At that time, an ISO 13485 certification was something device manufacturers were required to have. Service providers, on the other hand, didn’t see much value in obtaining the certification. Some recognized it as a business differentiator and it was really only those focusing exclusively on the medical device industry who obtained it. My, how far the industry (and outsourcing) has come since then. Today, it’s essentially a barrier to entry for medtech. A service provider may get work from a device manufacturer without it, but those opportunities are going to be few and far between.
Only a few years later, Medical Product Outsourcing appeared and was an immediate hit. Again, everyone knew the act of outsourcing was taking place among medical device manufacturers, but no one was willing to talk about it. Fortunately for many, MPO talked about it. Of course, back then, I was on the outside looking in, leading the editorial team (of one) on a design engineering-focused magazine. At that time, however, it was easy to see the trajectory of MPO would be a favorable one since it was all too apparent the direction the industry was headed.
While it’s always interesting to take a moment to reminisce, it’s perhaps more useful to examine how current trends and incidents could affect future outsourcing decisions. Some of the daily headlines we see today are likely keeping industry executives awake at night. On the other hand, there are occurrences that present unexpected opportunities.
For example, recent reports have shown footage of huge lines at the Mexican border crossing, with some noting up to 12-hour delays. In an era of just-in-time inventory and Lean manufacturing philosophies, delays of this nature could potentially stall production of medical devices at facilities relying on those deliveries of components and products. At the same time, natural disasters have ravaged other regions of the world critical to companies’ supply chains. Further, Trump’s chess match with Chinese leaders over tariffs and a potential trade war must have industry executives nervous about timely deliveries of essential goods from the Far East, not to mention the prospect of increased costs for those items. All of this uncertainty could ultimately lead some to seek more stable, U.S.-located facilities upon which to base its supply chain. With more companies looking at implementing a “China for China” or a “Europe for Europe” strategy when it comes to having manufacturing in the same region as product distribution, will the idea of using a similar “U.S. for U.S.” policy become more prominent among medtech firms?
But, as we’ve recently seen in other headlines, a U.S.-based facility does not automatically represent a more stable partner. One need look only as far as the Sterigenics facility in Illinois to see that service delays and supply chain concerns can most certainly happen within a U.S.-based facility. (For a fantastic, in-depth look at this specific concern, read Medtech Musings on page 114 of this issue.)
Adding to the potential problems with a U.S.-based partner are the aforementioned natural disasters, such as hurricanes in the Gulf of Mexico hitting Puerto Rico, the southeast, and/or Texas. Earthquakes in California can certainly create supply chain problems, just as flooding in the Midwest can cause havoc there.
Meanwhile, might we have already caught a glimpse of the future of outsourcing in the medical device industry? Last September we saw an interesting transaction between Jabil and Johnson & Johnson that had the former take over 14 of the latter’s manufacturing sites. The deal was centered around J&J’s endo-surgical, spine, trauma, and instrumentation offerings. I’m uncertain, however, whether the agreement is exclusive or it allows Jabil to offer other manufacturers similar services at those facilities. Regardless, the question remains: was this a one-off deal or the next evolution of outsourcing in medtech? Only time will tell.