to just do consulting
hours on my own thing.
I like having a team that, wecan all work together and help
(30:20):
everyone within the organizationachieved their hopes and dreams
as well as help our customers dothe same thing through the
products that they're providing.
And so at first, I thought I wasgoing to keep going on in food
when I bought Vonco, but, weultimately had some really great
products for medical devices andwith very limited marketing, we
continued to grow in that thatsegment in industry.
(30:44):
And, after a few years, I maybewe should market in this area
and, lo and behold, we're about85%, medical device now, uh, 10
years later.
So it's, it's been a tremendous,opportunity that working in
medical devices way morefulfilling, than I ever, dreamt
it would be, with some of thethe work that we're doing and
(31:04):
products we're inventing withsome of our, customers, as well
as, the market information weget from a broad spectrum, we
can create, our own devices.
For instance, we've launched afew patents and our own devices,
510Ks that help our customersgrow in their marketplaces.
Enteral feeding, for instance,is a big, innovation that, we've
launched to help tube feedershave easier and better ways to
(31:29):
fight malnutrition.
And so that, to me, has been sorewarding in launching those
types of innovations in thisspace.
I can't believe it's justcoincidence that I ended up here
and that happened.
It was, it's what I was destinedto do.
And so, it was super exciting aswe've really Just become
(31:51):
passionate about, helping inthat medical device.
Pat Kothe (31:56):
So 2011, 2012, that's when you, you purchased the
company.
How, how old is Vonco?
Keith Smith (32:02):
Vonco's been around since 1955, I'm the third owner
of Vonco, and the, first twoowners were family, and so it
was somewhat of a, let's call ita job shop.
It was industry agnostic, so ifthey needed to, very specialty
welded, bags at first we startedactually making equipment to do
(32:23):
the welding and we tried to sellthe equipment and then the
second generation came in, intothe business.
It's named after the family,Vonco is named after the founder
and, he had, approached hisfather in law with a, we should
sell the consumable and not justsell the, the equipment, you get
lumpy sales and the equipment.
(32:43):
And we ended up in lots ofdifferent, uh, diverse, end
markets, doing that, um, or ona, a regional, basis.
But we were about 40 percent inmedical device when, in 2013.
And so they're, they started tosee that track.
But we were, we also were toodiverse and many other areas
(33:04):
that distracted and consumedsome of our resources.
When we found the opportunity tofocus, it's been a great, march
because now we can, move those,move all our resources in that
direction
Pat Kothe (33:17):
so you bought an existing business with, with one
focus and sounds like.
Early on, you need to, needed torefocus the business and refine
who your customers were.
Keith Smith (33:30):
for sure.
Pat Kothe (33:31):
Tell me about that challenge, because that's a
significant challenge,especially a company that's that
old, that has their old way ofdoing it.
Keith Smith (33:41):
Yeah, it's a great story, uh, Pat, uh, it's, uh,
really kind of the, the personaljourney I've been on.
Here I was, uh, general managerof a half billion dollar
division sitting on the thirdfloor with a nice view
secretary, uh, you know, and,uh,
Pat Kothe (33:59):
all of a sudden, welcome to startup.
Keith Smith (34:00):
two, 2, 000 people.
And I've worked as a plantmanager along my way and things
like that in some smallerplants.
And so I've understood that.
But, you know, it was kind of anawakening that first week of the
journey that we needed to go onto get to where we're at today.
And we're not done by anystretch of the imagination.
We have lots of opportunities tocontinue to grow and improve.
(34:25):
but that journey, did consume meand it was challenging and,
taking a family orientedbusiness and making it a bit
more of a corporate feel to dealwith some of the major med
device companies that we aretoday.
It was pretty much allconsuming, let's put it that
way, right?
So I'd wake up, in the morningand it'd be check messages and
(34:46):
get into the office as quicklyas I could and hope I can make,
my son's baseball game orwhatever's going on, after that.
It definitely consumed me andreally, even if I was engaged in
another conversation, businesswas on my mind, right?
What's going on?
And how are we going to get thistransitioned?
And how do we build the growththat we know, the potential that
(35:08):
the organization has so that,our customers in the world,
quite frankly, see it and feelit?
Pat Kothe (35:13):
When many of us get put into a situation like that,
our lives get out of whack.
I've had periods of time where,you know, the job just is all
consuming.
And it just takes over and youknow that you're suffering on
other parts of, of your life.
(35:34):
Did that happen to you as well?
Keith Smith (35:36):
Oh, for sure.
There's lots of, lots of reasonswhere, uh, certain areas of my
life didn't go the, the, to thesame.
Spot that I thought it would beat this point.
Uh, but I, I do believe, uh, youknow, that drive that
entrepreneurs have, for buildingsomething greater than
(35:57):
themselves, becomes so consumingthat it starts to chip away at
the foundations of many otherareas that something is going to
crumble.
For me it was in myrelationships, it was my
marriage.
Over time, it just, it becametoo difficult to, to, to manage,
uh, that, that marriage, um,and, uh, and it, it, we
(36:18):
ultimately ended up in divorce,uh, uh, some years back.
And so...
Uh, you know, I talk about it inreally many different ways now
in that reflection and myjourney and what I needed to go
through to, to understand thatis that there's this kind of
path of force.
I'm trying to force thisbusiness to be the potential it
is versus the business has a lotof potential.
(36:41):
It is today.
And so being versus doing is abig difference.
So you're trying to force it.
And then when you're being, whenyou're being that you're a bit
more attractive.
And so ultimately I look at thatin being is that I've got to
focus, I got to put enough fuelin my tank so that I can
overflow into everything elsearound me.
(37:03):
Not, I use this analogy on theother side of it is that I'd
wake up in the morning and I hada full tank of gas and everybody
was just consuming that from mefor that entire day until I left
my office exhausted.
And flipping that around, I needto do enough to keep my tank
(37:24):
full all the time that it'soverflowing so that when people
need me, and everybody is neededin my organization from time to
time, no matter where you're atand it's not consuming my
energy.
It's actually taking my overflowof energy.
And so I had to be verydeliberate and intentional at
starting with myself, quitefrankly, and saying I need to
(37:47):
make sure I do the right thingsthat fill my, bucket so that
it's overflowing.
So it starts with the rightamount of, reflection, the right
amount of reading, the rightamount of, morning routines has
been a, certainly a big thingbefore I get into work, it's
two, two to three hours I spendon myself and my health and
(38:07):
fitness, uh, so that I remain,energized no matter what, what
happens, uh, I, I can, I can gohome after 10 hour day now and
still be as excited to playcatch with my son, Jacob, as if
I just woke up.
And so it's just a big shift inthat energy.
And then really for myrelationships, I, I.
(38:29):
I need to find time.
I need to be deliberate,intentional to carve time out
for my son, my two daughters,uh, for, uh, my girlfriend.
I, I need to find those, thattime because it, I become a
better leader because I havethese people in my life.
And so it, it's, it doesn't needto work one or the other.
It's not a trade off.
(38:49):
it works together, to create,attractive energy.
Pat Kothe (38:54):
Can you be a stellar performer in one part of your
life, stellar, and still havetime to do other parts of your
life?
So for example, many of us haveApple products.
Steve Jobs was a phenomenalbusiness person.
Keith Smith (39:17):
Mm hmm.
Pat Kothe (39:18):
Personal life, not so much.
One of my, you know, you're aChicago guy, you're a Cubs,
you're a Cubs and
Keith Smith (39:27):
Yeah.
And bears.
Pat Kothe (39:28):
Bears guy.
Keith Smith (39:29):
can't even say bears, can you?
Pat Kothe (39:30):
I can't.
I'm a Packers guy.
And, and one of my favoritebooks is a book David Moranis
wrote, it's called When PrideStill Mattered.
And it's the biography of VinceLombardi.
And Vince, very similar.
Vince, obviously, everybodyknows what a great coach he was.
(39:53):
But a lot of people don't knowhis personal life was a
nightmare.
with his kids and his wife and,it just wasn't balanced out that
way.
So I've always, I've alwaysthought of that book.
and I thought of this,throughout my career is how do I
make sure that I'm successfuland am I willing to trade my
(40:14):
family for success in anotherarea of my life?
And I'm not, uh, you can stillbe successful, but that's always
the question that I wrestle withis do I need to sell my soul in
order to, you know, have thebest company
Keith Smith (40:32):
Mm hmm.
Pat Kothe (40:33):
and, and I don't think so, but I know that that
example is out there for otherpeople that have done it that
way.
Keith Smith (40:41):
Yeah, I, I, for an individual basis, I think it all
comes down to, I do, so first ofall, I do believe it's super
important to have a purpose andnot just, um, family, right?
Family, it, you hear that a lot,it's like, My family is my
purpose and I do think that is avery fulfilling part of life and
(41:03):
I, I, I would say that'simportant, but at least for me
personally, and what I've seenfrom, uh, other, other people
I've gone through this journey,networking I've, I've done
through this journey, It doesseem that there has to be some
purpose.
You get to define what thatpurpose is, and what you want to
create as maybe your legacy orhow you're impacting the world,
(41:26):
having both seems to be, theright way to actually be
fulfilled, right?
Because I don't know that, Hey,having that great success, Also,
when it comes down to that lastday, on this planet, I, I
believe Steve Jobs has beenquoted that, there's so many
(41:47):
different things that Iregretted, along that journey.
My goal would be to live withthe least amount of regrets at
that point in time.
And so, what is that purpose andwhat do you want from those
relationships?
So, if, uh, if, I think if, uh,Vince and I haven't read that
book, I am a, I'm a fan, winningis a habit, um, and I, I believe
(42:09):
in that wholeheartedly, that ifthat's what he intentionally
did, then fine.
If it was, hey, I'm going tohope to hold these relationships
together and do this.
But not be intentional anddeliberate about being a, being
better in those relationships, Iwould think that that would eat
at them.
And that's what, what happenedto me because that wasn't my
goal was to let thatrelationship deteriorate.
(42:31):
I, one, I, I, I didn't reallyknow how to fix it after it kind
of got off the tracks.
And two, I felt like I was doingthe right thing by building the
business.
And at some point I would beable to have the time to work on
that relationship.
And I always felt like there wasmore time.
There was more time.
I'll fix it when the business issettled, but guess what?
The business never really getssettled.
(42:53):
There's always something to do.
But I think it's a personalchoice.
Pick your mission and what doyou want that to be and how you
want those relationships to be.
And I do believe once you putthat out there and you're
intentional and deliberate aboutthat purpose, you can do both.
Pat Kothe (43:09):
I think what we're talking about here is, are you
managing your life or is yourlife managing you?
At some point in time, you justhave to stop and say, Hey, this
isn't good.
This isn't what I signed up for.
this isn't who I want to be.
Did you see that coming?
Keith Smith (43:26):
No, it took divorce to make me kind of say what,
what got my life so out ofkilter here?
And, And it really didn't haveto be the business.
I actually believe as I wentthrough this re...
alignment process of saying,what do I want in these facets
of my life?
What do I want for myself?
(43:47):
What do I want for my health?
What do I want for myrelationships?
What do I want for my, um,legacy?
Uh, and then what do I want formy business?
And when I actually wasdeliberate and intentional about
that, I was able to find thetime.
I don't know if you ever sawthat, parable kind of experiment
where there's these, uh, you putthe, you put the, um, sand in
(44:09):
first, then you put in thepebbles, then you put in the,
and then there's no room.
But if you put the rocks infirst, and then the pebbles, and
the sand around it, everythingfits.
And that's, uh, generally how Isee it now when, when I got
deliberate and intentional aboutthat, I now all of a sudden have
time for it all.
No different time, but I alsohave been managing my energy,
(44:31):
so, uh, I'm energetic for eachone of those things and I'm
mentally in flow with the goalsthat I want to achieve in each
one of those areas.
Pat Kothe (44:40):
Is that something that you did by yourself or did
you work with somebody?
Keith Smith (44:43):
I, yeah, I, I needed someone to kind of slap
me and say, wake up.
Um, you know, that, uh, you're,you're just, you just have your
priorities backwards.
You know, it, it really, thesimplest thing was that, um, you
know, I needed to start withmyself in the beginning of the
day so I can give to others therest of the day, and I started
(45:04):
with everybody else withbusiness and showed up there and
then tried to fit everythingelse around that.
So I would say, I don't thinkthere's any less time I spend at
business uh, than I did, fiveyears ago, but I would say that
I've already got the otherthings done that are important
to me before I start there.
Pat Kothe (45:23):
It's common to hear, leaders eat last, servant
leadership.
all of these things that we talkabout, but that doesn't mean
that, we shouldn't fillourselves up, as you said.
And you got a siphon hose inyour, in your tank, it's every
siphon you need a whole time,and you don't have time to fill
it up.
(45:43):
You're not going to be any goodto anybody when you're on the
side of the road and your tankis empty.
Your
Keith Smith (45:48):
it's the airplane example, you know, put your mask
on before you help othersbecause you pass out doing it.
Who's helping you?
So it's, it is, it's superimportant.
That transition is, probably,there's lots of little things
along the way, but that has beenprobably the biggest
reprioritization that's allowedme to live what I'd call a way
more fulfilled life and a waymore attractive, leader, instead
(46:13):
of forcing that, uh, Success.
It seems like, uh, success is,uh, attracted, uh, to, to us
now.
Pat Kothe (46:21):
Your employees saw you on both sides of the
spectrum.
What was that like for them?
Keith Smith (46:27):
Yeah, I'm, I'm a pretty open book, uh, about it.
I, I think that, uh, they've,they've noticed a lot of, like,
I look different physicallyeven, you know, uh, just
healthier and, and more vibrant.
I probably masked it prettywell.
I had a lot of energy cominginto work and most of the, the,
like fall off was more at home,right?
(46:47):
Less energy for home and doingthose things and committing to
those areas.
And, so I think some of that is.
is part of it, but, it happenedright on before, COVID and, the
way that we responded and COVIDand helped, it, it really
reshaped our organization.
And since then we've done threeacquisitions in three years.
(47:07):
We've expanded our building.
We've expanded our productlines, We've expanded our
customer base into, more toptier, medical device OEMs, so
that's what I believe the,employees started to see, hey,
there's a new person, here, butat the same time, we're starting
to see some growth.
Pat Kothe (47:25):
So you said you're, you're open and transparent
within the organization.
Is this a message that you'retaking, you're bringing out to
your employees?
Keith Smith (47:34):
Yeah, we do that through really, what we call
cultural operating principles.
Many of the things that I'vegone through, are what the
culture I would like to seeacross everybody, uh, within the
organization.
Each week we spend time invideos, across the four sites
and talking about it, amongstour leadership team of what
those, principles and culturesand behaviors all look like.
(47:56):
And, uh, transparency andauthenticity, are very
important, and inter interwovenin all those cultural, operating
principles.
So yeah, we're a very, we're apretty open book.
In many different facets.
but, uh, you know, I do a fairamount of these podcasts and a
lot of it, a lot of it's aroundthe balance, not as much around,
the actual company around theentrepreneurial journey.
(48:18):
And I, and I, I like to coach,uh, in that area as well.
I do some incubator classes withsome of the high schools and
colleges, and so it's, uh, it'sa passion of mine.
I like to have thoseconversations, uh, certainly
with my leadership team and thenas public as anybody wants to be
about, uh, that.
Pat Kothe (48:39):
So some people are out there struggling right now.
Some people are out there thatthink, geez, my life is not
quite what I wanted it to be.
What are a couple of the thingsthat you would tell them to help
them to turn things around?
Keith Smith (48:56):
Whatever those struggles and challenges are,
they're not you.
They don't make you.
They're just events.
The key for me is to define whoI am and what I want those
facets of life to be.
And manage your energy to focuson what's most important to you.
So ultimately what's, what'simportant to yourself?
(49:19):
What do you enjoy doing?
What fills your energy?
Make sure you spend time doingthat.
What's important for your healthso that you'll have the, have,
good fitness and nutrition anddefine that and do that.
You start stacking these littlewins that are controllable for
you.
Now you get into things whereit's two people relationships.
So what can you control there?
(49:39):
I can control that I, I'm goingto send a letter to somebody
each week at a certain time orin different people, or I'm
going to focus on my daughterto, uh, this week and take a
daddy daughter date.
And so I'll get that done, beintentional.
And you start stacking thesewins and, uh, all of a sudden
you now start seeing that inyour in your legacy, you start
(49:59):
seeing that in your business andstart stacking those wins.
I think that's what turns itaround.
But I, I, I felt like, uh, for along time, these problems and
challenges in these other areas,was, that was me, that, that
defined my being, and these werejust events and, I can control
different parts of my life andthe more intentional and
(50:22):
deliberate I got about what Iwanted, and then what's my next
step to achieve it.
Not, I don't need to know how toget all the way there, but
what's my next step?
And there's just power in takingthat next step.
And then when you do it, thenext step, and it just keeps
stacking.
Pat Kothe (50:39):
Now that conversation covered some ground.
Big, thanks to Keith for sharinghis thoughts on contract
manufacturing.
But also for his openness indiscussing his personal journey.
I was really appreciative of himsharing tough details of his
life.
But equally impressed that he'sdoing so to help others who may
(51:03):
be headed to where he was.
A few of my takeaways.
First contract manufacturing,and when to use it.
I found it interesting, hetalked about, you know, the
different phases that we havewith, uh, with our products and
contract manufacturing, beingappropriate at the front end,
when you really don't have agood understanding of, of.
Uh, kind of what your volumesare going to be.
(51:25):
And at the backend, in thatdecline phase, and kind of helps
to diversify fixed costs asvolume starts to decline.
And I think it's interestingfrom our standpoint, but also
from our, our, uh, partnerscontract manufacturers, they
have to look at these projectsalso in terms of risk and then
(51:45):
how, how they're going tomitigate their risk.
And Keith talked about managinghis risk profile.
So make sure you're a goodpartner.
Uh, when you approach contractmanufacturers as well.
The second thing was evaluatingcontract manufacturers.
And we, we discussed, you know,what the table stakes are.
Experience with medical device,experience with FDA and ISO, and
(52:08):
whether they manufactureproducts similar to yours.
But Keith took it a little bitfurther and talked about the
importance that, uh, OEMs placeon transparency with their
contract manufacturers,completely understanding when
something may not be going asexpected so that everyone can be
in the loop.
Every everyone can do theirplanning.
(52:29):
And it kind of leads also intothis issue of supply chain
resiliency.
You know, where are you strong,where you're weak with, uh, with
your supply chain and howcontract manufacturers can help
you in that area too.
The last thing was, you know,The second half of our
conversation and that's reallyliving a complete life.
(52:49):
And Keith was very open to thecost of imbalance in his own
life.
But We all have costs whenthings get out of balance within
our life.
Keith discussed, if you feelthat you've got that way, get
help.
Get somebody else to help youbecause you don't always see it.
See it yourself, what what'sbrought him.
Um, growth and satisfaction isdefining priorities.
(53:13):
What are the priorities?
And then developing an actionplan to be able to make sure
that you are dealing with theright things in the right order.
And I really liked him talkingabout keeping your tank full and
going to work with your tankoverflowing so that you would,
you don't get drained by the endof the day and got nothing left
for the people that are mostimportant in your life.
(53:35):
Thank you for listening.
Make sure you get episodesdownloaded to your device
automatically by liking orsubscribing to the mastering
medical device podcast whereveryou get your podcasts.
Also, please spread the word andtell a friend or two to listen
to the mastery medical devicepodcast, as interviews like
today's can help you become amore effective medical device
leader.
Work hard.
(53:56):
Be kind.
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