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Orthopedic OEMs and suppliers need to be on the same page to manufacture and market new devices. Effective collaboration between companies is based on constant communication, clear expectations and earned trust.
Zimmer Biomet prioritizes cooperative suppliers. “We value flexibility, reliability and engagement with a focus on continuous improvement activities,” said John Manning, the company’s Sourcing Director of Global Freight, Supplier Outside Processing and Injection Molding. “We’re always striving for faster, better and more cost-effective solutions.”
Ben Thompson, Chief Commercial Officer at Avalign Technologies, pointed to the importance of a deep and transparent understanding between companies. What are the shared priorities and objectives? What are the critical capabilities that need to be leveraged?
“An open and honest upfront conversation helps to identify win/win situations and find the best fit for both parties,” Thompson said. “Once a mutual understanding is established, you can begin dedicating the necessary time and effort to the partnership.”
Manning and Thompson provided additional perspectives on OEM/supplier relationships that are built to last and the keys to making product development deals work.
OEM Essentials
Zimmer Biomet assigns global and regional category leaders to every commodity it supports worldwide. Each leader develops an individual strategy tailored to their specific area of focus. The methods are reviewed and approved at several levels of the organization, including the Global Sourcing Vice President and, most importantly, the quality leadership team.
“We prioritize maintaining a close alignment with the quality group to ensure that the strategies are implemented effectively across our supply base,” Manning said.
Many elements of the strategy are consistent across different commodities and categories, but category leaders have the flexibility to customize their approaches based on individual needs.
Zimmer Biomet sometimes struggles to integrate smaller affiliates into the company’s global strategy, especially following mergers and acquisitions. “Our strong relationships with suppliers remain key to overcoming these challenges and ensuring successful implementation of the company’s priorities,” Manning said.
Manning tracks traditional KPIs such as delivery and quality to maintain collaboration with his suppliers. He also focuses on four Cs that he considers essential elements of a successful OEM/supplier relationship: compliance, cooperation, competency and competition.
Manning said effective supply chain management begins with a strong foundation of adherence to compliance processes, including a robust quality system, consistent quality performance and dedicated quality resources. He also pointed to the importance of effective business continuity planning, especially when market forces test supply chains.
Zimmer Biomet expects its suppliers to also establish strong continuity plans to maintain the effectiveness of the supply chain. Strict observance of the supply chain notification process is also non-negotiable. “We cannot afford surprises or disruptions caused by process changes that haven’t been approved,” Manning said.
Manning wants to understand how well suppliers are performing financially and uses financial evaluations to assess potential risks and anticipate future challenges.
Competency is also important to Zimmer Biomet, which expects its suppliers to be strong and diverse in their capabilities. “Suppliers need to deliver a broad range of services and maintain high standards in quality and delivery,” Manning said.
A key part of Zimmer Biomet’s competency measures is the on-time-in-full metric. The company also expects suppliers to support new product introductions (NPIs), which are essential for business growth, so meeting NPI timelines and requirements is important.
“We’re focused on lead time reduction, so KPIs around lead time and strategies for improvement are part of the supplier evaluation process,” Manning said.
Zimmer Biomet wants to see year-over-year supply cost reductions through process improvements. “We prefer suppliers with processes in place that align with our strategic and preferred programs,” Manning said. “Periodic business reviews help us reinforce these KPIs with suppliers and ensure we’re aligned on each measure as we move forward.”
Manning stressed the importance of transparent communication between OEMs and suppliers.
“Maintaining open dialogue at the right levels of the organization is crucial for building stronger partnerships,” he said. “Email works, but sometimes you need to pick up the phone, meet in person or connect virtually. Consistent information sharing remains vital to strengthening our business relationships.”
Supplier Priorities
Aligning the goals of OEMs and suppliers is paramount, according to Thompson. “How do you get the right people and resources focused on the right priorities?” he asked. “That’s crucial to achieving mutual benefits for both companies.”
Thompson noted that OEMs and suppliers must agree on establishing proper operating mechanisms. How will success be measured and tracked? Who is accountable for each aspect? “Clear understanding, organizational alignment and performance tracking are critical to any successful collaboration,” he said.
Avalign reviews the performance KPIs that are shared with its customers, but also dedicates time to additional in-house metrics that reflect the overall success of external partnerships.
One metric is account profitability, which assesses the return on the company’s dealings with OEMs. Another is customer penetration, which determines whether an OEM engages with Avalign for just one capability or utilizes the full range of the company’s offerings.
A third metric focuses on relationship mapping, which involves evaluating where Avalign has access and alignment within the customer’s organization — and whether the company is connecting with an OEM’s key areas beyond just one or two functions.
Thompson said Avalign also assesses its win/loss percentage, not just in terms of the accounts the company is gaining or losing but, more importantly, why OEMs are coming aboard or leaving as partners.
“This deeper understanding helps us evaluate the strength of our relationships from a strategic standpoint and beyond simply how well we meet a partnership’s commitments,” he added.
Most leaders at OEMs and suppliers don’t have enough hours in a day to accomplish what needs to be done. That’s why fostering two-way communication between companies requires putting operating mechanisms in place to ensure essential conversations happen.
At Avalign, business reviews typically involve a mix of quarterly executive-level and functional meetings. The company’s integrated planning involves reviewing OEM forecasts and demand levels, as well as NPI projects and product development efforts with their customers. The goal of these touch points is to ensure the company is focused on the right priorities of an OEM partnership and can course-correct if needed.
“Business reviews, forecasting and integrated business planning effectively drive open, two-way conversations that are essential to partnership success,” Thompson said.
