not just a printed circuit board assembly, but a higher-level assembly. “We may not have the expertise in, say, injection moulding or plastics that go into that higher-level assembly,” Huebschman notes. Still, in such cases, the company can offer one of its preferred suppliers, meaning it can “still provide an end-to-end solution”.
The volume advantage in enlisting a full- service CMO An OEM’s comfort level with using a full-service CMO may depend on a broad set of factors, including how much of the device’s life cycle it wants support on and cannot manage internally. Meanwhile, for some OEMs, full-service CMOs
may help address specific factors related to their manufacturing needs.
Orthopaedics specialist OrthAlign shares that it “wrestled” with the decision to enlist the support of multiple or a single CMO and had been onboarding a second CMO to support risk mitigation and potential manufacturing redundancies.
Bobby Nandi, vice-president of operations at OrthAlign, says: “What we found very quickly, though, is that when onboarding multiple CMOs, you’re not gaining the volume pricing aspects of consolidating your manufacturing.” As a result, the company recently transferred all of its manufacturing to one CMO. “To mitigate the single-site risk factor, we chose a CMO that had sites around the world. After visiting four of the CMO’s sites, we were comfortable with the fact that any one of those sites could build our products,” Nandi explains. “We have a roadmap from a risk mitigation standpoint to have multi-site manufacturing capabilities, but all these are now still under one roof, meaning that we are able to maintain volume discounts and draw down on our cost structure,” Nandi concludes.
Make the best of a full-service provider Regarding whether consolidation makes sense for a given company, Huebschman’s view is that engagement should be happening sooner rather than later to realise the most beneficial outcomes. “It is challenging from a new product introduction perspective when a company is in the process of developing what the functionality of whatever medtech device that they’re developing is, as they typically bring us in too late to influence what path they’re on,” Huebschman explains.
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“And once a device’s design is locked in, there’s not a whole lot of opportunity to influence and perhaps drive down the cost or increase supply chain resiliency.”
Acknowledging that certain CMOs’ value-add consultative provisions may prove beneficial to an OEM, Washington highlights that a CMO won’t necessarily get the results an OEM is looking for, since they will not necessarily “understand an OEM’s business the way they do”. “I think, therefore, that OEMs have to be careful with delegating responsibility to their CMO. It has to be more, let’s say, earned by some kind of incremental improvement over time, and it can be difficult for an OEM to think about that until a contract manufacturer is ready,” Washington says. A CMO may be good at things like automation and performing its duties “on time, in full, and with no surprises”, but often only if an OEM has a clear specification and test requirement on the back end, Washington notes. According to Washington, only once these factors are cemented in place, should additional layers of consulting on a CMO’s part, beyond their core competencies, be introduced.
He explains: “Adding these additional services should only happen, I feel, once an OEM decides that they can share this responsibility or let go of some of it. I still think the OEM has to maintain most of that authority and responsibility.” Washington’s concluding view around consolidating outsourcing is that it is often “more of a design problem around strategic integration” – a factor that is “more important than just consolidation”. “Supply chain leaders have to work with their product counterparts, so somebody like me, who’s defining the product roadmap and the future direction for the organisation, isn’t just interested in more operational efficiencies,” Washington explains. “We’re interested in innovation and what we’re going to do to continue to differentiate our product, grow our business, and have the outcome that also aligns not just operational efficiency, but [also] the ability to offer innovation to our customers.” There is an undeniably broad range of benefits that an OEM can realise through a full-service CMO relationship. Less fragmentation, fewer moving parts, and a closer relationship between OEM and CMO can create greater scope for innovation while increasing operational certainty. However, to make the most of a CMO’s capabilities, OEMs must have a well-developed understanding of what they are looking for in a CMO partner. In fostering the relationship, it may also pay dividends to select a CMO whose offering aligns closely with the specific manufacturing roadmap and requirements; to clearly establish which operational functions they may need to retain in-house; and to understand the breadth of responsibilities a given CMO can reasonably be expected to fulfil. ●
www.medicaldevice-developments.com
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