Reaping the Rewards of a Global Supply Chain Partnership

Trevor Baumel, manager of supply chain management for Celestica HealthTech, Zurich, discussed the future of healthcare supply chains and leveraging the power of supply chain leaders during Compamed 2011, a three-day exhibition (Nov. 16-18) geared for medical manufacturing contractors in Düsseldorf, Germany. He shared some of his wisdom about global supply chain management and the changes that have occurred in the international market over the last few years during an exclusive interview with MedicalDeviceNow.

MedicalDeviceNow: How do supply chain opportunities increase when conducting business globally?
Trevor Baumel: By engaging with a global supply chain services partner, medical device companies have an opportunity to leverage their partner’s global network and supply chain infrastructure to put in place a long-term global supply chain strategy. We help our healthcare customers think about total cost and quality, and help them establish strong supply chain relationships. We find that in doing this, there is a significant opportunity for cost savings and greater supply chain efficiencies. For example—by engaging with our customers early in the product development stage, we can optimize the design from a supply chain standpoint before the first prototype ships. We help our customers tailor the supply chain to meet the needs of the product and the specific challenges of their end-market.

MedicalDeviceNow: What are the challenges in navigating a global supply chain?
Baumel: The biggest challenge in navigating a global supply chain is identifying all sources of risk—the larger the supply chain, the more the opportunity for risk….. and reward. You really need to have an infrastructure to help you manage on a global basis. For example—having the ability to consolidate your supply base, optimize supplier locations for production and distribution, ensuring that component lifecycles match the product lifecycle to prevent obsolescence issues—these are all elements of de-risking and optimizing the supply chain. Early involvement and collaboration with key partners and suppliers can dramatically improve product launch and ultimately, your time to market.
Communication across a global supply chain can be a challenge and can result in inefficiencies—examples are long lead times, inventories and buffer stocks as well as poor responsiveness from suppliers. Celestica has made significant investments in e-collaboration tools to help our customers move faster with less risk, giving them visibility in real-time across the supply chain.
Other sources of risk include geo-political risk—the recent events in Japan and Thailand have identified the importance of having a robust supply chain and strong supplier relationships. By building flexibility into your supply chain, it will be better able to weather any shocks to the system.

MedicalDeviceNow: How has the international medical device manufacturing market changed over the last few years?
Baumel: As the world’s population ages and people around the world gain greater access to healthcare, medical device companies are challenged to innovate faster while operating under increasing financial demands for efficiency and profitability. The competitive landscape is also changing as medical device companies face new competitors from emerging markets.
As a result, more and more medical device companies are embracing outsourcing as a competitive advantage. Medical device companies can now leverage a strategic outsourcing partner’s network and capabilities through the complete life cycle of their products—a dramatic change from the focus on product assembly. By best leveraging the outsourcing relationship, medical device companies can focus on their core competencies in developing and introducing new products faster.
Medical device manufacturers also need to focus beyond lowering the total cost of production and better understand the diverse needs of developed and emerging markets. Different types of products may be required for different regions to suit the local healthcare infrastructure and these products will also need to meet those regional regulatory requirements.
A strategic partner with the relevant global footprint and supply chain expertise can help navigate through those disparate markets. Through the partnership, medical device companies will more likely be able to expand their market reach cost effectively by uncovering and seizing growth opportunities in the rapidly growing emerging markets.

MedicalDeviceNow: In what ways will global supply chain management change over the next five years? Please explain the reasons for this change (or changes).
Baumel: As the market becomes more competitive and cost pressure continues to mount, we are seeing greater velocity and complexity in supply chains as manufacturing migrates to lower cost regions. Many companies are reacting to these new challenges when they should be proactively architecting the optimal supply chain for the future.
At the same time, they need to be thinking about non-traditional challenges such ensuring an ethical supply base. Corporate Social Responsibility is becoming a greater part of the overall manufacturing process. As a founding member of the EICC, Celestica ensures our manufacturing sites and our supply partners work to uphold the tenets of the ElCC Code of Conduct. Corporate Social Responsibility extends to how we work with our employees, suppliers and the impact we have on the environment. This will require a much more aligned, collaborative approach where all partners are aligned to meet the goals of the customer, beyond the traditional metrics of price, quality, and on-time delivery.