Medical Device Contract Manufacturing – Supply Chain Agility
The supply chain has become a sensitive topic lately. It is not a subject that most of us typically pay much attention to—that is until things aren’t working smoothly.
In medical device contract manufacturing, we’ve felt the shortages very acutely. We assemble and package many different types of medical devices. As such, we are part of complex, global supply chains involving many suppliers and customers.
We are based in Los Angeles, CA, and approximately 40% of all goods that are shipped by boat to the United States come through the local ports of Los Angeles and Long Beach.
From the right vantage point, you can actually see the long traffic jam of huge container ships carrying everything from medical devices to toys to electronics. It’s like the 405 freeway at rush hour but out in the ocean.
Against that background, we wanted to share some of the activities and strategies that we have been pursuing to adjust to this new environment. We pride ourselves on being flexible, and we work hard to satisfy our customers’ needs by adapting to changing conditions.
Although this is one that is certainly testing us along with everyone else in the medical device contract manufacturing industry.
Anticipation & Early Action
One of the actions that we took several months ago was to anticipate that the situation was going to get worse before it got better. As a result, we increased our safety stock on all raw materials. This runs the gamut of pouches to trays to foam to adhesives.
You’d be surprised how many different materials go into the packaging and protection of medical devices. The number of individual components is in the hundreds and a shortage of any one of these has the potential to majorly disrupt customer shipments.
Early ordering to increase our component inventory has given us a buffer against the long lead times the industry is currently seeing and has protected us from significant downtime.
The tradeoff is that it has increased our inventory carrying costs. However, we feel that it’s more important to protect our medical device supply lines and deliver for customers. One of our guiding principles is Customer First, and we put this value front and center as we’ve made decisions related to the supply chain.
Another critical action has been consistent, transparent communication with our clients. For months now, we’ve been informing them about the medical device supply chain challenges, providing visibility to the situation, and working with them to best handle each situation.
In many cases, they are experiencing it themselves. In fact, most of our biggest medical device supply challenges are from our clients not being able to send us their medical devices or the unassembled components because they can’t get them on time.
Our strategy has been to communicate any potential supply chain disruptions early and often and to highlight any potential delays to the ship date.
We also provide our clients with 24/7 access to their own online portal that tracks their projects in real-time, and they can see where we are throughout the production process.
All of this has given clients peace of mind that we are on top of the situation and are dedicated to delivering for them. Additionally, they see us as part of their team as we work together to solve these challenges.
Expectations Re-Set for Medical Device Companies
Another area of focus has been to re-set expectations both internally and externally. As part of our communications outreach, we have been counseling everyone to rethink timelines and conventional decision-making.
The new normal demands that we move up key milestones to adjust to longer shipping times and component shortages so that we can build that extended time in, rather than sit still and expect the environment to change. Instead, we’ve pushed our internal team and our clients to change and adapt.
Strength of Relationships
We are also in constant contact with our suppliers to gauge the situation and enlist their help in solving the problem.
One of Pro-Tech Design’s most significant advantages is that we’ve been doing this for over 40 years and have built strong relationships with our key suppliers. They know us personally and we know them.
So, when things get difficult, we can have real conversations about where we stand with our deliveries, and what we can do to expedite them or work together to solve the problem.
All these steps taken together have been key to our success in navigating these current supply chain challenges.
The tactical steps have been important to keep delivering for our customers. However, the real story behind our success can be attributed to strategy, values, and people.
- Customer First – it starts with our overriding commitment to put our customers first. Part of our company culture is to do whatever it takes to deliver for our customers. One thing that makes that mission easier is to recognize the life-saving nature of the medical devices that we package, assemble, and deliver for them.
- Flexibility – we take pride in how we flexibly adjust to changing conditions. As the final step in a long process, we are often the link in the chain that must adapt to unforeseen circumstances upstream. Building flexibility as an organizational muscle for a contract manufacturing company like us has been a key part of our success and we continue to make it a point of emphasis with our team.
- People & Relationships – you can’t do any of this without a strong team. It may go without saying, but it’s good to remember in times like this that it’s the people on your team that make the difference. We have hired, trained, and rewarded the dedication of our people and they take pride in the success of the company because they know they are part of that success and are appreciated for what they do. Additionally, our suppliers are an extension of our internal team, we have long-standing and deep relationships with them. This helps us work through difficult situations because they know us, and we trust each other.
We’ll emerge from this supply chain mess at some point in 2022, but there will be some other challenge down the road that will grab headlines. The lessons learned for us are to ground our strategies in our values, hire great people, and build strong relationships with clients and suppliers.