Getting it Right the First Time, Part One

Setting up a collaboration with a contract manufacturer is a very complex process, and if you have no experience with it, you might make wrong decisions that could be very costly down the road.
           
Contract manufacturers and OEMs say that the process of finding an appropriate partner should be a diligent one, with tons of questions asked and tons of factors taken into account.
           
In this two-part series, they explain what sorts of mistakes are common to those going through the process for the first time, how to avoid them, and how to determine whose services best fit the needs of your product and your company.

Pitfalls
Many poor decisions about contract manufacturing arrangements occur when the OEM doesn’t really understand what it needs the contract manufacturer to do, leading to arrangements that don’t fit production and distribution needs, leave too much work in the hands of the OEM, or add unnecessary costs.

“A lot of first-timers are not really sure of what they want the contract manufacturer to do,” says Susan B. Nichols, vice president of sales, medical device for Advanced Scientifics, a Millersburg, Pa.-based contract manufacturer. “All they are thinking about is getting to market on time. So you have to look at what your core competencies are, and those of your potential partner. You want to avoid duplicative processes, which can eat up a lot of time and money. Don’t be afraid to ask questions.”

Some of the worst mistakes occur when the OEM picks a contract manufacturer that isn’t equipped to handle the rigorous quality and regulatory requirements of medical device manufacturing.

“One of the biggest mistakes OEMs make is that they underestimate the scope of what is required to comply with domestic and international regulations and quality requirements for a medical device,” says Kenneth Fine, president of Proven Process Medical Devices Inc., a contract manufacturer based in Mansfield, Mass. “The cost is much greater for the medical device market than it is for the general consumer market. They also may not understand what that means for turnaround time. And they may not understand that you need a documentation package.”

Sometimes the underestimation occurs because the OEM is thinking only about price. That’s a recipe for disaster in the medical device world.

“The biggest mistake OEMs make is shopping on price, pushing for the lowest possible price without considering total cost,” says Jeff Shepherd, general manager, implants, for Sandvik Medical Solutions, a Memphis, Tenn.-based contract manufacturer. “Reputable manufacturers are more expensive, but they bring knowledge with them. If you only consider price, you will spend a lot of time hand-holding and teaching, using your own resources. Price is a starting point, but we are not making brake pads here. There’s a level of expertise required to make medical devices, and there is regulatory risk. If you go cheap, you could risk having compliance issues.”

Failure to properly vet prospective partners is another common problem, says Scott Kellogg, new business development manager for Jabil Healthcare & Life Sciences, a contract manufacturer based in St. Petersburg, Fla.

“A device manufacturer that is engaging with a contract manufacturer for the first time is vulnerable to many different kinds of mistakes, beginning with judging a company on the basis of its sales team or on references provided by the contract manufacturer,” he says. “A wise OEM will insist on meeting with operations staff, engineers, designers and regulatory personnel, touring the facility where its project will be handled, and finding customers that can provide a candid analysis of the contract manufacturer.”

In recent years, a number of books about quick and cheap manufacturing have been written, but this has left an inaccurate impression when it comes to medical device manufacturing, says Scott Clear, product development director for DD Studio, a product development firm based in Carlsbad, Calif.

“An abundance of articles, books, and news stories have circulated over the years heralding fast and inexpensive ways to manufacture,” he says. “These can be valuable insights to those already equipped with experience. Unfortunately, it convinces some to believe that manufacturing is easy, and that selecting a manufacturer requires nothing more than an internet search and a few phone calls. Guided by this misconception, many people won’t start searching until the product has been completely engineered. At this point, the probability of finding the right manufacturer is about the same as winning the lottery.”

Understanding the Product
The first thing an OEM needs to do, even before seeking out contractors, is to understand its own product and the manufacturing requirements that will come with it.

“They need to understand what the product is going to be, and to understand its intended use and use environment,” says Fine. “That way, the contract manufacturer can get a handle on the product environment and its constraints. Then be prepared to manage the outsourced product as if you are manufacturing it yourself.”

There are huge differences in how the project should be managed depending on whether the product is a new or existing one, says Shepherd.

“If you have a new product, you need to select a supplier that will work with you throughout the whole process, from design to manufacturability,” he says. “That helps lower cost, improve quality, and increase deliverability. A supplier that provides end-to-end services helps continuity. It is best to get them involved as early as possible. If it’s not a new product, but an older one being transferred, put together a technology transfer plan. Document the process specifications, drawings, material specifications, and things of that nature. There is so much local knowledge involved with these projects you can’t assume everything is well-documented via engineering specifications. So make sure you have what you need and don’t be afraid to ask stupid questions.”

Also important for the OEM to understand is which capabilities it can handle in-house and which it cannot. Gunnar Trommer, PhD, vice president of marketing and customer service for Sotera Wireless Inc., a San Diego, Calif.-based OEM that specializes in equipment for monitoring vital signs, says this analysis was very helpful when it went looking for a design and engineering firm to partner with, and found DD Studio.

“The reason to outsource came when we realized we did not have all the competencies we needed in-house,” he says. “But if you do it halfheartedly, it will not work the same as it does in-house. We wanted to create a relationship. We did a lot of due diligence, and we found that DD Studio was the best possible partner for us. The way we have it set up, the collaboration is running like a well-oiled machine. You can’t beat it. It feels like we are part of the same company from a mindset perspective. Everyone has the same goal. It is very valuable to have that level of partnership.”

Editor’s note: The second part of this series will explore due diligence and provide seven critical questions OEMs must ask supplier partners.

Erik Swain is a freelance writer based in Phillipsburg, N.J. He has covered the medical device industry for 13 years.