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Suppliers play a vital role in an orthopedic device company’s ability to produce safe and effective implants in a timely manner. Therefore, vetting a new supplier can be a lengthy process and shouldn’t be rushed.
Prior to adding a company to the Approved Supplier List (ASL), device companies need to verify and validate that the supplier can manufacture their parts 100% to the drawing requirements, show the quality records that back up their work and provide on-time delivery.
Edward Jaeck has sat on both sides of the table, first as a principal engineer at Medtronic and then in vice president roles in operations, quality and strategy at Lowell. Now, his consulting firm SINE18 performs supplier assessments and validations. We asked Jaeck about the crucial steps OEMs should take and where companies often fall short during due diligence when shopping for a new supplier.
The supplier selection process likely won’t succeed if device companies don’t identify what they seek in a supplier. What criteria should OEMs review before starting the search? How do companies ensure the dialogue is productive and that the requirements accurately portray their needs?
Jaeck: The first question OEMs must ask is why they seek a new supplier. List out the things that went wrong with the current supplier and do a thorough gap assessment of the supplier selection process. What was missed? Why was it missed? What could you have done differently? In my experience, most OEMs blame the supplier for issues that are their own responsibility.
The OEM must check their own work and confirm that their drawing is dimensioned and toleranced appropriately to avoid a conflict of interest. They can achieve this level of fidelity from external specialists at a supplier or consultant.
At a minimum, the OEM supply chain lead should organize a design review as part of the development process and require manufacturing and quality to approve the final drawing before it goes to a supplier for a quote. An additional step is to ensure the product design team incorporates design for manufacture (DFM) and considers inspection as part of the product design.
Two templates can help to achieve the best practice. First, the OEM should create a manufacturing risk assessment template. Second, the OEM should create an inspection risk assessment template. If the OEM has a good quality lab, a quality engineer should share the incoming inspection plan with the new supplier.
However, a risk to this approach is that OEMs follow these two steps less than 20% of the time. As a result, suppliers need to develop these capabilities themselves to support their customers. One way the suppliers can do that is to build their own detailed design for inspection (DFI) and DFM templates.
The practice of DFI/DFM is extremely valuable feedback to the OEM and can consume substantial resources to do well. As such, the OEM should commit to paying for professional feedback as the effort is standalone.
This information is beneficial when an OEM solicits feedback from multiple suppliers. Well-crafted and completed templates from suppliers can make a powerful impression on an OEM.
The points above ensure that the supplier has assessed technical risks. There are also other key challenges OEMs need to overcome.
One challenge is estimating lead time. Improving the project schedule requires the OEM to acknowledge the long lead times in the current environment and many reputable suppliers’ queues.
Many quality agreements that I have seen over the years were written by legal staff and nearly impossible for the supplier to achieve. This reality is surprising given that the average total dollar amount of the programs was below $1 million per year.
Another hurdle is the lack of mastery in quality management system (QMS) knowledge. Junior team members often lead OEM supplier quality teams with limited professional experience or industry knowledge. The lack of experience can lead to overly conservative quality engineers, whose detailed questioning can disrupt the supplier engineer’s work.
A supplier quality engineer should understand geometric dimensioning and tolerancing (GD&T), advanced inspection tools and techniques, and statistics. Mastering these three key disciplines gives the OEM and supplier many ways to validate the design.
What are the immediate questions that OEMs need to get answered to understand the supplier’s capabilities, performance and overall ability?
Jaeck: After working with suppliers for more than 20 years, I’ve learned that focusing on their ability to make the part is essential. Then, I assess their ability to make the part at the required volumes, building redundancy into their manufacturing process. Finally, I discuss strategic fit to ensure we maintain priority during high-activity periods.
Let’s break down these steps.
For the technical section, give suppliers a risk assessment template that contains a complete drawing with ballooned features and a table to fill in the results. This table has a row for each feature. It lists the nominal dimension and tolerance from the drawing, the required resolution of the metrology needed to measure that feature and the overall criticality of the feature (critical, major, minor, negligible). It also prompts the supplier to rate the risk level to inspect and manufacture that feature.
A low risk for inspection is represented by the ability to pass a gauge repeatability and reproducibility (GR&R) study with their current metrology with a 25% maximum precision to tolerance ratio. Low risk on the manufacturing side translates to achieving a process capability index (Cpk) above 1.67. For the manufacturing process section, give suppliers a template and ask them to fill in the process flow with equipment IDs.
I look for redundancy in equipment for each process step and a minimum number of steps. Ideally, the part is machined in one machine, then chemically deburred or electropolished to minimize process steps and transition time between stations. Simple process flows maximize throughput and minimize places for parts to sit and wait from a lean manufacturing approach.
For the strategic plan discussion, inquire how well they executed last year’s strategic plan. It is a significant risk if a supplier lacks or does not use their strategic plan. On the other hand, if the supplier has a plan and executes it well, then the conversation can shift to how we fit into their strategic plan moving forward.
How can an OEM validate the supplier’s response?
Jaeck: If a supplier can provide everything from the questions above, they are likely a potential partner. To validate their response, the OEM should assign a supplier quality engineer to partner with the supplier and review the risk assessments and manufacturing capacity analysis in detail. The supplier quality engineer should be able to go to a whiteboard and map out the entire supplier process flow with equipment layout.
Qualifying a new supplier takes substantial resources from the OEM and the supplier. However, if done correctly, the OEM and supplier can create an efficient methodology while establishing strong rapport.
What do device companies need to understand about sub-tier suppliers during the vetting process?
Jaeck: All sub-suppliers should be listed on the process flow diagram by supplied component along with their ASL status and ranking by the annual basis.
The OEM is responsible for the entire supply chain per FDA, adding a legal component to a qualification effort. While a resource and time investment, it is well worth visiting the supplier and key sub-suppliers. This practice also encourages suppliers to visit a sub-supplier if they have not previously done so.
The supply chain is only as strong as its weakest link. A great way to broker these visits is by discussing them at annual conferences such as OMTEC.
Who from the OEM and supplier must be involved in the initial conversations to ensure that directives are aligned moving forward?
Jaeck: I like to invite someone from OEM design, manufacturing and quality, with the most critical being the person that designed the part. This is because they have the deepest knowledge of detailed design decisions, which the supplier must hear during a call.
That team member can best describe a component’s function and mating interface strategy. Suppliers need to know a part’s function and how it operates. If possible, the OEM should provide those details at the start of a supplier engagement.
The other critical person is the quality engineer or lead inspection programmer. They need to be able to explain to the supplier how they measure the part during incoming inspection.
For example, they can advise how the piece was fixtured, how they established the datum reference frame, the probe types used, the number of points collected to define the dimension, and the software used to analyze the data. Correlating inspection systems is absolutely critical to running an efficient supply chain.
A supplier should be concerned if the OEM cannot (or will not) bring these specialists to this meeting. It signals that the OEM doesn’t have them, doesn’t prioritize the activity, or is afraid to engage with suppliers due to a lack of confidence.
I hear OEMs say they did their due diligence and the supplier still didn’t meet their expectations. Where do device companies go wrong in the vetting process?
Jaeck: Most OEMs struggle with vetting suppliers. They often send staff with little manufacturing or quality experience to visit the supplier, and that person then adopts the supplier sales and marketing team’s pitch without the expertise needed to dig deeper.
Great suppliers fly through the risk assessment process, then make sample parts and send them to you with a 100% first article inspection (FAI) on those parts. Great suppliers speak to the manufacturing capacity planning in detail. Great suppliers tell the OEM how the OEM fits into their strategic plan. Lastly, great suppliers have program managers who communicate weekly with the OEM, using standard tools of the program management profession.
What steps should they take to initiate a successful supply chain management process?
Jaeck: The best relationships are based on data, trust and transparency. Production volumes and pricing should be discussed only after demonstrating that a supplier can do a solid risk assessment, make samples with 100% FAI, and deliver parts with a process flow diagram containing time studies or estimates.
The supplier needs to make money to justify the project and internal investment. The components should not disrupt their factory, and the OEM should fit into their strategic plan. After aligning these points, achieving chemistry between the teams can ensure a healthy, enduring technical partnership.
