Transparency Can Help Keep Medical Device Supply Chains Compliant

Medical device manufacturers have to contend with some of the most stringent supply chain regulations, including those that govern third-party relationships. The Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH), and the EU’s Medical Device Regulation (MDR) are some of the more notable laws that they must adhere to. Common third parties governed by these laws include suppliers, manufacturers, distributors, sales intermediaries, and providers. Due to the high level of complexity in these supply chains, transparency and traceability have become all the more important in this industry. So much so that the above regulations, and others, specifically call out transparency requirements for every step of the supply chain. Here are just a few of the transparency requirements medical device manufacturers must follow under one or more of these rules:

• The EU’s MDR requires technical documents, clinical evaluation reports, and more to be furnished by medical device manufacturers depending on the “Class” of the product.
• HIPAA and HITECH require full documentation for the privacy of private health information that companies have access to.
• FDA regulations such as 21CFR, FDASIA, ISO9001, ISO/IEC 17025, and GMP require auditable books of record for compliance.
• The SEC in the US and the CSRD in the EU lay out ESG-related rules that companies must follow—and prove they follow—via disclosures around carbon emissions (including emissions from the whole supply chain, what we call Scope 3 emissions), supplier diversity, forced labor, and more.
• FCPA and similar laws make anti-bribery and anti-corruption (ABAC) compliance mandatory and require documented proof of efforts to curb such activity.

In each of the above requirements, transparency is key. Specifically, transparency throughout all parties of the supply chain and the relevant data that passes up and down the chain. This requires that companies trace the origins of their products and maintain a record of all their third parties, including n-tier suppliers, to ensure that they’ve covered all their bases. Let’s take ESG as one example. Every aspect of the supply chain has implications for ESG. The raw materials that make up the components used in manufacturing must be harvested ethically, without forced labor or other human rights violations. Distributors and sales intermediaries must be able to detail the path a product takes through their networks—and provide the carbon footprint of such activities to the manufacturer upstream.

The Challenges of Meeting Compliance 

However, a number of challenges exist that make it difficult for medical device manufacturers to enable proper transparency. Most notably, the extensive network of third parties that comprise their supply chain makes transparency a cumbersome task. In-depth tracing is needed with such sprawling networks. A lack of standardization complicates risk and supply chain professionals’ jobs and hinders transparency since a variety of data collection and reporting processes exist that don’t always work well together. Similarly, a lack of regulatory standardization across countries and regulations—and the increasing number of regulations—can create overlaps and duplication of work. This highlights the need for transparency in the first place: to meet these myriad regulations, companies need transparency into third parties to collect the right information from them in a timely manner. These challenges make it hard, if not impossible, to coalesce the relevant data to meet regulations without intentional action being taken to enhance transparency. This includes utilizing tools specifically designed for that purpose and building processes that properly gather the required information needed for transparency.

Making Transparency Possible in the Supply Chain 

With the MDR requiring detailed product reports, HIPAA and HITECH stipulating clear privacy documentation, FDA and FCPA requiring books to be transparent and auditable in a number of areas, and SEC/CSRD ESG regulations stipulating that products need to be traced in order to properly calculate the environmental impact of the supply chain, medical device manufacturers have their work cut out for them. They should plan to do the following to enable transparency:

• Automate key parts of the data collection process, such as sending out questionnaires, prompting third parties for additional information, and generating reports.

• Lean into AI to enhance autonomy and automation for risk management and transparency throughout the supply chain.

• Gather comprehensive governance policies and procedures using AI to ensure that the latest standards are being followed.

• Utilize process orchestration to gather information from cross-functional teams and third parties, using AI to automatically fill in known information to save time and effort.

• Create workflows that automatically screen new third parties for risks related to ESG, sanctions, ABAC, and more; these can be cross-checked through integrations with data providers.

• Continuously monitor for risks, reassessing third parties every year and updating workflows when the regulatory environment changes. AI can streamline due diligence and vendor segmentation with insights that can identify risks quickly and help mitigate them.

• Build transparency requirements into new third-party contracts moving forward, and reassess current contract management procedures with an eye toward negotiating further transparency or traceability where needed.

Third-party management systems are a key piece of this puzzle, and device manufacturers are increasingly leaning on these systems and their broad set of tools and capabilities. Finally, a culture of transparency is important—letting everyone know from your own employees down to each vendor, supplier, partner, or buyer that information must flow in both directions will set the tone for smoother communication when it comes time to audit processes, gather emissions data for disclosures, or collect important information for any other regulation. With the regulatory space continuing to expand in all medical-related fields, along with the advancing global sprawl of supply chains, medical device manufacturers are looking at transparency and traceability as the key cornerstones of their risk management and supply chain processes in 2025. Leaning into automation and AI tools to gather and manage the continuously growing amounts of data needed for regulatory compliance will help keep companies ahead of the curve when it comes to adapting to future laws that are passed. Transparency helps not only to keep supply chains compliant, but also flexible and resilient in the face of future changes, and will keep all parties accountable in the future.

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Jag Lamba is the founder and CEO of Certa, a third-party lifecycle management platform for procurement, compliance, and ESG.