One-stop OEM

With rising material costs and government regulations, there is no room for waste in the supply chains for medical equipment design and metal fabrication. Once medical equipment OEMs had the time, margins, and procurement staff to afford 6- to 8-week lead-times for fabricated metal components – subcontracted to layers of vendors, each taking their slice of profit and adding weeks of lead-time. That is no longer the case.

It turns out that the latest competitive advantage for medical equipment designers and manufacturers is one-stop precision metal fabrication. Full-service metal fabrication under one roof can not only cut cost, design, and manufacturing lead time – while improving quality – but also satisfy rush orders and just-in-time requirements, which streamlines the supply chain.
 

Optimizing the medical supply chain

Traditionally, medical equipment designers and manufacturers have relied on metal suppliers to provide parts using processes such as cutting, drilling, grinding, and polishing. However, secondary operations such as finishing, forming, coating, welding, and assembly were completed by other companies, usually at different locations.

The problem with outsourcing to multiple vendors – all with their own processes, inspection, lead-times, shipping, freight costs, and markups – is that it can inflate the cost of doing business and delay orders weeks or months to the point of losing the order. If errors occur, subcontractors have been known to engage in the finger pointing-blame game, rather than fixing the problem and expediting the order.

“The more layers of vendors involved, the slower the precision metal fabrication process and worse the transparency,” says Don Vitale, vice president of Operations/Engineering at Clinton Industries, a York, Pennsylvania-based designer and OEM of medical exam tables, treatment tables, blood drawing chairs, physical therapy equipment, and tubular steel medical accessories.

“If you have to juggle several subcontractors with limited capabilities to fill a large rush order, any delay can snowball,” Vitale adds. “One delay or error will impact the next vendor, since most vendors only understand their small piece of the puzzle.”

Recognizing the need to optimize the medical equipment design and OEM supply chain, some custom metal fabricators have gradually expanded their in-house capabilities by upgrading their facilities and equipment to act as full-service metal fabrication companies.
 

Combined services

Instead of working with layers of vendors as he had previously, Vitale chose to streamline Clinton Industries’ medical equipment design and OEM supply chain.

“Getting our metal parts from one source that does the work under one roof helps us meet our order commitments, even the large rush orders with a single point of contact,” says Vitale, who relies on Summit Steel for 2D and 3D laser cutting, CNC and Swiss machining, bending/forming, welding, and powder coating.

Vitale notes that his full-service metal fabricator once expedited parts in as little as two days for a rush job.

“It’s much faster to move components to value-added processes within the same building than to ship them to different vendors across the state or country,” he adds. “We’re saving about 10% to 15% in costs by eliminating unnecessary layers of subcontractor profit, shipping, packaging, accounting, and follow up.”

Clinton Industries saves even more by working with a large metal fabrication company that purchases raw materials at mill-direct pricing. Smaller machine shops typically buy in small quantities from metal service centers that include an intermediary mark-up. Larger metal fabricators, on the other hand, have the buying power to purchase large quantities direct from the mill.

These savings are then passed along to the medical equipment designer and manufacturer.

For Vitale, there is one additional competitive advantage to working with a one-stop shop: simplifying Clinton Industries’ quality auditing. Such quality auditing can be particularly important in the medical equipment design and manufacturing industry, which is scrutinized by regulators.

“Instead of having to track and audit several vendor subcontractors, I can monitor one full-service vendor. That’s easing our goal to become ISO 9001 certified, which should help us expand our North American and international markets,” Vitale concludes.

Summit Steel and Manufacturing
www.summitsteelinc.com

About the author: Gary Romig is the founder and CEO of Summit Steel and Manufacturing and can be reached at 610.921.1119 or summitsales@summitsteelinc.com.