Contract Manufacturing

Why Contract Manufacturing?

Constantly spiraling costs, regulatory demands, industry consolidation, combination products, and engineering and product management talent shortages are forcing Original Equipment Manufacturers (OEMs) of medical devices to rethink their strategies. To maintain their competitive edge and deliver optimal solutions at a reduced price, they are engaging Contract Manufacturers (CMs) for the design and production of cost-effective, branded solutions.

This consolidation delivers cost reductions on individual components and assemblies, particularly with CMs who can offer several component and assembly verticals. It also enables OEMs to reduce their overall number of individual suppliers.

Selecting a CM Partner

Price is not the only consideration when selecting a CM partner.
The following are the 6 key factors that every medical device OEM should consider before outsourcing to a CM:

Size

Large CMs are burdened with bureaucracy and high overheads. Mid-size CMs are agile and responsive, offer robust quality control, and have sufficient presence to provide significant cost reductions. Small CMs lack the ability for volume ramp-up and global scale cost reductions.

Responsiveness & Communication

Good CMs offer fast responses and direct access to an appropriate point of contact throughout product development, manufacture and delivery. First impressions are an indication of how business will operate throughout the partnership

Production Focus

Vertically-integrated CMs deliver significant value through consolidated supply chains and integrated teams delivering total value to the product. Singularly-focused CMs are valuable for niche processes, or when they are experts in a singular commodity process field.

Level of Quality

CMs with robust, accredited quality systems in combination with risk mitigation plans are very valuable, since this almost always reduces expenditure of time, money, and effort.

Location

CM location and country of manufacture significantly affects the price-per-unit, access and timeliness to distribution channels, and overhead rates.

Understanding of Goals

It is critical that the CM clearly understands why an OEM is outsourcing, e.g., reduce costs, reduce wholly-owned space, create flexible models for expansion.