Supply, Cost and Quality Lead Concerns among Raw Materials Providers

Propylux HS 400x267

Concerns about availability, cost containment and quality will likely surface in conversations between OEMs and material suppliers in 2016 as uncertainties continue over supply and demand, top-down price pressure and enhanced regulatory scrutiny. These are generalities—starting points, if you will, in the conversations to come regarding materials.

BONEZONE reached out to the 27 raw material companies exhibiting at OMTEC 2016 to identify what you should be aware of as you embark on your R&D initiatives, as well as important follow-on topics influencing this portion of the supply chain. Three themes arose from an array of materials suppliers: inventory, pricing and quality. Here’s what they had to say.

On inventory and availability:

Bill Brebrick, U.S. Sales Manager, Zapp Precision Metals: Regarding [increased demand for] localized manufacturing, we have some OEM customers that are seeking suppliers located within their same geographic region. The aim is to be able to reduce delivery times and provide a higher level of customer service.

Michael Kell, Business Development Manager, Total Plastics: Stocking locations for polymer/plastic materials could be beneficial to orthopaedic OEMs this year, as demand [for polymers] is on the rise. Availability will be the key issue as several materials have changed from a supply standpoint, most notably Celcon M25, the medical grade acetal copolymer from Celanese. Many of the colors they produce now require high minimum orders, and some diameters of rod in these colors are becoming scarce.

Mary Moynihan-Downes, Marketing Director, Titanium Industries: We have seen some extended lead times for a select segment of our raw material products. I suggest that the supplier and manufacturer maintain an open line of communication with information flowing both ways, so as changes occur—either on the supply or the demand side—both have an opportunity to react.

Propylux HS 400x267

Medical grade Propylux HS made from an FDA, USP VI approved polypropylene resin (Courtesy of Westlake Plastics)

Dennis Rahill, Medical Products Manager, Vulcanium Metals International: Pay attention to what’s going on in aerospace, because aerospace has been busy lately; medical applications seem to get put to the background because aerospace represents so much volume. We see significant lead time increases in titanium sheet and in some cases, plate product, too. I think that’s a challenge both for our customers and for us, because lead time spikes can happen very quickly and that should be discussed when they see something beginning to stretch out.

Steve Smith, President, Edge International:
I’ve noticed, from a distributor standpoint, that most of the manufacturing mills of titanium, cobalt and stainless steel are now holding less finished goods inventory than they used to. It seems now that they are concentrating more on efficiency improvement. Their investment lies in the equipment for manufacturing, so they need to prove the return on that investment. In order to do so, they’ve got to be more efficient in what they produce, which means that they need to supply full quantities to customers, not bits and pieces or small quantities.

OEMs should give the contract manufacturers more notice of what they’re going to be expecting from them, so that everybody can work together and get materials in stock.

On pricing:

Brebrick: The global metals market has been weak over the past several years. Our OEM and contract manufacturing customers are savvy, and many have entered long-term agreements at these low levels. Those who have not or are working on a transactional basis will likely see upward rather than downward price movement in 2016. Such movement could expose these customers to negative purchase price variance.

Mark Evans, Meditech Global Business Manager, MediTECH/Quadrant Engineering Plastic Products:
 A lot of focus on anti-oxidant polymers. Also, a focus on the identification of lower cost alternatives (materials, processes), as well as a drive to lean out the supply chain (reducing the supplier base).

David Smith, Vice President, Business Development, Boston Centerless: The industry is under constant pressure to reduce cost and improve quality. Materials suppliers will be challenged to meet these demands, not just through price reduction, but also by offering solutions that result in a lower total cost to manufacture.

On quality:

Kell: Material specifications and the ability to accept equal or equivalent materials for certain polymers that may be hard to find will be a significant challenge in 2016. Re-approvals for 510(k) device submissions may be more prevalent this year, so it may be good advice to get a head start on new material approvals.

Stu Krupnick, Director of Marketing, UFP Technologies:
 Polyvinyl chloride (PVC) is a protective packaging material commonly used to minimize sterile barrier breaches for orthopaedic implants, sharp instruments, fixation devices or any other sharp or abrasive medical device that ships sterile. In Europe, most manufacturers have eliminated PVC due to the leaching of the plasticizer DEHP (Bis(2-ethylhexyl) phthalate), which is used to soften the material. In the U.S., only a handful of companies have taken this step, but in anticipation of potential legislation, more companies are looking for alternative materials.

David Smith: We see a growing emphasis on risk mitigation issues related to materials. Our customers are looking for guarantees that the materials they are buying from their suppliers are what they are certified to be. They want proof that the dimensions and alloy composition are correct. This is being driven largely by FDA and the pressure that their regulators are putting on OEMs to ensure that they are monitoring the entire supply chain, right back to the original melt source. Fines and penalties for product recalls are more costly than ever, so the OEMs are pushing back on material suppliers to guarantee the integrity of the materials they sell.

Steve Smith: There is a lot of talk about additive manufacturing. Products that are currently made by investment casting are more likely candidates for additive manufacturing. As far as the machine bar side, there’s a lot more work that needs to be done to see whether there’s potential for converting some of those products over to 3D-printed products.

The new ISO 13485 doesn’t really have any effect on the materials themselves, but it does put more emphasis on risk assessment, so OEMs and contract manufacturers are going want controls from their suppliers from the mills and from the distributors, to assess the risks of “what-if situations.

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