Is your contract manufacturer (CM) a supplier or a partner? Are they a “hired gun,” brought on to complete a specified task or are they a trusted extension of your manufacturing capabilities? If either of these questions gave you pause before responding, you’re likely not engaged in an ideal relationship with this company.
Working with a contract manufacturer should be more than a transactional-based relationship. It should embody trust, reliance, and excellent communication. An OEM should feel like their contract manufacturing partner is simply another facility location where their products are being developed and manufactured, under the same strict guidelines and quality measures as their own facilities. It takes time, however, to establish such a relationship. It doesn’t happen overnight.
With this in mind, Tanya Sima, supply chain manager at Command Medical Products, responded to questions about making the most of this relationship between OEM and contract manufacturer. She provided a number of factors that need to be considered to ensure success. Further, Sima addresses inquiries regarding the supply chain, corporate objectives, and expanding beyond the traditional role of the CM.
Sean Fenske: When selecting a contract manufacturing partner, what factors should medical device OEMs consider most important?
Tanya Sima: Growth, flexibility, sustainability, nimbleness, quality control, and documentation support are among them. A strong partner will have the ability to make quick decisions, expedite new product launches, implement regulatory requirements, and ease the burden of design revisions. OEMs need to be able to support their customer ordering needs with on-time delivery without the concern of quality problems that may cause personal liability issues or recalls. They must be able to support their products with as much data as possible from both a point-of-use requirements standpoint and a liability standpoint.
The size of the CM (bigger is not always better), being vertically integrated verses singular concentration, quality focus, responsiveness and communication, location of facility or facilities, understanding the OEM’s internal goals, and the CM’s knowledge of the part or process are also major factors to be considered.
Fenske: With supply chain concerns gaining the spotlight due to the pandemic, how can a contract manufacturing partner help alleviate these worries?
Sima: By staying on top of the OEM’s short-term and long-term requirements. Forecasting is not an exact science, but a good CM can work closely with their OEM to reduce the issues caused by unforeseen increases or decreases in customer requirements. In some cases, sudden product changes, caused by a variety of actions, can cause delays or unusable component inventory that creates lost revenue.
The pandemic has had long-lasting implications for how people work and how supply chains function, which includes building long-term resilience in their value chains for managing current and future challenges. A continuous cycle of risk mobilizing, sensing, analysis, configuration, flexibility, and operation will help to optimize results and mitigate risks. This requires a holistic approach to the entire supply chain process—including being in constant communication with suppliers on raw material price fluctuations, complications, or potential delays, as well as keeping a finger on the industry pulse for potential downstream disruptions in the supply chain. Dealing with those matters requires long-term relationships built on trust. When such issues arise, an OEM needs to be able to have faith in the contract manufacturer to solve them effectively and efficiently.
Fenske: Does moving the management of a medical device OEM’s supply chain to a contract manufacturer make good business sense?
Sima: It depends on the criticality and risk assessment of the product. Some CMs are experienced in managing segments of the process, and some understand the requirements of managing an entire supply chain, which allows the OEM to focus on their core activities. This is a financial benefit due to the need for healthcare companies to level off resources and reduce costs.
When a contract manufacturer manages the OEM’s supply chain, however, efficiencies are gained with direct contact and partnerships, ensuring cost management, supplier quality, and on-time delivery. Direct supplier partnerships improve delays in raw material change implementations and product non-conformance management. Additionally, the management of supplier re-qualifications and performance improvement are more efficient when assigned to the manufacturing location.
Outsourcing the manufacturing of a product allows OEMs to grow, spend more time listening to customer needs, design new products to meet industry changes, reduce labor costs, free up capital, and improve worker productivity. OEMs can then concentrate on the things that most enhance a product’s value such as R&D, design, and marketing, for instance. Facilitating these gains are the contract manufacturer’s special strengths, which may include location in a low-wage land, economies of scale, manufacturing prowess, and exposure to the engineering and development processes of products it handles for other OEMs. Such exposure puts the CM in a position to propose potential improvements to current processes.
Fenske: How can contract manufacturing partners help address issues with supply chain resiliency?
Sima: By working closely with the OEM on forecasting, inventory levels, manufacturing capacity, and component sourcing, CMs can help OEMs maintain low-risk sustainability. Once again, it requires a holistic approach to all levels of supply chain, risk mitigation, long-term resilience, and using all sourcing and strategy components to continue on a solid, secure path. Since the CM is closer to the downstream suppliers, they can provide up-to-date information on materials an OEM would not know about or be involved with at their level.
Fenske: When a medical device OEM is identifying corporate objectives, is it a good idea to involve a contract manufacturing partner?
Sima: Yes. A CM should be considered as a resource extension when determining corporate objectives, identifying opportunities, and developing and actioning plans to achieve targets. A good CM can assist with and, in some cases, overcome obstacles that could prevent the OEM’s ability to exceed their departmental and/or corporate targets. At Command Medical, we want to understand what our partner’s objectives are so we can provide them with as much of the internal knowledge and experience we can in order to help them succeed.
Fenske: Should medical device OEMs get contract manufacturing partners involved with areas outside their typical scope, like marketing, regulatory submission, and customer service?
Sima: Yes. A CM has additional resources and experiences to implement strategies in areas outside the typical scope. A CM can provide the advantage of a diversified experience. The resource extension will allow an OEM to explore a broader scope of consideration. Also, a good CM can provide information that is either a requirement (e.g., FDA, ISO) or complimentary to a given product’s value based on experience with similar products or markets. The FDA has placed ownership on the OEM for supply chain down to the raw resins (as an example). An experienced and responsible CM knows what is required and can ensure all of the product and manufacturing data, including processes and risk assessments, are collected and tracked appropriately.
The right CM prides itself on customer service. In most cases, customer service is the difference between a good CM and a great CM. Further, customer service is not just limited to the front line such as order acceptance, but throughout the organization—from engineering and supply responsiveness to shipping on time, every time.
Fenske: Do you have any additional comments you’d like to share based on any of the topics we discussed or something you’d like to tell medical device OEMs?
Sima: Command Medical has been a contract manufacturer for over 30 years. In that time, we have provided quality contract manufacturing services to the medical industry’s top device companies as well as smaller firms. We deliver value by focusing on customized solutions for our clients, maintaining product integrity and offering unmatched customer service. We have developed a vertically integrated platform of services coupled with ample ISO Class 7 cleanroom capacity exclusively focused on medical device sub-assembly and finished goods production using key technologies such as RF and ultrasonic welding, tube extrusion, printing, packaging, and assembly services.
We are small enough to be agile and responsive to the OEM’s needs, yet large enough to be able to ramp up volume and work on a global scale for cost reductions while operating in the increasingly strict regulatory environment.