Questions OEMs and CMOs May Ask Potential Suppliers
How successful an organization will be within the medical-device industry depends on how well it can answer the following questions.
1) How does adding a supplier into my supply deck impact my quality risk? Do you improve quality within the supply chain? This is the door opener for any organization. Are you registered with the FDA? (Unless you’re supplying straight-to-market products, this typically isn’t necessary.) Are you ISO 13485 certified? (This is critical, as some OEMs and CMOs won’t even entertain discussions with suppliers without this certification.) Do you have a robust approach to problem-solving/root-cause analysis? Do you understand the industry vernacular (CAPAs, MDRs, CFR 21, complaints, etc.)? What’s your track record from a quality-performance standpoint?
2) How does sourcing to this supplier impact my total cost? As OEMs or CMOs evaluate adding suppliers, they logically see these entities as work—something else they have to manage that may negatively affect their ability to quickly commercialize products. Suppliers must demonstrate an ability to increase product commercial speed by bringing value—by participating in advanced quality planning, mitigating risk, improving product-launch performance and increasing speed to market.
3) Is the supplier financially stable? Because CMOs have such a fragmented supply base, during the recession it wasn’t uncommon for suppliers to go out of business; many simply didn’t have the financial wherewithal to deal with the changes in production volumes. Although supplier financial stability hasn’t historically been of particular importance, OEMs and CMOs are evaluating it based on these negative experiences.
4) Can the supplier fund further development? Since top-line growth is a major objective for OEMs and CMOs, it’s important that they have the ability to increase capacity and funding, and grow with them. Another significant trend is increased involvement in low-cost areas, particularly the relatively immature markets of Asia, South America and Africa. Suppliers should plan accordingly.
5) Can the supplier provide future cost reductions? Do you have systems in place to improve efficiency and effectiveness and continue to reduce costs, which can be passed along to OEMs and CMOs?
6) What’s the depth of talent of the supplier’s management team? Because of the fragmented supply chain, OEMs and CMOs are used to working with mom-and-pop suppliers, where the talent resides in only one or two people. If that talent leaves, quality and value often leaves with it. OEMs and CMOs have learned this lesson and take this into account.
For companies contemplating entering the medical-device industry, the first order of business is research. Visit shows, such as the Medical Design & Manufacturing Conference. Visit www.fda.gov, where you can view examples of FDA warning letters and recalls and learn more about industry happenings. Subscribe to industry publications, learn the lingo, and then begin to identify potential end products that fit your manufacturing capabilities.
There will continue to be opportunities within the medical-device arena for years to come. Leveraging them won’t be easy, but those organizations willing to expend the effort will reap the rewards. MF
See also: Plante Moran, PLLC
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