Selecting the right contract manufacturer

For medical device design companies, working with a contract manufacturing resource can be an exciting and sometimes unnerving experience. Often companies are not sure what to look for in a partner, how to make the most of a partnership, or how outsourcing can enhance a product or product development lifecycle. The following five tips and considerations provide insight into key questions relevant to selecting an outsource partner, approaching the partnership, and paving the way for a smooth and efficient result.


1. Documentation Evaluation and Exchange
An ancient Chinese proverb states, “The palest ink is better than the best memory.” In today’s terms that would be, “Write it down!” One of the most costly, time consuming, and head scratching processes facing businesses today is how to harness employee knowledge and make it available in a shared and accessible format across the organization. Too often, companies rely on a handful of people to serve as legacy experts and mental keepers of information on everything from product design and client interaction to lessons learned. This puts companies at enormous risk for gaps in knowledge and repeat mistakes, and does not allow for collaborative and productive sharing of information inside – and outside – the company’s walls.

Consideration: Do you have documents you can share with the contract manufacturer to help them better understand the product you would like to outsource?

All design and manufacturing projects include documentation from all phases of the project to date. When beginning work with an outsourcing partner, a complete assessment of all documentation – including assembly, test, and final acceptance criteria – is essential. Some designers choose to bypass this exchange of documents and instead ask the outsourcer to create a Requirements Document, or scope of work, to serve as the foundation for a project guideline. However, be advised, working with an outsourcer to create a Requirements Document can often add significant cost to the project, depending on the amount of detail missing from the initial package and the overall complexity of the product.

Providing complete documentation at the onset of a project can also help avoid the need for reverse engineering. The more information you can provide to your partner, the better. Recently, one of our clients saved more than $20,000 and dramatically reduced project risk when the company recovered important missing documentation, eliminating the need for reverse engineering and documentation re-creation.

The ultimate goal of your selected outsource partner should be to assist you in eliminating tribal knowledge from your product – unwritten information that is known within a small group of people (tribe), but usually unknown outside of it. In order to gain control of your product’s design or assembly process, you need to identify your product’s tribal knowledge and give it up. By giving it up to a trusted and knowledgeable contract partner, the appropriate qualification questions will be asked, appropriate information will surface, and it can then be clearly documented. This eliminates tribal knowledge and enhances the design timeline and overall produce-ability of your product.


2. Use a CM with a diversified supply-chain network
Contract manufacturers with expansive supply-chain networks are able to secure world-class prices and contingencies for varying quantities of parts. By aligning with manufacturing partner with a well-developed global supply chain management capabilities and a secure infrastructure, outsourcers can optimize cost across their entire customer base (aka buying leverage), in turn, garnering flexibility through the implementation of safety-stock, Kan Ban, and lean manufacturing programs with customers and suppliers.

Consideration: Is your contract manufacturer flexible and well capitalized? Have you discussed the various possible product launch scenarios and how your partner would adjust?

Contract manufacturers with a diversified supply-chain network and strong purchasing leverage are inherently better equipped to rapidly adjust to the constant changes in your business and industry in order to meet fluctuating demands. Flexibility is one of the primary assets you acquire when selecting your trusted partner. The best resources can turn on a dime, so ensure your selected partner is well-capitalized and able to handle the ramp-up or ramp-down scenarios associated with new product launches.


3. Weigh the true and total cost of doing business
The total Cost of Ownership (TCO) must include a true assessment of the costs associated with transitioning a product out of development and into scaled manufacturing. This assessment needs to be inclusive of all training, tooling, service, support, sustaining engineering, manufacturing engineering, and documentation creation, finalization, and validation. Experienced engineering and manufacturing partners can typically provide a company with a realistic estimate of projected costs at the start of a project.

Consideration: Are you choosing your partner solely based on the price per unit cost? Have you calculated the total cost of ownership?

For companies on the verge of outsourcing a project, often the temptation is to choose a contract-manufacturing partner based solely on the price per unit cost. Do not be too shortsighted! If all transition steps and costs are not carefully considered prior to bringing your product to market, costly challenges are likely to occur downstream, which could result in poor product quality, performance, brand damage, and high field service costs or recalls.

Since the outsourcing partner is responsible for establishing the supply chain, training all manufacturing personnel, and absorbing the cost of manufacturing process fluctuations, along with infrastructure costs related to space, general tooling, climate control, and other general overhead expenses – the manufacturer partner or OEM is able to minimize capital expenditure by leveraging their existing internal operation.


4. Decide what is right for your business
Take advantage of the ability to focus on your core competencies and core technology while leveraging a partner with a broad experience base and breadth of knowledge in various technologies, methodologies, and personnel.  It is your responsibility to retain and improve the core technology that provides your competitive advantage in the marketplace. Let a trusted outsourcing partner assist you with the rest by putting its vast capabilities and global networks to work for your new product designs.

Consideration: What will it cost you to build an infrastructure that supports your product design? Are you comfortable focusing on what you do best and trusting experts for the rest?

In this tough economic climate, companies are often faced with difficult decisions over which skills to maintain and which to let go until the general economy begins to improve. Partnering with a contract manufacturer will allow you to maintain the technical resources that are critical to retaining your core competencies and technology and leverage the broad-based capabilities of your trusted outsource partner – truly the best of both worlds.

Vertical integration can be costly. If you believe your capital is better used in other areas, consider outsourcing assembly, internal machining, printed circuit board, or field service responsibilities to a trusted turnkey resource.


5. Protect yourself and your product
Consideration: What is the lifecyle of your product and how is it protected?

As technologies, economic conditions, and regulations evolve, your product will need to remain competitive and compliant. Part of a contract manufacturer’s job is to offer expertise and knowledge throughout the development process and ensure a safe and efficient product or project.

Your trusted contract manufacturer can help protect your company and your product in the following ways:
Develop disaster plans that include offsite storage of valuable documents and qualified alternate sources of supply. Eliminate sole sourcing of components! In a critical time-to-market development, when one supplier cannot deliver parts in the necessary timeframe, an alternate supplier should be ready to step in to allow the product to make its market entry deadline.

Continually assess part obsolescence, particularly with electronic devices. With mature products that use older generation electronic chips, your supply chain can dry up as modern chip designs supplant older ones. In addition, stay ahead of compliance issues and other international green initiatives.


Conclusion
A new outsourcing partnership can be an overwhelming experience if you are not sure what to look for, or how to guarantee that your assets are protected. Following these five simple tips will help to create an efficient, cost-effective, outsourcing experience. To download a Tips and Consideration worksheet for selecting a contract manufacturer, visit coghlincompanies.com/cogmedix-tips-worksheet.php. 


Cogmedix
West Boylston, MA
cogmedix.net