Establishing A Medical Device Supplier Selection Process for Early and Mid-Stage Companies4/30/2024 When you need help in your device business how do you figure out where to go to find it? Just as important, how do you make sure the partner (supplier) you select is the right one for the job? Establishing a medical device supplier selection process (part of your Supplier Management system) is an important and vital process for any size company. Even though supplier management is mandated by quality management systems globally, its eye opening how many device companies don't have a formal process for identifying and selecting their supply chain partners. Making the wrong decision can lead to countless hours of wasted time and of course money down the drain. If the situation is grave enough, it could also cost someone their job. To find the right supplier, a ‘supplier selection' process is key to develop ahead of time. When considering implementing a formal supplier selection process for a medical device OEM some important steps to consider includes: 1. Consider the Regulations/ Standards: before you begin building out a supplier selection system make sure you get acquainted, or re-acquainted, with the quality requirements for your given global region. (USA & EU - ISO 13485:2016, section 7.4) While perhaps not the leading indicator as of 2024, additional insights can be gained by reviewing CFR 21 Part 820.50, subpart E. (purchasing controls) Chapter 7 of MDSAP can also provide insights in the event your company follows this regulation. 2. Simple Systems: if the idea is to systematize the process of selecting suppliers across a company, regardless of size, it's best to create a simple to follow procedure set as this will encourage adoption. 3. Internal Procedures: start by creating purchasing procedures which align appropriate decisions with justifiable needs. This is especially important if the supplier in question lands on the 'critical supplier' list. Outlining who internally can perform supplier qualifications, as well as who can approve suppliers. 4. Formulate Supplier Criteria: It’s important to know what you want, or most of what you want, before you begin looking for it. Utilizing a pre-established set of standardized criteria will help you ask the right questions, obtain the right information and compare capabilities across a multitude of supplier options. This also helps to remove information bias where we tend to make decisions based on emotional characteristics, rather than on sound science or facts. Depending on the supplier you’re looking for a Supplier Questionnaire can be useful in obtain this information, and or utilizing a Request for Proposal (RFP) process. Typical data you’ll want to obtain may include:
5. Experience and Expertise: Look for a partner(s) with experience in the area you need help with. The last thing you want is a company that will ‘figure it out’ or give it the old ‘college try’ while simultaneously billing you the for experience. Referrals and references are key here, especially if the supplier you’re considering falls in that elusive ‘critical few’ supply chain partner list. The best approach to finding the right supplier is by reaching out to others in your industry, or local industry associations, to learn who they use, and just as important who they don’t use. Take the time to read reviews, gather intel from people you trust before you start calling potential suppliers. While sites like Thomas.net and Google can provide this information it is likely you will quickly find yourself overwhelmed with information. In the end the most useful data is those that are unbiased or comes from experience which is best collected from trusted resources. 6. Proactively Learn About Your Suppliers Behaviors When speaking with a potential new supplier try connecting with the people you will be working with, not just the company’s salesperson. This is important because once the relationship is established most of your time won’t typically be spent with their salespeople rather those delivering the service or product. When courting a supplier pay attention to things like:
If they are a critical supplier it’s vital you learn about their business continuity plan. What if their manufacturing facility caught on fire? Shipping is seriously delayed. Or a key person leaves the company? Do they have plans in place in order to deal with serious situations which could impact their business, and yours? 7. Determine Risk: Every supplier you interact with must have a risk score associated to their involvement with your product and end user. Categorizing risk usually falls into two buckets: non-critical and critical. Greenlight Guru does a wonderful job articulating these categories and risk tiers in its article ‘Ultimate Guide to Supplier Management for Medical Device Companies’, as follows:  8. Perform Audits: while not every supplier needs to be formally audited, especially if you’re looking at a non-critical tier 3 supplier, in particular who is a service provider. That said, it can be a good rule of thumb to audit all suppliers to keep yourself, procedures and systems honest and consistent. It is recommended to audit any supplier which provides components, parts or raw materials, regardless of their risk level to ensure you are in compliance with standards such as ISO 13485. Audits can be done both onsite or offsite; critical suppliers require a much deeper dive into their capabilities and processes to ensure compliance and risk mitigation. Once an audit is performed its vital to finalize the process showing a clear determination of said supplier, including acceptance or rejection and the justification for the decision. 9. Selecting A Supplier: Before you make a final decision which supplier to go with take a step back and think big picture. Is there an opportunity now, or shortly down the road to be looking at economies of scale? Meaning – can one of your suppliers in question do more than just one thing? If so, selecting a supplier who can offer a multitude of capabilities may be the better partner – less points of contacts and companies in your supplier database, opportunity for better pricing if you’re giving them more of your business, increase efficiencies. There is a draw back to this idea which is important to be aware of which is it is wise not to have any one supplier dominating a particular part of your business as this gives them leverage. While single source suppliers aren’t uncommon, it’s advisable to slow the process down and really think through what you need today as well as in the next couple years to determine appropriateness of these kinds of relationships. 10. Agreements and Onboarding: There should never be a time where you go into business with a supplier and not sign a contract. Period. While there are a lot of things which are covered in a contract some of the key considerations may be product or service guarantees, indemnification, no-change clauses, audit openness, pricing and of course intellectual property agreements. Once contracts are signed its important to onboard the new supplier in a methodical and open arms approach. You have decided to go into business with this new supplier, treat them like gold. It may save you down the road. Schedule a formal meeting and invite all key stakeholders from both companies to the meeting. Key discussions for the onboard meeting should cover how the two companies will successfully work together, areas of opportunity in the next 6-12 months, points of contact, expectations on both sides, etc. While this step may seem a bit overkill, it’s important to you look a supplier relationship like they’re now part of the family. The way you treat them and the experience is inevitably what you’ll get as an outcome. 11. Requalifying Suppliers: When creating your supplier selection process it’s considered good measure to include a ‘requalifying process’ to ensure your company is managing its suppliers consistently and diligently. Using a standardized scorecard to capture performance data will make this process easier to manage and act on. A Closing Note on Cost Most supplier selection programs or processes don’t have a specified approach when dealing with the evaluation and costing of products, materials or services. That said, the bigger the company the more robust their approach and or data will be to work with specific to cost. Either way, reality often shows us it doesn’t matter how affordable or cost effective a supplier is, or how nice they are as people. If they can’t perform, and do so consistently, the other two ultimately don’t matter. In many situations I’ve found paying a bit more for the right product/ service and relationship often is worth the investment in the long run despite the extra cost up front. While cost is important, it’s usually not the driving factor when picking suppliers. For most supplier relationships it comes down to:
 THE MEDTECH PROBLEM SOLVERS Square-1 Engineering, a medical device consulting firm, provides end to end technical project services to companies which design, develop and or manufacture life science products in Southern California. We utilize a unique approach in helping our customers complete their projects by combining the best of technical consulting services (hands on engineering & RAQA compliance) with technical training programs focused on building powerhouse teams. 
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“They gave us world class, but all we needed was the basics.”
Last week I was speaking with a VP of Quality at a small medical device company at which point he politely complained to me about a recent experience he had with a consultant their company brought onboard. The company was implementing a new online quality management system (QMS) and was utilizing this consultant to get it up and running. The VP shared with me his irritation about how the consultant came in and took on the project as an expert in the field. The consultant had done many QMS implementations prior and came with good recommendations of his work. As the conversation went on the VP share further irritation about his experience working with the consultant. He brought in an expert to do a job that was rather straight forward yet that’s not what the company got in the end. Unfortunately, the consultant failed to understand one of the most important aspects of his job – understand the needs of the customer and implement accordingly. “We’re a small company, we don’t need all the bells and whistles right now [from a QMS system]. We just need a system that keeps us in compliance while making things easier from a process flow standpoint.” The VP was sharing with me a painful experience he was having as a result of someone doing work for him and not understanding what was actually needed in the moment to be successful on that project. Sometimes what’s needed is the basics, not world class. The key is knowing when each of these is appropriate. All to often we show up to a project or work with the idea we’re going to dress up the proverbial pig ready for a fancy night out on the town. This pig of ours is going to look amazing, amazing because of the work we did to get it there. However, we end up missing the mark because we don’t bother to ask the right questions along the way. If we had bothered to ask the right questions to understand what was truly needed by the company and the key stakeholders we may find out the ‘pig’ just needs a new pair of shoes, not a whole wardrobe change. Here’s how this played out in the scenario above with my client and VP…
Here’s the rub on the situation. If the consultant had bothered to ask the vital question of their client upfront “What does ‘success’ looks like at the end of the project?” he would have found out the client needed a practical QMS which met the basic needs of their product and regulatory requirements yet did not need a lot of the fancy bells and whistles larger companies utilize with their QMS. Basically, this small medical device company needed a QMS that was straightforward, basic yet allowed them to upgrade their company to meet the regulatory requirements for their product. The client wanted a no frills, basic system yet what they got was a world class system they’ll probably never fully utilize. Key Takeaway: Don’t assume your work or project requires you to put forth world class service. Sometimes ‘good enough’ is all that’s needed. Knowing the different between ‘good enough’ and world class work outputs is a vital skill to develop and implement in your career. Action Item: Before you begin your next project at work think to yourself “what’s really needed here? The basics or something more?”. Then actually go ask the key stakeholder in charge. Doing this shows an ability to think big picture with an appreciation for what’s best for the company, not what’s best to make you look good as a result of the work you can do.  Like many things in life there is often more than one way to accomplish a task. This is especially true for those of us who fall in the creative space. One persons’ approach in the creative development process (drawing, painting, product design, coding, graphical design, underwater basket weaving, etc.) could be quite different from the person sitting next to them yet it’s possible for both people to arrive at the same destination. Or so we think. I recently sat down with a good friend of mine, Tim Humphrey, who I’ve had the pleasure working with for several years teaming up to facilitate a variety of product design and drafting projects in the medical device arena. During our discussion I shared with Tim a frustration I had, and still have, having to do with inconsistencies in people’s design approach. I see this often in product development where the approach one person takes to design a product may on the surface get them to the desired finish line but as a result of their approach it leads to a plethora of unnecessary challenges down the road. As Tim laughed at me lightheartedly, we found ourselves diving deep into a discussion where in one conversation I found myself both highly intrigued while equally confused and somewhat baffled at the same time. Here’s the issue as I see it specific to designing in a product development scenario. Issue: someone is tasked with designing either a product, sub-assembly or component of a new or existing product. As such, their design approach gets the company to a conclusion where the design is technically complete allowing the person facilitating the work to check their proverbial work box and move on to the next assignment. While the work may have technically been completed, it often is done in a fashion which causes all sort of problems down the road for the company, including other employees working on the same project within the same organization as well as their external suppliers. How is it someone can complete a design project satisfactory on the surface yet problems arise down the road with that very same design which had been previously approved? Answer: the devil is in the details, or lack thereof, to be more specific. Tim and I both agreed on the following. The reason why companies and or their respective employees experience this is because they aren’t following a formal and documented ‘gold standard’ for their design practices. Simply put, they lack discipline with design fundamentals. They don’t have GOLD! There is also something to be said about training. If your company lacks proper training to ensure the standards are being followed that too can produce similar unwanted results. As a result of a lack of design standards and training employees are left to decide for themselves how to complete a task which may get them to the finish line but the approach, process and details along the way can have wild variances and interpretations. While this may be common place and old news to many of you reading this article, the reality is the actual practice of designing a product with repeatable ‘gold standards’ is anything but common sense or consistent in the workplace. When our approach to design is fast and loose we experience the following:
When these issues show up it causes companies to reinvest dollars and resources into their work in order to move the project forward to get it to a point of where it can be properly advanced along the product development life cycle. This reinvestment is unnecessary and a huge time suck. For these reasons its vital companies implement a gold standard which their employees and suppliers follow to ensure the work each party is facilitating makes it to the finish line in the same format, intent and approach. This unification of process increases the likelihood design work is done correctly while also ensuring future usage of said designs doesn’t require additional unnecessary iterations or complete redesigns. Does your company need to implement a ‘gold standard’ for your design and product development practices? Implementing a gold standard includes:
Key Takeaway: If you and or your company lacks a gold standard for your product design efforts you are inevitably wasting time and resources. This also has a direct correlation to a suppliers’ ability to help with outsourced work causing the overall project to be more challenging and lengthy than necessary (prototyping, manufacturing, etc.) Action Item: Got GOLD? Start right away implementing your gold standards starting with develop a best practice plan. From there setup a review plan to provide feedback on all work performed. Once infrastructure of your new gold standard system is established you’ll want to asses the skills of your team and develop a training program which can be offered to both new and existing employees.  In this weeks Monday Quickie Recap we talk about our article ‘How to be Successful in the Start-Up World’ and the importance of working outside of the box and your respective job description, as well as the impact good/ bad leadership can have on small companies.  Think back to the last time you experience a moment where during a conversation an elongated pause or silence occurred between you and the other person, inevitably leading you to think in the moment “this is awkward”. Perhaps you were in a social setting, on a date, in a debate, or even at work. Whatever the situation may have been it’s highly likely you did or thought about saying something in moment just to end the awkwardness of the deafening silence between you and the other person. If in fact you acted and said something in order to break the uncomfortableness of the silence know that you just failed one of the basic lessons taught to many professionals about the art of negotiations. Don’t feel bad, it happens to all of us. Here’s why… While the situation you were just thinking about may not have had anything to do with a negotiation, the action you took and therefore the outcome is all too reminiscent of a typical negotiation setting. Did you know many people in a professional ‘buying’ role are trained on how to deal and negotiate with a seller? Meaning, they’ve been taught a ‘buyers strategy’ on how to negotiate with sellers in order to get an outcome which is more favorable to them as the buyer. I know this because I’ve been through the class. Many companies train their key people in decision making positions, such as leadership, buyers, purchasing, contract managers, etc. to use an interesting tactic in negotiations which is the ‘pause’. It’s a devilish and fairly simple tactic that works like a charm with sellers, especially those who aren’t particularly skilled with negotiations. Here’s how the ‘pause’ from a buyer works: Seller: Well Tom, we can certainly provide you with 10k units of ABS molded tubing at $3.85 per meter. Buyer: Doesn’t say anything in response to the sellers pricing comment; buyer just sits there with a smug look on his face starring at the seller creating an uncomfortable and certainly awkward silence. Seller (20 seconds into the awkward silence): Actually, you know what Tom, we can probably get that number down to $3.40 per meter if you’re able to sign off on a PO today. And there you have it. The art of negotiation at times is nothing more than a pause; flat out no response at all, no reaction. When an inexperienced seller is confronted with a pause in a negotiation they squirm in their seat to the point where they feel compelled to say something in an effort to get out of the awkwardness and hopefully move the discussion closer towards the sale. They then break the number one rule of negotiations, “whoever responds 1st loses”, and blurts out another offer. The buyer may have had every intention to buy the sellers product, they were just trained better in the art of negotiations to know that sometimes patience and not responding to the first offer can get you a better deal. It happens all the time. If you’re a consultant the art of negotiation is very much the same. Many times a client early in a conversation will put a consultant on the spot by asking “what is your rate?”. Most people and or consultants hate that question, especially if it’s early in the discussion as they haven’t been able to ask enough questions to better understand the client or buyers needs. As a result, the consultant throws out a figure with limited information which further puts him or her in a back peddling position defending their rate and or service with the client. If you find yourself in a conversation where the rate question comes out early in the discussion the best way to address it is, yep, you guessed it – use the ‘pause’. Pauses also work on the sellers side too. Utilizing a pause, a momentary stalling in discussion, allows you to adjust and think before blurting out an answer. Peter Bregman’s book ‘4 Seconds’ talks about the power of pause and how even a 4 second pause before responding can dramatically improve your outcomes. “What’s your rate?”, the buyer asks. “My rates are based on the work I’m performing, length and difficulty of the project. For this reason I don’t use a standard rate for my work and would need to understand more details of your project before I can ensure I’m the right person for the job.” Basically, you’re saying ‘I’m not a commodity, so don’t treat me that way’. You also didn’t rush into giving them a price which may or may not be reflective of the work the client needs completed. You ‘paused’ as the seller and backed up in order to reframe the conversation in a way that helps both you and the client learn more about one another’s capabilities. Key Take Away: If you’re in a negotiation don’t rush to fill silence with a comment that might work against you down the road. Stew in the pause, in the silence. You may find the person on the other side of the table cracks before you do. Action Item: Read the book by Peter Bregman called ‘4 Seconds’. It’s a quick read and provides great insight and perspective on how utilizing a pause, even 4 seconds, can dramatically change the outcome of your conversations, actions and even relationships.  The demand for consulting is up, way up! The US consulting marketplace has grown consistently over the past decade. In the last three years, 2015-2018, consulting services have increased upwards of 25% bringing it to an estimated $68.5 billion U.S. dollars. Demand is up and so is the desire from the US workforce to provide the service. Whether you’re new to consulting hoping to dive in to get a piece of the current demand for consulting services, or you’ve been consulting for years, you’ve inevitably been challenged with the thought… “How should I charge for my services?” Here we’ll give into a quick and straightforward guide for establishing your consulting fees and the things which need to be taken into consideration before settling on your pricing approach. #1: Research the local marketplace – it is imperative you understand what the marketplace yields for the consulting services you plan to offer this way you have an understanding of how you fit in with your competitors and their respective offerings. Best way to obtain this information is to ask others in the business, attend events and get quotes from others in similar lines of work. While you always want to make sure you’re getting paid for what you’re worth, you also need to be cognizant of pricing yourself out of the game. For example, in Irvine, CA there is a large supply of people offering mechanical engineering design services. Baring any unique or niche expertise the average mechanical engineer consultant charges anywhere from $50-80/hr. If you’re charging $125/hr for similar services you may find yourself missing out on projects with potential clients because the end user, or client, has too many other reliable and capable consultant options to choose from at rates cheaper than your offering. #2: Fixed cost vs. time & materials – you’ll need to decide up front what type of pricing strategy you’re going to use. Fixed cost is when you charge a flat fee or a ‘not to exceed’ fee for work you’re performing regardless of the amount of hours it takes you to get the job done. Time & materials pricing structures price based on the amount of hours it takes to complete the job. Read more HERE. #3: Long game mindset – your pricing should reflect both your experience, capabilities but also your willingness to get repeat business from your clients. If your rate is higher than the average marketplace rate for similar service you may still be able to get work, however you may find the client doesn’t pick you for additional work or longer projects. Remember, the higher your rate the higher the clients expectations will be on your performance and the further scrutiny you will receive on your work output. #4: Know your profit margin – it’s important you understand what potential profit you stand to make for each project. Profit is what keeps you growing and stable long term. If you’re constantly breaking even you leave yourself at risk for unexpected downturns and other things out of your control. Establish an ideal profit margin per project you want to achieve and incorporate that into your pricing. Learn how to establish a profit margin HERE. #5: Flexibility is key – clients like working with consultants that are flexible; if you’re too rigid with your pricing you may find you’ll lose out on opportunities in the long run. Try pricing your work based on the difficulty of completing the task. Perhaps you have a minimum threshold you’re going to charge per hour (say $100/hr) and then based on the work you’re potentially taking on you will scale your price upwards by 25%. It’s not uncommon for consultants to have a pricing menu based on the range of their capabilities and difficulty to perform the work at hand. We suggest not using a ‘one size fits all approach’ for pricing your services. #6: Know what you need – while you should never price your consulting practice based on your personal lifestyle (clients don’t care how big your house is, what car you drive or what your bills are so they certainly aren’t going to pay you more just because your lifestyle requires it) it is important to know what you need to be charging in order to meet your personal financial obligations. Once you know this number go back to step #1 in this article to see if your pricing number is in line with the general market. Don’t charge more just because you need more to live. Clients can smell that from a mile away and it’s a big turn off. Key Takeaway: Pricing should be based solely on the value you provide. Your consulting price should have flexibility built into it while keeping in mind the difficulty of the work being performed. Ensure you know how the marketplace is operating and what others are charging for similar services so you can be competitive with your offering. Action Item: Meet 3-5 people in the consulting space which is similar in nature to yours. Learn about their offerings, how they go about pricing their service and what challenges they’ve had with clients specific to pricing. The more you can learn from them ahead of your own efforts the better off you’ll be when it comes time to present your price in front of a potential customer.  This week we discuss the reasons behind why so many of us wait to lead, how we can recognize our abilities to lead by addressing our fears and how to transition successfully into a leader without the need for a management job title Check out our Monday Quickie recap as Trisha Aure and Travis N. Smith discuss this weeks article, 'You're Doing It Wrong'; we cover ways to address miscommunication and how to ensure successful project/ work completion between employees, consultants and suppliers. To view the article: https://lnkd.in/gyFJmcE About the AuthorTravis Smith is the founder and managing director of Square-1 Engineering, a medical device consulting firm, providing end to end engineering and compliance services. He successfully served the life sciences marketplace in SoCal for over 15 years and has been recognized as a ‘40 Under 40’ honoree by the Greater Irvine Chamber of Commerce as a top leader in Orange County, CA. Categories
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