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Editor’s note: This is part 2 of a four part series on orthopedic supplier solutions to today’s most pressing challenges. Check out part 1 for advice on dealing with the uncertainty of today’s orthopedic market, part 3 for advice on reducing manufacturing costs and part 4 for insights on ways to reduce lead times and the importance of transparent communication between OEMs and contract manufacturers.
The orthopedic industry faces constant challenges in maintaining a stable and efficient supply chain, and those challenges are exacerbated because of current global trade policies and material availability. Companies have learned to navigate these complexities by proactively securing contracts and diversifying their supply base.
Dual sourcing has gained traction as companies seek to build more resilient supply chains. Orchid has been working on this strategy for some time, allowing them to produce products in both Europe and the U.S.
“For us, this isn’t hugely disruptive,” explained Lisa Hiller, Strategic Account Manager at Orchid Orthopedic Solutions. “It’s more about timing and the ability to set up another site for producing a specific product.”
The company’s focus on regional manufacturing and dual sourcing creates a more flexible supply chain that can withstand disruptions brought on by external factors.
This shift toward dual sourcing and regional manufacturing has sparked discussions about the future of global supply chains. “We’re seeing more customers prioritize proximity to their end markets,” Hiller said. “The closer you are to the end customer, the more responsive you can be, and that’s becoming increasingly important.”
Orchid has strategically positioned its manufacturing facilities in the U.S. and Europe to serve the respective markets more efficiently, ensuring that they can meet customer demands while mitigating the risks of long-distance shipping and trade disruptions.
Some of Orchid’s customers have also taken steps to develop a more resilient supply chain. Hiller noted that companies have embraced multi-source manufacturing to reduce their reliance on a single geography.
OEMs that have products made in China are incurring a significant added cost given the current state of U.S. tariffs. Hiller said many customers are ramping up their U.S. or European manufacturing capacities while keeping channels open with China. This approach hedges against risks while maintaining flexibility in their operations.
“It’s about finding balance and being able to pivot, when necessary,” Hiller said. “We’ve definitely seen a sense of urgency in some U.S.-based orders — a push to move quickly while still maintaining some level of supply from China.”
Overcoming Forecasting’s Limitations
For Able Medical’s Adam Paltzer, resilience is not just about reacting to disruptions but also anticipating them and building a system that can absorb changes without compromising on quality or customer satisfaction. Paltzer, Able’s Vice President of Operations, said the orthopedic manufacturing space is inherently unpredictable, so forecasting is often a major pain point for suppliers that are trying to anticipate the needs of their OEM partners.
Even the most advanced forecasting systems can struggle to predict what the future holds.
“If you show me a company that’s ‘great’ at forecasting, I’ll show you a company with a narrow product line that fits most anatomies and relies on highly standardized procedures,” Paltzer said. “Even then, as soon as competitors enter the market and start taking market share, that forecasting model falls apart.”
In such an unpredictable environment, flexibility becomes key. Rather than trying to improve forecasting to perfection, Able prioritizes adaptability. “We focus on operating within the current environment,” Paltzer said. “It’s not just about getting better at forecasting; it’s about accepting the nature of the market and adapting to it.”
Able works hard to maintain supply chain agility. The company ensures that its supply chain is dynamic and can quickly pivot when needed. This mindset allows its OEM partners to stay responsive, even in the face of unexpected shifts in demand.
“In a market where forecasting is inherently flawed, a winning strategy revolves around adaptability. We need to be quick and effective in responding to changes,” Paltzer said. “To do that, we leverage more of our supply chain in smarter ways. We make it stronger, not longer to ensure it remains flexible.”
ARCH Medical is focused on maintaining its competitive edge by continuing to adapt its supply chain strategy. One area of focus is helping OEMs with long-term planning to ensure they have access to the materials they’ll need to produce their products.
“It’s hard for them to commit to products they might need a year from now,” said John Ruggieri, Senior Vice President of Business Development at ARCH Medical Solutions. “However, we often can get them to commit to the raw materials that go into those products. Once we secure that kind of buy-in, it becomes a much easier proposition. Materials typically account for less than 10% of the total cost of goods, making it a relatively low-risk commitment for them.”
ARCH Medical also assists OEMs in choosing the right materials for their products, including high-risk materials. The OEMs are advised to let ARCH Medical purchase these materials while they’re available in order to avoid the price volatility of last-minute purchases.
“While not all customers have adopted this approach, some of our larger clients have agreed to it, and that’s been very helpful,” Ruggieri said.
By working closely with customers to plan for future material requirements, ARCH Medical has been able to create a more stable and predictable supply chain. “It’s about being proactive. If we can secure materials ahead of time, we don’t need to worry about sudden price spikes or shortages,” Ruggieri said.
Ready to Respond
One of the core challenges faced by the orthopedic supply chain is the delicate balance between the complexity of products and the need for rapid, flexible service. The latest implants, instruments and devices demand optimized manufacturing processes and meticulous quality control, which makes it difficult to meet the increasing speed required to keep pace in today’s orthopedic market.
“OEMs are under constant pressure to meet just-in-time surgical demands, manage vast field inventories and comply with regulatory standards,” said Peter Huie, Millstone’s Vice President of Supply Chain Operations.
That demands a delicate balancing act that can often strain supply chains that are already grappling with other significant pressures.
Huie said global disruptions, including shortages of raw materials, ethylene oxide sterilization capacity constraints and delays in international shipping due to port congestion and geopolitical instability, have impacted the industry.
“These factors affect delivery times and disrupt production planning, regulatory approvals and ultimately, patient care,” he added.
To mitigate these disruptions, Millstone Medical works closely with its OEM partners to ensure that the supply chain remains resilient. Huie pointed out several effective strategies, such as positioning inventory near major logistics hubs, implementing scalable packaging and testing operations and offering late-night fulfillment services to respond to demand spikes.
Technological innovations, particularly in predictive analytics and real-time data visibility, are revolutionizing the supply chain and helping to address these challenges. By leveraging advanced tracking technologies, orthopedic manufacturers can gain visibility into their inventory by tracking location, usage and condition across the entire supply chain.
Millstone Medical developed customized management platforms that help OEMs better track their inventory and anticipate demand. The ability to monitor inventory in real-time provides critical insights into how products are moving and where inefficiencies might lie.
The company uses tracking technology to help customers reclaim and redeploy underutilized field inventory, transforming often-overlooked assets into revenue-generating goods without the need for new manufacturing. This strategy not only addresses immediate supply chain disruptions, but also allows OEMs to optimize their existing resources.
“Predictive analytics and real-time data visibility transform the way orthopedic medical device OEMs make supply chain decisions,” Huie said. “We assist our clients in leveraging this data to minimize excess inventory, avoid stockouts and better predict future demand.”
The results of these strategies are clear: Better inventory management leads to quicker kit turnarounds, reduced waste and more agile decision-making. As Huie explained, these tools not only make operations more efficient but also provide tangible investment returns for OEMs. “These tools are practical and provide real value to our clients,” he said.
For Huie, building a resilient supply chain begins with the ability to stay flexible and proactive.
“The most successful OEMs cultivate agile systems that adapt to unforeseen circumstances,” he said. “That necessitates nurturing strong supplier relationships, strategically positioning inventory and leveraging technology to enhance visibility throughout all segments of the supply chain.”
