As healthcare manufacturers face skyrocketing demand for critical product lines, contract manufacturing partners are being asked to do more in less time in order to help meet demand against unprecedented timeframes. The key to meeting this challenge is vertical integration.

The concept of vertical integration is simple: a company combining two or more stages of production that would normally be operated by separate companies. The execution, however, is not so straightforward. The integration of multiple capabilities—tooling, molding, and secondary operations, for example—is complex, especially in an environment that demands high standards in quality and profitability. If done incorrectly, vertical integration can cause greater complication of a manufacturing process, interruptions in supply, lost time, and wasted revenue. A successful vertical integration, on the other hand, creates increasingly innovative manufacturing solutions, among numerous other benefits.

Partnering with a contract manufacturer that possesses the experience, capabilities, and financial strength to successfully integrate critical parts of the manufacturing process will drive long-term success for a company by de-risking the supply chain, shortening time to market, and improving productivity and profitability.

De-Risking the Supply Chain
A vertically integrated contract manufacturing partner creates a single source of accountability to ensure a project is delivered on time, within budget, and to the level of quality expected. For instance, the centralized control heightens accountability of the process from start to finish, as well as simplifies regulatory compliance through tracking and traceability when corrections or adjustments are needed. Additionally, the collaboration of cross-disciplined teams under one roof leads to greater innovation; maintains ongoing, reliable quality; and facilitates better problem-solving through the diversity of thought and range of perspectives that can only come from a multi-disciplined team.

Furthermore, vertically integrated contract manufacturers are better positioned to support companies looking to reshore the majority of their manufacturing. The unique ability of vertically integrated contract manufacturers to manage more of the supply chain helps streamline the process, taking out risk and ensuring supply chain continuity.

Lastly, centralizing manufacturing with one company allows you to more easily manage the supply chain, giving contract manufacturing partners the responsibility to handle day-to-day issues with a wide range of suppliers, eliminating the need for your involvement.

Not all contract manufacturing partners, however, are equipped to hold this level of accountability. In order to be successful, they need to have a broad understanding of the healthcare industry and deep knowledge of individual manufacturing competencies. For example, a process engineer working at a vertically integrated manufacturing company can come together with a metrology engineer, sampling engineer, and automation engineer to evaluate a part design and tool, as well as understand the risks and potential issues. In doing so, they are able to design the best process prior to molding. 

Look for a partner that emphasizes the importance of accountability and transparency so you, as an OEM, have peace of mind knowing you’re in good hands.

Shortening Time to Market
Speed to market is critical for the healthcare industry, and vertically integrated manufacturers are uniquely positioned to take on that challenge. With multiple operations under one roof, production is streamlined and time to market often decreases without sacrificing any quality along the way. Successfully integrated contract manufacturers can shorten time to production through a number of ways, including utilizing the unique skill sets and deep expertise of a diverse group of employees. From designing the optimal cavitation tool to identifying the right automation, a vertically integrated team can collaborate from start to finish on solving complex problems and developing the most effective manufacturing process and work environment.

Timelines are also condensed at an integrated manufacturer because molds only need to travel cross-campus (not cross-country), integrated advanced manufacturing technologies eliminate unnecessary steps, automation increases repeatability, and quick tooling updates can be made in real time. Additionally, tasks such as building out the manufacturing environment and the equipment, are done simultaneously as opposed to linearly, and validation and quality testing can be directly integrated to streamline the process and immediately uncover and address concerns.

Finally, the work is done right the first time because vertically integrated manufacturers employ cross-functional teams that complete all processes in-house. For instance, they don’t need to spend time getting familiar with the tools made by another company before they can get started on the molding since team members communicate along the way and ensure things are accomplished correctly each step of the way.

The right contract manufacturing partner knows how to effectively manage the time, money, and complexity of a process without omitting critical steps along the way.

Improving Productivity and Profitability
In the face of consistently rising demand for healthcare products against shrinking margins, improving productivity and profitability of programs are top of mind for every OEM. Vertically integrated manufacturing partners are able to maximize throughput without inflated costs by investing in efficient processes, advanced automation, smarter logistics, and highly competent, knowledgeable teams.

For example, through the combination of tooling, automation, and molding, integrated contract manufacturers offer the perspective needed to design the right tools, processes, and workflow to maximize efficiencies while finding smarter ways to increase manufacturability and profitability. They create manufacturing environments designed for optimal workflow, utilize sophisticated automation equipment, employ experienced team members, and leverage competencies across disciplines. A smart, vertically integrated contract manufacturer, however, does not stop there. It remains focused on long-term continuous improvement and continually evaluates its programs and processes in order to maintain productivity and customer profitability, reduce labor costs, and eliminate scrap and rework.

Put your trust in an integrated manufacturer that puts its expertise to work for you. The right partner will have the competencies to design integrated solutions that drive down costs and timelines, increase volume and quality, and provide greater economies of scale.

Case in Point
As major medical device manufacturers are challenged to meet the rapidly rising demand for COVID-19 test kits, vertical integration has proved essential in meeting tight timelines for critical parts. Vertically integrated manufacturers made excellent partners for leading healthcare OEMs because they could make complex parts while simplifying the process. For instance, vertical integration, coupled with robust, advanced manufacturing technologies, gave MGS the ability to quickly pivot to meet the demand for test kits.

Specializing in tooling, automation, and molding, MGS reallocated capacity to focus on building the right cavitation molds and leveraged its ISO Class 8 cleanroom to injection mold 10 million components per month. MGS immediately mobilized its tooling team to leverage decades of experience to build several molds in a significantly condensed timeframe. Concurrently, the team evaluated its manufacturing environment to create a technology-enabled cleanroom work environment to facilitate round-the-clock production of these components. Given its deep competencies across multiple disciplines, MGS was able to quickly ramp up production to de-risk the manufacturing process and get the test kits to market faster.

This experience gave MGS a better understanding of the potential that is unleashed when cross-disciplined teams are brought together from the start. When manufacturers implement vertical integration, it leads to greater collaboration, efficiencies, and innovative solutions that all contribute to getting products to market more effectively.

Conclusion
When done correctly, vertical integration of key parts of the manufacturing supply chain can provide many benefits for healthcare OEMs looking to launch programs quickly amid rising demand. The first step in identifying the right contract manufacturing partner is to identify the benefits of working with an experienced, integrated manufacturer, as well as the potential complexities that may come from working with the wrong partner.

Once again, the benefits of vertical integration are: de-risking the supply chain by implementing a single source of accountability and increasing long-term reliability and high quality; shortening time to market by leveraging expertise to condense timelines and maintain quality; and improving productivity and profitability by realizing economies of scale and utilizing specialized expertise in designing and launching manufacturing programs.

With an increased understanding of the value of vertical integration, ensure you focus on it as a value driver in evaluating your supply chain partners. Ask smart questions and get the answers you need to augment your team with an integrated manufacturing partner that will give you a competitive edge and produce the short-term and long-term results you need. 

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Ryan Lipe is senior vice president of sales and marketing for MGS. He has 20 years of experience in the medical device sector working in sales, marketing, and general management roles.