All Supply Chain, All the Time

When we started planning this year’s April issue, it began with an in-vitro diagnostic (IVD) theme. And, indeed, with two features covering the topic this month, the “weight” of the issue certainly does slant in that direction. However, as some of the other articles began to trickle in from writers—both on staff and contributors—the overall tone of the issue seems to take a different direction. Two words became obvious page after page: supply chain. Though there is a supply chain feature in this issue (page 70), the topic appears to be the most common element flowing throughout April’s MPO.

For example, the recent tragic earthquake and tsunami in Japan has many device firms questioning parts of their manufacturing value chain, from suppliers based in Japan to end-users in the stricken island nation. This month’s Financial News column (page 44) examines the impact on companies’ bottom lines. So far, the medical device supply chain has remained largely unaffected by the devastation, but analysts expect that to change.

“Hospitals in the [affected] area are going to be flooded with patients, so U.S. sales of medical supplies could increase,” one analyst said. “On the other side, hospitals that were destroyed will not be buying supplies for the next year.”

In this month’s software feature (page 64), titled“A PrudentInvestment,” Contributing Writer Mark Crawford included a section on supply chain management through the use of cutting-edgesoftware applications.

“It is clear that life-science/biomedical companies must gain tighter control over the complete supply and value chains, fromingredient to patient,” said Daniel R. Matlis, president of Axendia Inc., an analytical and strategic advisory firm based in Yardley, Pa., that works with the medical device industry.

“Control over thesupply chain extends well past ingredient and components coming into the corporate manufacturing facility. Brand owners must deploy systems and technologies to provide visibility and control, not only in the supply chain, but also in the entire value chain.”

Medical device companies realize the best way to reduce these risks (and boost profits) is by implementing manufacturing and supply chain quality software that connects with product/process design models to enable more agile, less burdensome product quality verification and compliance traceability. This awareness is driving more integrated software solutions for product quality planning,execution and closed-loop feedback lean/paperless manufacturing and compliance, experts said.

Supply chain even worked its way into our primary IVDfeature, “A Good Diagnosis,” on page 52. According to an executive from Celestica Inc., a global supply chain and product life-cyclemanagement firm based in Toronto, Canada, outsourcing sustaining engineering can provide huge savings for IVD OEMs. Thecompany recently conducted a survey to evaluate a more streamlined process for IVD manufacturers.

“We found two major things,” explained Sandra Ketchen, vice president of Celestica’s healthcare division. “One, there is a significant opportunity for cost savings and reduction. We saw a very fragmented supply chain. OEMs can have as many as 15-20 connector suppliers, for example. There was no cohesive long-term supply chain strategy. The more suppliers you have, the less leverage over costs you have. Also, the supply chain structure tended to be regional. They would just pick someone down the street that they were comfortable with, with no thought toward a long-term global supply chain strategy. You have to think of total costs, focus on quality, and develop strong supply chain relationships.”

The second thing Ketchen noted was that IVD firms reallybenefit from a risk perspective when implementing a long-termsupply chain strategy. “Typically, more than 10 percent of a system’s components are going obsolete or heading in that direction,” she said. “It’s an ongoing battle. How do you keep in front of it? We know from experience that takes a significant amount of time and resources from an engineering team. Companies are battling between sustaining engineering versus investing in next-generation products. It takes a lot of effort to consolidate suppliers and design asupply chain strategy.” IVD firms may not have the time or theresources to keep abreast of these issues, but they benefit if they have a partner who does, she noted.

Along those lines, partnerships and supply chain issues also are at the heart of our agenda for the upcoming MPO Symposium Costa Rica (turn to the event preview on pages 76-77).

Almost like a subliminal message, the supply chain theme has infiltrated much of this month’s content. But, that’s not a surprise, because it also cuts down the center of almost everything themedical device industry does.