Jorge Izquierdo, VP of Market Development, PMMI08.05.22
Medical device manufacturing typically involves an array of suppliers. Identifying the right suppliers and maintaining good working relationships require attention to dozens of details and frequent, collaborative communication.
With an inflation rate approaching 10% mid-year, hedging for inflation has joined supply chain disruptions, supply shortages, and longer delivery times as top-of-mind concerns. It’s also helpful to be aware of what suppliers are facing in their supply chains. Shortages and delays for OEMs mean extended delivery times and higher prices for orders placed by medical device manufacturers (MDMs).
The “Supply Chain Quickie Survey Results” report, published in March 2022, goes on to note that shortages of automation components such as programmable logic controllers and human/machine interfaces are virtually universal. All respondents are affected with 84% experiencing high impact; 14% experiencing moderate impact, and 2% experiencing low impact.
Transportation is another hurdle, with the greatest difficulties associated with land transport, followed closely by ocean freight and then air freight. Many shipments, regardless of mode, are being delayed up to four weeks, and a significant percentage of ocean shipments (17%) arrive between 13 and 16+ weeks late.
As a result, OEMs are experiencing purchasing delays for electrical components, mechanical components, and materials. Although the majority of delays are 12 weeks or less, lead time for electrical components has stretched beyond 16 weeks for 37% of the survey respondents. The delays experienced in receiving components and materials, plus longer transit times are stretching machine delivery dates. At the time of the survey, just over half of all deliveries were experiencing delays ranging from five to 12 weeks.
MDMs can take similar actions to prevent and overcome supply chain glitches. It’s imperative to have multiple sources and some flexibility regarding components. Considering alternate freight options or arranging transportation themselves are options. When selecting suppliers, MDMs also should confirm:
The free, downloadable MC2 document serves as a foundation that MDMs and healthcare delivery organizations (HDOs) can use to negotiate and define which party will be responsible for which tasks associated with compliance, management, operation, services, and security of MDM-managed medical devices, systems, and connections. The contract language clarifies security terms and responsibilities to protect HDOs from cybersecurity threats and risks. Adoption of the contract language results in enhanced patient safety and increased resilience and security of the healthcare system. Stakeholders also benefit from:
From connecting with colleagues and hearing from experts to seeing new technologies, materials, and machinery-in-action, PACK EXPO International is the most efficient and effective way to discover packaging and processing solutions for over 40 vertical markets. No other event this year will showcase entire production line solutions and offer attendees everything needed to compete in a changing marketplace.
Jorge Izquierdo is vice president of market development for PMMI, The Association for Packaging and Processing Technologies. He oversees PMMI’s market development plans, research and programs for strengthening the competitiveness of North American suppliers of packaging and processing equipment.
Izquierdo is a mechanical engineer from the Universidad Nacional Autonoma de Mexico (UNAM), where he earned an MBA from the Instituto Autonomo de Mexico (ITAM) and has participated in globalization programs at the Thunderbird Graduate School of International Management.
With an inflation rate approaching 10% mid-year, hedging for inflation has joined supply chain disruptions, supply shortages, and longer delivery times as top-of-mind concerns. It’s also helpful to be aware of what suppliers are facing in their supply chains. Shortages and delays for OEMs mean extended delivery times and higher prices for orders placed by medical device manufacturers (MDMs).
Shortages Across Supply Chains
For OEMs, a lack of materials is particularly problematic in metals where 79% of respondents noted shortages are having a high or moderate impact, according to a supply chain survey by PMMI Business Intelligence, a division of PMMI, The Association for Packaging and Processing Technologies. Plastics shortages are slightly less severe with 62% of respondents experiencing high or moderate impact.The “Supply Chain Quickie Survey Results” report, published in March 2022, goes on to note that shortages of automation components such as programmable logic controllers and human/machine interfaces are virtually universal. All respondents are affected with 84% experiencing high impact; 14% experiencing moderate impact, and 2% experiencing low impact.
Transportation is another hurdle, with the greatest difficulties associated with land transport, followed closely by ocean freight and then air freight. Many shipments, regardless of mode, are being delayed up to four weeks, and a significant percentage of ocean shipments (17%) arrive between 13 and 16+ weeks late.
As a result, OEMs are experiencing purchasing delays for electrical components, mechanical components, and materials. Although the majority of delays are 12 weeks or less, lead time for electrical components has stretched beyond 16 weeks for 37% of the survey respondents. The delays experienced in receiving components and materials, plus longer transit times are stretching machine delivery dates. At the time of the survey, just over half of all deliveries were experiencing delays ranging from five to 12 weeks.
How MDMs and OEMs Can Work Together
To reduce supply chain disruptions and minimize delays, OEMs are increasing inventory levels, finding alternate vendors, ordering earlier and even preordering. They’ve adopted other tactics such as placing blanket orders, specifying alternate components, extending lead times, and eliminating terms that have penalties for late deliveries.MDMs can take similar actions to prevent and overcome supply chain glitches. It’s imperative to have multiple sources and some flexibility regarding components. Considering alternate freight options or arranging transportation themselves are options. When selecting suppliers, MDMs also should confirm:
- Responsiveness and excellent communication
- Compliance with industry standards and company specifications
- Ability to identify risks
- Adherence to a strict QA process
- Previous experience with the application and level of customization needed
- Price and payment terms
- Lead time
- Ability to provide added value not available from other vendors
- Reliance on proprietary components/software
- Willingness to share drawings and technical data
- Availability of local support
- Installation, start-up, and training services
- Order backlog
- Security of systems and remote support, if present
Cybersecurity Supports Supplier Flexibility for MDMs
FDA premarket guidance recognizes that cybersecurity is a shared responsibility among stakeholders throughout the use environment. To support cybersecurity needs, the Healthcare and Public Health Sector Coordinating Council has developed Model Contract-Language for Medtech Cybersecurity (MC2).The free, downloadable MC2 document serves as a foundation that MDMs and healthcare delivery organizations (HDOs) can use to negotiate and define which party will be responsible for which tasks associated with compliance, management, operation, services, and security of MDM-managed medical devices, systems, and connections. The contract language clarifies security terms and responsibilities to protect HDOs from cybersecurity threats and risks. Adoption of the contract language results in enhanced patient safety and increased resilience and security of the healthcare system. Stakeholders also benefit from:
- Enhanced efficiencies and lower costs
- Reduced negotiation and execution times
- Improved legal and operational process compliance
- Greater alignment between contracts
- Better staff awareness and understanding
Finding Solutions at PACK EXPO International
It is more important than ever that the packaging and processing industries come together to share insights and innovations, and the best place to do that is PACK EXPO International (Oct. 23-26, 2022; McCormick Place, Chicago) – the most comprehensive packaging and processing show in the world in 2022. The show includes a dedicated Healthcare Packaging Pavilion, with solutions targeted specifically to medical devices, pharmaceuticals and more.From connecting with colleagues and hearing from experts to seeing new technologies, materials, and machinery-in-action, PACK EXPO International is the most efficient and effective way to discover packaging and processing solutions for over 40 vertical markets. No other event this year will showcase entire production line solutions and offer attendees everything needed to compete in a changing marketplace.
Jorge Izquierdo is vice president of market development for PMMI, The Association for Packaging and Processing Technologies. He oversees PMMI’s market development plans, research and programs for strengthening the competitiveness of North American suppliers of packaging and processing equipment.
Izquierdo is a mechanical engineer from the Universidad Nacional Autonoma de Mexico (UNAM), where he earned an MBA from the Instituto Autonomo de Mexico (ITAM) and has participated in globalization programs at the Thunderbird Graduate School of International Management.
