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A lot has changed since Dale Tempco began working in the medical device industry twenty years ago, but he still recognizes the essential elements of successful OEM/CM partnerships. Tempco, a consultant who often maintains lines of communication between the two groups, believes a foundation built on clear expectations is key to collaborations that successfully bring new products to market.
OEMs and CMs must team up to deliver ROI on product development that leads to profitability and growth. Both sides should start the process headed toward agreed-upon objectives and with open lines of clear communication. They must analyze progress and cost savings in procurement, production, logistics and quality control. They should work together to mitigate the risks of supply chain disruptions and regulatory compliance issues.
“Addressing these factors on the front end makes projects move forward faster, smarter and cheaper,” Tempco said.
Those three keys are the bottom-line measurements of ROI in orthopedic manufacturing and what all OEMs and CMs should strive for when working together to bring innovative products to market.
On the Same Page
Common challenges in OEM/CM relationships involve a range of issues associated with ensuring quality standards are met, managing risk, meeting compliance requirements and controlling costs. Supply chain problems such as material shortages, extended lead times and sudden cost increases can impact the manufacturing process. Plus, numerous market factors have led to an unprecedented shortage of skilled laborers that continues to impact all manufacturing companies.
In light of these variables, agreements and decisions made by OEMs and CMs should benefit both parties. The foundation for mutually beneficial partnerships needs to be built at the start of product development and cultivated to remain strong throughout the manufacturing process.
Both sides must gather information to better understand the partnership in terms of stakeholders, strategies, goals and outcomes. They must establish clear expectations and standards by which both parties will work throughout projects. It’s all about balancing risk and the value both sides bring to the table.
Successful partnerships between OEMs and CMs require agreement on goals and the ongoing measurement of key performance indicators (KPIs), which can include cost savings, quality improvements, reduced lead times, supply chain efficiencies and the ultimate successful launches of new products. Establishing ways to measure the success of a partnership and prove its ROI leads to long-term profitability and growth.
This requires both parties to clearly define the objectives of the partnership outlined in the KPIs, which should be tracked, monitored and analyzed for progress and cost savings. OEMs and CMs should also assess and quantify the ways partnerships mitigate the risks of supply chain disruptions, regulatory compliance issues and quality control problems.
Either party can’t wait for the other side to take the lead on communications. A proactive approach to discussing the timeline of the product development and manufacturing processes and addressing potential issues mitigates risks before they become expensive problems.
According to a whitepaper published by Beroe Inc., a global procurement intelligence and analytics provider, it’s best to build a business case that emphasizes ROI early in the OEM/CM relationship. For example, Beroe noted, a company that is exposed to high supplier risk could highlight the use of an AI-enabled risk management monitoring tool to proactively implement mitigation planning. This would make clear the company’s efforts to reduce the likelihood of events that negatively impact material supplies and services.
CMs certainly feel pressure to control production costs and meet agreed-upon lead times. It’s therefore useful for OEMs and CMs to consider existing performance benchmarks that can be used as references for upcoming projects and get buy-in from all stakeholders involved in making sure the goal markers are met. Taking a more strategic role in managing OEM/CM relationships requires change management and a shift in internal and external perspectives, Beroe noted.
Ashish Shah, Ph.D., Vice President of Research Development and Engineering at Viant Medical, a manufacturer service partner headquartered in Foxborough, Massachusetts, pointed to the importance of understanding what kind of project model works best for individual OEM partners, regardless of whether they’re a startup, mid-sized company or major player. “One size does not fit all,” he said.
Dr. Shah suggests spelling out the expectations both sides have for the partnership and addressing them upfront to achieve success and a guaranteed ROI. He described OEM/CM partnerships as “fluid” and requiring both parties to address potential issues in a collaborative way.
“There’s no such thing as a cookie-cutter approach,” he explained. “But most partnerships work out well if the essential elements are planned out and clear-cut goals are established at the beginning.”
Blueprints for Success
Collaborative design efforts help to define the vision and scope of any project, whether it’s for a small, mid-size or industry-leading company. The goals may vary but productive collaboration and ensuring important goals are achieved can have an enormous impact on the ROI.
Not all OEMs are fully keyed into how a product is manufactured. That’s why keeping lines of communication open and educating them about potential issues on the front end will help avoid future problems that could derail a project. Bringing suppliers into the design process early on allows them to apply their expertise in setting goals related to the manufacturing processes and set design, quality and cost.
CMs can also add value to OEM partnerships through the services of expert design teams, especially when it comes to having specialized knowledge and expertise in materials selection, manufacturing processes and regulatory compliance. These factors enhance the overall design process and the quality of the end product. Ultimately, it’s important for the experts on collaborative teams that understand the best ways to design and manufacture products to work freely based on their product development background.
Design for Manufacturing (DFM) principles play a key role in the success of any OEM/CM collaboration. Notably, CMs can provide vital data about design and manufacturing that reduce production costs while improving overall quality. Early attention should also be paid to Design for Excellence (DfX), which involves considering inspection, assembly, cost containment, manufacturing efficiency and throughput, packaging and distribution.
When new material is proposed in the design of a device, Tempco said, ensure it meets regulatory requirements like biocompatibility. He also pointed to the importance of assessing material availability, which can limit production levels, jeopardize lead times and delay commercial launches. CMs can provide excellent value in providing procurement and production planning from the start of the product development process, according to Tempco.
CMs can also help OEMs reduce production costs and maintain quality through advanced design and engineering, and with new design tools and prototyping capabilities. Collaborative design processes can be a key factor in the success of product development.
Precision and innovation drive the entire manufacturing framework at Tecomet, a CM headquartered in Wilmington, Massachusetts. Kevin Hayes, Tecomet’s Senior Director of New Product Development, said the company works with OEM customers to create new orthopedic instrumentation or customize in-house designs to meet their specific needs.
“We view our relationships with OEMs as partnerships,” Hayes said. “We work together proactively to address their design, development, risk management, regulatory and manufacturing challenges.”
Tecomet uses two main methods to produce instruments designed to optimize performance and ROI. The first is to create an instrument with two or more functions. The second is to leverage the company’s broad capabilities to produce packaged finished products made from raw materials. “Leveraging our international manufacturing capabilities allows us to reduce overall production costs,” Hayes said.
He estimated that many of Tecomet’s projects typically last between 12 and 24 months, depending on the scope and length of the research and testing phases. “Our prototyping and testing capabilities allow us to test design iterations to optimize manufacturing pathways and concept selection during the early stages of product development,” he said. “This helps to avoid unforeseen issues after design freeze that could arise during full verification and validation testing.”
Hayes harnesses the experience of his OEM partners and new technology that improves the planning and manufacturing process to streamline the time it takes to develop a product from concept to commercialization, which is often the primary focus of Tecomet’s OEM partners.
“We utilize additive manufacturing to produce prototypes and have in-house equipment for verification testing,” he said. “We also use the additively manufactured prototypes to validate part design and geometry.”
Supporting the OEM/CM partnership throughout the product development process is essential, Hayes noted. “We collaborate with our customers and internal teams to provide design services that advance product launches,” he said.
Finely Finished Products
Product development can take between two and 10 years to complete, depending on the focus of the project and the studies and tests needed to bring devices to market. Dr. Shah said supply chain issues and repeated quality testing impact the duration of projects. Pressure exists during lengthier timelines to keep costs low without sacrificing quality. OEMs and CMs should never lose sight of the time and money investments both sides have made in making sure the project is a success.
“Maintaining consistent quality measures is extremely important,” Dr. Shah said. “We test, confirm and consider predicate examples to make sure we’re meeting required specifications every step of the way.”
Dr. Shah depends on OEMs to provide specific guidelines early in the collaboration process. FDA requirements and information from other important regulatory bodies also offer valuable information that guides the procedures that need to be followed during the design and manufacturing of new products.
“We also rely on our engineers to determine what’s correct and appropriate,” Dr. Shah said. “And we document as much as possible. A lot of testing — physical testing, destructive testing and hazard analysis — could be involved in successful product development and each step must be fully documented.”
Dr. Shah emphasized that expert designers and engineers play a key role in the OEM/CM relationship. Their experience and expertise contribute to successful product launches with reliable ROI.
He believes solid partnerships require companies to stay current on trends within the orthopedic industry, including new materials and manufacturing methods, and work closely together to meet design goals.
“The true value of relationships between OEMs and CMs comes down to a willingness to do anything needed to help improve how surgeries are performed,” Dr. Shah said. “Patient safety and outcomes are ultimately at the forefront of our jobs.”
