To the untrained (or uneducated) eye, outsourcing can seem like a relatively simple process. But medtech industry executives know the practice requires the right mix of skills, experience, support, and perhaps most importantly, partners.
Finding all the proper ingredients can be challenging, even for the most seasoned professionals. As one company leader noted not too long ago, “The biggest challenge...is finding people that are truly partners with you.”
Overcoming that challenge was the primary focus of the recent MPO Summit in San Diego, Calif. Hundreds of executives converged near the city’s marina in mid-October to discuss best practices and strategies associated with successful outsourcing relationships. The day-and-a-half event provided a plethora of useful takeaways for manufacturers and suppliers, a partial list of which is provided below. (Further details on sessions can be found at http://bit.ly/17notebook)
The most effective outsourcing partnerships are grounded in solid relationships. “When I look for people to work with, I want someone I can develop a relationship with—someone that is as invested as I am in the product. We’re in this together,” Hip Innovation Technology CEO, manager, and Board Chairman George Diamantoni said. “You find the right partners and you stay with them and move forward.” Diamantoni was part of a case study presentation on quality system management outsourcing; both his company and Medtronic plc teamed with medical device consulting firm Secure Biomed Evaluations on their respective outsourcing needs. Representatives from the company trio discussed the intricacies of partnering on such an important part of the product development process, noting that relinquishing control can initially be intimidating. “One of the biggest hurdles was getting the Medtronic side comfortable with a different [quality system] model,” declared Nnamdi Njoku, Medtronic’s senior business director of Pelvic Health Minimally Invasive Therapies. “It’s hard to get a big ship to do something different.” That anxiety, however, dissipated over time. “The partnership we’ve had has been like it’s one seamless team. Having a team on the Secure Biomed side has been very beneficial,” Njoku continued. “It’s allowed us to keep doing what we do very well at Medtronic.”
Never burn bridges. This common-sense tenet dominated part of the Make vs. Buy panel discussion. Outsourcing unions—like most any relationship—are not always lifelong commitments, and often end upon project completion. Both partners, therefore, must be prepared for the possibility of a “divorce,” and act graciously during the split to safeguard potential future pairings. As Teleflex Medical OEM Senior Director Jessica Lenhardt advised, “Some folks are ultimately going to insource. I wouldn’t ever want to make it difficult for one of my customers to do that [insource]. It doesn’t make any sense to me. That customer has many projects, and if you’re a good partner to them, they’ll come back to you.” Alex Porion, global sourcing senior manager for Boston Scientific Corporation, offered a similar tip, recommending that companies look beyond the current contract to attract future business. “Quite often, the reason for the ‘divorce’ is the curve of continuous innovation has plateaued,” he said. “From an OEM point of view, I may be losing an immediate transactional business now—the product lifecycle may have reached its end—but I’m going to help my partner move back in-house or help them in another way because in a year or two, they will come back to me. We need to be very consious of that.”
Engage early and often. Another fundamental building block of outsourcing partnerships, but one that can easily be overlooked. Brian Weller, RAC, a partner at Business Value Group Intl., outlined a comprehensive strategy for minimizing and managing outsourcing-related risk that involves adaptability, discipline, technical expertise, and senior management support. In addition, the partners should agree to specific risk management roles and responsibilities, and determine methods for syncing their CAPA systems. “Having a solid model that everyone understands tends to keep things relatively calm when bad things happen,” Weller explained. “No plan is perfect, and plans can change. But planning is always where the true value is. Things always happen, but if you’re on the journey together, you can have a much more effective means of getting to the root cause of a problem and managing a solution.”
Think globally. The device industry’s largest companies generate roughly 70 percent of their worldwide revenue outside the United States, according to industry data. That’s a lot of different-colored greenbacks. It’s also a great incentive for multinationals to collaborate with partners that can facilitate new market entry. “Collaborative global outsourcing partnerships and networks can serve to accelerate and bolster an OEM’s expansion into and penetration of new markets,” indicated Bill Ellerkamp, operating partner at Inverness Graham Investments and founder/principal of Acceleration Medtech, a Groton, Mass.-based firm providing analysis, insights, and action plans to medical device contract manufacturers. During his 45-minute Summit presentation, Ellerkamp identified various global sourcing “hotspots” and suggested that OEMs partner with local suppliers in developing markets to expand their footprints in those regions. “‘Local’ suppliers can have advantages in recruiting, navigating government bureaucracies and local customs, and accessing government incentives,” he said. “Identifying, developing, and managing outsourcing partners to support your global needs is challenging in the evolving medtech landscape, and should be a highly strategic activity. Do your due diligence in terms of vendor selection.”
And choose wisely.