Claudio Hanna and Ralph Tricomi , Web Industries04.01.21
“It’s time to fix America’s supply shortage problems for good.”
This statement from President Biden’s 2021 pandemic response plan sums up the sentiments of many U.S. business leaders and everyday Americans. They are not alone. COVID-19 challenges have governments and businesses globally assessing their supply chain resiliency for critical healthcare products, including personal protective equipment (PPE) and diagnostic tests. This has rekindled interest in domestic manufacturing, which in turn, creates valuable jobs and helps the economy.
While this is good news in many ways, it also poses new challenges. Offshore sourcing has dominated for decades. Converting to onshore production takes commitment and thoughtful planning. Also, big, new opportunities attract opportunists and associated risks for quality problems, intellectual property breaches, and missed deliveries. As medical product original equipment manufacturers (OEM) craft their onshoring strategies, smart leaders proceed with both urgency and caution.
If you are an OEM of PPE or diagnostic testing devices, you probably are evaluating your onshoring choices, trying to determine how to transfer some portion of production stateside. Whether you acquire or expand in-house production or partner with a contract manufacturing organization (CMO), you need a seamless transfer of processes and expertise to execute your domestic production strategy.
Onshoring Orders
In January, President Biden issued a 200-page report, “National Strategy for the COVID-19 Response and Pandemic Preparedness.” The report includes plans for securing the pandemic supply chain and establishing a U.S. manufacturing base for future health emergencies. “To respond more effectively to this crisis and ensure the United States is able to respond more quickly and efficiently to the next pandemic, we need a resilient, domestic public health industrial base,” the report said. “The U.S. government will not only secure supplies for fighting the COVID-19 pandemic but also build toward a future, flexible supply chain and expand an American manufacturing capability where the United States is not dependent on other countries in a crisis.”
The report refers to the Executive Order, “A Sustainable Public Health Supply Chain.” This order directs development of a Pandemic Supply Chain Resiliency Strategy to design, build, and sustain both short- and long-term U.S. capability to make supplies for this and future pandemics and biological threats. The order instructs the federal government to focus on building a U.S. supply chain in four sectors:
The order also invokes the Defense Production Act and other appropriate authorities to fill supply shortfalls in 12 critical supply categories, including:
As of this writing, President Biden’s $1.9 trillion stimulus plan passed in the House and was pending U.S. Senate consideration. The plan proposes funding for COVID-19 vaccine distribution and testing.
These government actions have sparked interest in public-private investment in U.S. manufacturing. No one wants to see a repeat of 2020’s supply chain vulnerability. “It’s not just that we [the U.S.] didn’t have enough masks during the pandemic. This [executive] order is about the future of U.S. competitiveness. Promoting that involves altering global supply chains. It won’t be easy, but there are ways,” said National Public Radio correspondent Sabri Ben-Achour in a Feb. 24 “Marketplace” broadcast.
Onshoring Options
Following are several ways to establish a U.S. supply chain.
All are viable approaches, but with all paths, OEMs must make their onshore transition without skipping a beat on product quality, consistency, or customer delivery. They need to get up and running rapidly. The United States is still fighting a healthcare emergency.
Constructing a new factory requires significant investment in bricks and mortar, machinery, and employees. Acquiring a business requires a large upfront investment. Outsourcing to a CMO involves building trust and transferring your product plans to a contractor, ideally one with a strong U.S. manufacturing base and ability to seamlessly integrate with your processes, systems, and people.
As companies weigh their options, they are running the numbers on U.S. critical medical supplies demand—past, present, and future—and reacting to U.S. government moves. Key variables include:
Choosing an Onshore Partner
If outsourcing to a CMO is essential to your onshoring plans, following are qualities to seek in a contracting partner, particularly for PPE and diagnostic test devices.
Speed and Flexibility: Speed to market is one of the primary advantages of outsourcing to a domestic CMO instead of building your own manufacturing facilities. An established CMO already has a supply chain in place. Ask about available capacity and ability to rapidly scale and commercialize your products. Request a plant tour and look for automation. Highly automated CMOs produce efficiently, control labor costs, and scale to handle spikes and fluctuations in demand.
Trust: An OEM needs a CMO that shares its commitment to get products to market expediently. Look for a strong track record with reputable customers. Check references and ask about process transparency and proactive communication. Consider the value of experience and number of years in business. Beware of newcomers just diving into the medical products business at the prospect of short-term financial gains. With lives on the line if your product does not perform, you need a trustworthy partner.
Quality: An OEM and CMO should speak the same quality language. There should be a seamless bridge between OEM and CMO quality assurance and processes. Also seek CMOs with ISO 13485 certification, U.S. Food and Drug Administration site registration, and Current Good Manufacturing Practices compliance. Ask prospective CMOs about how automated equipment, including vision inspection systems, contribute to quality control (QC).
Expertise: In the medical device industry, specialization matters. Consider whether a CMO is trying to be all things to all people or focusing on deep knowledge in specific product categories. Ask about operational competencies, including converting, laboratory, technology transfer, raw materials sourcing, and packaging capabilities. In addition, delve into the CMO’s information technology strengths and ability to integrate seamlessly with OEM enterprise resource planning, QC, and other solutions.
Conclusion
President Biden’s “Sustainable Public Health Supply Chain” executive order prescribes a surge in onshore manufacturing of critical medical products. The president’s 2021 plan states:
“The Pandemic Supply Chain Resiliency Strategy will address onshoring production of COVID-19 and related pandemic and medical supplies, creating a manufacturing base in the United States that can fill the Strategic National Stockpile, avoiding reliance on other countries for lifesaving medicines and supplies, and allowing the speed and flexibility required to produce needed supplies and medicines for ongoing COVID-19 outbreaks and future biological crises.”
How will your business respond? With smart onshoring strategies, the medical device industry, including OEMs, CMOs, and other suppliers, can work together to fix U.S. medical supply chain problems for good.
Claudio Hanna (channa@webindustries.com) is business development director, Medical, and Ralph Tricomi (rtricomi@webindustries.com) is market development and strategy manager for Web Industries (www.webindustries.com), a precision converting and contract manufacturing organization.
This statement from President Biden’s 2021 pandemic response plan sums up the sentiments of many U.S. business leaders and everyday Americans. They are not alone. COVID-19 challenges have governments and businesses globally assessing their supply chain resiliency for critical healthcare products, including personal protective equipment (PPE) and diagnostic tests. This has rekindled interest in domestic manufacturing, which in turn, creates valuable jobs and helps the economy.
While this is good news in many ways, it also poses new challenges. Offshore sourcing has dominated for decades. Converting to onshore production takes commitment and thoughtful planning. Also, big, new opportunities attract opportunists and associated risks for quality problems, intellectual property breaches, and missed deliveries. As medical product original equipment manufacturers (OEM) craft their onshoring strategies, smart leaders proceed with both urgency and caution.
If you are an OEM of PPE or diagnostic testing devices, you probably are evaluating your onshoring choices, trying to determine how to transfer some portion of production stateside. Whether you acquire or expand in-house production or partner with a contract manufacturing organization (CMO), you need a seamless transfer of processes and expertise to execute your domestic production strategy.
Onshoring Orders
In January, President Biden issued a 200-page report, “National Strategy for the COVID-19 Response and Pandemic Preparedness.” The report includes plans for securing the pandemic supply chain and establishing a U.S. manufacturing base for future health emergencies. “To respond more effectively to this crisis and ensure the United States is able to respond more quickly and efficiently to the next pandemic, we need a resilient, domestic public health industrial base,” the report said. “The U.S. government will not only secure supplies for fighting the COVID-19 pandemic but also build toward a future, flexible supply chain and expand an American manufacturing capability where the United States is not dependent on other countries in a crisis.”
The report refers to the Executive Order, “A Sustainable Public Health Supply Chain.” This order directs development of a Pandemic Supply Chain Resiliency Strategy to design, build, and sustain both short- and long-term U.S. capability to make supplies for this and future pandemics and biological threats. The order instructs the federal government to focus on building a U.S. supply chain in four sectors:
- Antigen and molecular-based testing
- PPE and durable medical equipment
- Vaccine development and manufacturing
- Therapeutics and key drugs
The order also invokes the Defense Production Act and other appropriate authorities to fill supply shortfalls in 12 critical supply categories, including:
- N95 masks
- Isolation gowns
- Nitrile gloves
- Polymerase chain reaction (PCR) sample collection swabs
- Test reagents
- Pipette tips
- Laboratory analysis machines for PCR tests
- High-absorbency foam swabs
- Nitrocellulose material for rapid antigen tests
- Rapid test kits
- Low dead-space needles and syringes
- All necessary equipment and material to accelerate the manufacture, delivery, and administration of the COVID-19 vaccine
As of this writing, President Biden’s $1.9 trillion stimulus plan passed in the House and was pending U.S. Senate consideration. The plan proposes funding for COVID-19 vaccine distribution and testing.
These government actions have sparked interest in public-private investment in U.S. manufacturing. No one wants to see a repeat of 2020’s supply chain vulnerability. “It’s not just that we [the U.S.] didn’t have enough masks during the pandemic. This [executive] order is about the future of U.S. competitiveness. Promoting that involves altering global supply chains. It won’t be easy, but there are ways,” said National Public Radio correspondent Sabri Ben-Achour in a Feb. 24 “Marketplace” broadcast.
Onshoring Options
Following are several ways to establish a U.S. supply chain.
- Build or expand a factory.
- Acquire a business with U.S. manufacturing.
- Outsource your product’s manufacturing to a U.S. contractor.
- Do a combination of the above.
All are viable approaches, but with all paths, OEMs must make their onshore transition without skipping a beat on product quality, consistency, or customer delivery. They need to get up and running rapidly. The United States is still fighting a healthcare emergency.
Constructing a new factory requires significant investment in bricks and mortar, machinery, and employees. Acquiring a business requires a large upfront investment. Outsourcing to a CMO involves building trust and transferring your product plans to a contractor, ideally one with a strong U.S. manufacturing base and ability to seamlessly integrate with your processes, systems, and people.
As companies weigh their options, they are running the numbers on U.S. critical medical supplies demand—past, present, and future—and reacting to U.S. government moves. Key variables include:
- How much PPE and diagnostic test manufacturing capacity is needed to keep up the COVID-19 fight?
- How much capacity will be required to make products for the Strategic National Stockpile (SNS)?
- What will be the normalized U.S. demand for PPE and diagnostics in non-pandemic times, and how much of that will be fulfilled from domestic manufacturing?
- How much U.S. manufacturing capacity is required to meet demand spikes due to future healthcare emergencies?
Choosing an Onshore Partner
If outsourcing to a CMO is essential to your onshoring plans, following are qualities to seek in a contracting partner, particularly for PPE and diagnostic test devices.
Speed and Flexibility: Speed to market is one of the primary advantages of outsourcing to a domestic CMO instead of building your own manufacturing facilities. An established CMO already has a supply chain in place. Ask about available capacity and ability to rapidly scale and commercialize your products. Request a plant tour and look for automation. Highly automated CMOs produce efficiently, control labor costs, and scale to handle spikes and fluctuations in demand.
Trust: An OEM needs a CMO that shares its commitment to get products to market expediently. Look for a strong track record with reputable customers. Check references and ask about process transparency and proactive communication. Consider the value of experience and number of years in business. Beware of newcomers just diving into the medical products business at the prospect of short-term financial gains. With lives on the line if your product does not perform, you need a trustworthy partner.
Quality: An OEM and CMO should speak the same quality language. There should be a seamless bridge between OEM and CMO quality assurance and processes. Also seek CMOs with ISO 13485 certification, U.S. Food and Drug Administration site registration, and Current Good Manufacturing Practices compliance. Ask prospective CMOs about how automated equipment, including vision inspection systems, contribute to quality control (QC).
Expertise: In the medical device industry, specialization matters. Consider whether a CMO is trying to be all things to all people or focusing on deep knowledge in specific product categories. Ask about operational competencies, including converting, laboratory, technology transfer, raw materials sourcing, and packaging capabilities. In addition, delve into the CMO’s information technology strengths and ability to integrate seamlessly with OEM enterprise resource planning, QC, and other solutions.
Conclusion
President Biden’s “Sustainable Public Health Supply Chain” executive order prescribes a surge in onshore manufacturing of critical medical products. The president’s 2021 plan states:
“The Pandemic Supply Chain Resiliency Strategy will address onshoring production of COVID-19 and related pandemic and medical supplies, creating a manufacturing base in the United States that can fill the Strategic National Stockpile, avoiding reliance on other countries for lifesaving medicines and supplies, and allowing the speed and flexibility required to produce needed supplies and medicines for ongoing COVID-19 outbreaks and future biological crises.”
How will your business respond? With smart onshoring strategies, the medical device industry, including OEMs, CMOs, and other suppliers, can work together to fix U.S. medical supply chain problems for good.
Claudio Hanna (channa@webindustries.com) is business development director, Medical, and Ralph Tricomi (rtricomi@webindustries.com) is market development and strategy manager for Web Industries (www.webindustries.com), a precision converting and contract manufacturing organization.
