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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:

• Product specifications or service offering
• Supportive documentation on the product, service and or the suppliers internal processes (QMS, etc)
• How they manage their own supply chain partners
• Certifications
• The suppliers key capabilities and areas which may be verging in the gray

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:

• What is their communication like? 
• Do they respond quickly?
• How do they handle mistakes they’ve made?
• What is their customer retention rate? (if they don’t keep customers long that should be a big red flag)
• Find out how long their employees have been with the company too.  If the company suffers from consistent turnover that should be a red flag as you will likely have to be much more involved with this supplier helping coach and direct new employees to ensure the work is done properly.  You don't want to be in a situation where you're training your suppliers new employees just so they can turn around and bill you for it. 
• Where are you in the pecking order of the level of importance to the supplier?  Don’t be fooled, not all clients are treated equal, even if they tell you otherwise. 
• Do they have consistent business processes in place or are they like a 5-year-old all over the place while simultaneously trashing the house they live in.  Stay away from companies that seem disorganized or get frazzled easily.

​
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:

• Performance
• Relationship
• Price

As Benjamin Franklin is quote as saying, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”

We’ve had an unprecedented amount of commentary and feedback on the original article published in early 2018 covering ‘Picking the Right Supplier’.  Given the current economic and supply chain challenges facing many businesses in 2022 we’ve updated the article to reflect today’s business needs in an ever-changing marketplace.
 
When you need help in your business how do you figure out where to go to find it?  Just as important, how do you make sure the help you select is the right one for the job?
 
The supplier selection process (finding and picking your help) is an important and vital step for any size company.  Making the wrong decision can lead to countless hours of wasted time and of course money down the drain.  To find the right supplier, a ‘supplier selection process’ is important to develop ahead of time, especially for small and start-up based business where decisions can have a larger impact on the state of the business.

​When looking for a new supplier follow these steps to best position yourself and company for success in picking the right relationship for your business:

1. Know What You Need Before You Need It
Two reasons this is important: 1st – if you don’t know what you need how will you be able to explain it to a supplier?  If you can’t explain it how will they understand what you need to then be able to successfully deliver on your behalf?  When we know what we need, and therefore want, we're better prepared to explain those needs while setting expectations for what a successful partnership looks like.  This minimizes miscommunication and opportunity for expectations to fall through.  2nd - Waiting till the last minute to find suppliers often leads to decisions being made which may get you out of a momentary jam but leads to larger problems down the road.  For this reason it’s vital you are proactive in establishing relationships with vendors and suppliers before you actually need their help.
 
2. Finding A Supplier
Referrals, referrals, referrals!  Once you know what you need 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 Thomasnet 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.  Me personally, I would rather work with someone I know, or with someone a close source to me knows, rather than cross my fingers and hope for the best by using an online search.  As stated in #1, do the leg work to find suppliers proactively before you actually need it!
 
3. Be A Detective, Collect Useful Information
It's vital you vet all potential suppliers with the same list of needs, criteria, and expectations this way you can compare each supplier and what they bring to the table.  This will help to create an even playing field when looking at a supplier’s capabilities, offering and of course pricing.  Below shows an example of what a ‘Supplier Selection Criteria' may look like.  Using this type of tool allows you to collect similar information while comparing against other options.  It’s important to remove emotion from this process while sticking to facts.  Remember – each situation may be different.  There may be a time you need something quickly, in this situation ‘quick response’ usually translates to higher cost.  Maybe location of your supplier or their experience in your industry is important.  Each situation is different and should be viewed as so in order for you to determine what supplier is best fit for your needs. 

​
​4. Strategic Thinking & Economies of Scale
Once you know what you need from a supplier it’s important to think about other associated or cross functional activities which need to be done that could be accomplished by a single supplier.  The ideal situation is you find a supplier that can do more than just one component of your needs, therefore providing more value in the long run. This also saves time because you have less suppliers and vendors to managed increasing your efficiency and effectiveness.  Lastly, its not uncommon when you have one supplier doing several things for you to experience a price break as a result.  The flip side may also be true – if you have one supplier dominating a particular part of your business that can also be a risk point as well.  Balance is key here while consistently reviewing your relationships, needs and financial output annually.
 
5. 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:

• What is their communication like? 
• Do they respond quickly?
• How do they handle mistakes they’ve made?
• What is their customer retention rate? (if they don’t keep customers long that should be a big red flag)
• Find out how long their employees have been with the company too.  If the company suffers from consistent turnover that should be a big red flag as you will likely have to be much more involved with this supplier helping coach and direct new employees to ensure the work is done properly.  You don't want to be in a situation where you're training your suppliers new employees just so they can turn around and bill you for it. 
• Where are you in the pecking order of the level of importance to the supplier?  Don’t be fooled, not all clients are treated equal, even if they tell you otherwise. 
• Do they have consistent business processes in place or are they like a 5-year-old all over the place while simultaneously trashing the house they live in.  Stay away from companies that seem disorganized or get frazzled easily.

 
6. Economics & Supply Chain
Simply put - can your supplier withstand a downturn in the economy?  Do they have a strategy in place for dealing with supply chain issues?  I love working with small companies because I think it’s important to support small businesses, however I do often think about their ability to weather the storm from a business continuity perspective.  Regardless of the size of the supplier, what is more important is can they continue to meet your needs even when times get tough.  If they are a critical supplier to your business it’s worth spending time to learn about this proactively as you don’t want to find yourself in a situation where the economy takes a digger causing your supplier to go belly up or unable to meet its commitments.  Your supplier’s inability to manage their business may just leaving you high and dry, in the process causing you to have your own business continuity issues.
 
In the end, the supplier selection process should ideally come down to three things, in ranked order:
1.    Performance
2.    Relationship
3.    Price

At the end of the day 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.  I’ve also found that paying a bit more for the right service and relationship often is worth the investment it in the long run despite the extra cost up front.  As Benjamin Franklin is quote as saying, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”

Executive Summary:
Developing a strategic and consistent process to evaluate and therefore acquire suppliers before you need them is vital to our ability in growing our company.  When we utilize a systematic process we eliminate bias and emotion from the decision making process which allows us to make decisions which are capabilities and needs based rather than emotions.  Your ‘minimum expectations’ list serves as a road map for decision making and comparison shopping as you engage with each supplier.

​Author: Travis Smith

​Read the full article by downloading the below PDF attachment

​When we look at a how most businesses operate we learn there is a consistent and heavy reliance on external parties to help the organization operate effectively.  The larger the business the more reliance they typically have on external people and or companies to help them achieve their goals.
 
For start up businesses it’s common to see them rely on external service companies and consultants which provide support in areas such as finance, accounting, HR, logistics, even sales.  If you’re a product based company your supply chain inevitably includes people or companies which provide product support such as design, prototyping, packaging, raw materials/ components, etc. 
 
Many of us rely on our suppliers to help us run our business efficiently, but are we truly maximizing these partnerships?
 
Lot’s of small company’s use ADP to process their payroll.  ADP is considered the gold standard in payroll processing as they offer their service across a broad range of business sizes and industries, provide a thorough and well-crafted service which is customizable and affordable.  For many small businesses it’s a no brainer to use ADP for payroll processing because ADP does it far more effective and at a cheaper cost than most small businesses could do on their own.
 
Here’s the catch – did you know ADP also offers support in talent acquisition tools, benefits administration, HR services (including outsourcing/ PEO), employee system integrations and even marketplace apps?
 
I didn’t!  I always thought of ADP as a payroll provider, little did I know that ADP also offers at least five other major services, all of which carry the same ADP quality of service and support.
 
This is where we fall short in utilizing our suppliers to maximize the impact on our business.  If we don’t know all of the services or areas of support our suppliers offer we can’t align those services with our business needs.
 
Last year a start up medical device client of ours came to us with a problem.  They needed to do some concept feasibility research on a particular product idea they had which if it made it to market it would significantly aide them in completing against their two closest competitors.  They contacted our company not to help them with the project, but to help them with a referral to a local Orange County, CA based company that specialized in designing and testing early stage concepts.
 
Damn it!
 
That was a hard pill to swallow.  My company, through yours truly, had been working with this start-up for several years and this client, who we had a good relationship with, didn’t know all of the services we could and do provide.
 
That was an invaluable learning lesson.  I had assumed all along that our client knew we also provided concept design and small stage prototype testing.  I was wrong.  As the old saying goes “when we assume we make an ass out of you and me.”  That saying should be re-written to say “when we assume we make an ass out of me and me only.”
 
After I listened to our customers situation and the support they were looking for it was apparent we would be a great option for them.  The conversation thereafter was rather amusing and equally humbling as our customer told us “oh really, I had no idea you also offered that service.  We would love to work with you all on the project, you already know our system, product lines and the people running the project. How do we get started?”
 
I remember hanging up the phone and laughing to myself thinking, “how many other customers do we have that think of us in one way yet have no idea about the other services we provide.”  The next several months after this realization I spent all my efforts educating our current customer base on our full suite of services, not just the one area of support our customers had grown to rely on us for.  It would prove to be a valuable learning lesson on my end needless to say.
 
Seven months later we finished the concept feasibility project, three weeks ahead of schedule, for the customer I had mentioned earlier.  At the completion of the project I asked our customers VP R&D for his feedback on the project, our involvement, our work output and of course “would he use us again for other development needs they had?”
 
His response, “you all did a great job.  We honestly had no idea you did concept work.  We would rather give the work to an existing supplier, like you, we trust than go out and start a new relationship with someone we have no history with.  Interestingly enough, after we learned that about your firm and the other services you offer which we didn’t know about we went back to several other key suppliers and ask them for information on other services they offered.  In one instance we ended up saving almost 19% on our annualized material costs because we shifted the majority of our material purchasing needs over to another existing supplier.  We love working with them and their prices were very competitive, we just had no idea they offered other materials outside of what we were already purchasing from them.”
 
Yahtzee!
 
Here in lies the ‘Ah-Ha’ moment and perhaps the reason you’re reading this article in the first place.
 
Inevitably you are working with suppliers at present which you only have a narrow view of how they can help your business.  Take a moment to reach out to those suppliers of yours and learn about their full suite of services and or capabilities.  You may just find out there’s a handsome cost or time savings for you just around the corner.
 
Key Take Away:
Don’t assume you know everything about your supply base.  Most likely you’re working with suppliers you don’t have a full understanding of their capabilities.  Take the time to learn more about your supply base and how those existing relationships can further maximize the impact they’re making on your business. 
 
Action Item:
Reach out to your best or favorite top 5 suppliers for the sole purpose of learning about their full suite of services and capabilities.  Identify where you are presently working with them and the areas you aren’t.  Does this supplier offer additional services that you could benefit from?  Better yet, do they offer a service which you presently have contracted with another company you aren’t thrilled with?  This is a great time to begin reviewing your supply chain to see if there are areas of your business that would be positively impacted by working with the suppliers you like working with?  When you begin to ‘bundle’ more projects and opportunities with your supply base you stand to greatly reduce your time and cost associated with your supply chain.

​The supplier selection process is an important and vital step for any size company.  Making the wrong decision leads to countless hours of wasted time and of course money down the drain.  A successful supplier selection process is even more important for small and start-up based business where financial considerations are at the top of the pecking order.

​When looking for a new supplier follow these steps to best position yourself and company for success:
1.Know What You Need Before You Need It
Two reasons this is important: 1st – if you don’t know what you need how will you be able to explain it to a supplier?  When we know what we need and therefore want we're better prepared to explain those needs while setting expectations for what a successful partnership and outcome looks like.  This minimizes miscommunication and opportunity for expectations falling through.  2nd - Waiting till the last minute to find suppliers often leads to decisions being made which may get you out of a momentary jam but leads to larger problems down the road.  For this reason it’s vital you are proactive in establishing relationships with vendors and suppliers.
 
2.Establish Minimum Expectations for Vetting Suppliers
Establishing minimum expectations means that you will vet all potential suppliers with the same list of needs, criteria and expectations.  This will help to create an even playing field when vetting suppliers and their capabilities.  Similar to #1, when you know what you want and have created a way to gather information which allows you to do equal comparisons your chance of making the right decision increases dramatically.  If need to create a checklist to hold yourself accountable to making the right decisions then by all means do so.
 
3.Be Strategic
Once you know what you need from a supplier it is important to think about other associated or cross functional activities which need to be done that could be accomplished by a single supplier.  The ideal situation is you find a supplier that can do more than just one component of your needs, therefore providing more value in the long run. This also saves time because you have less suppliers and vendors to managed increasing your efficiency and effectiveness.
 
4.Supplier Identification
Referrals, referrals, referrals.  Once you know what you need the best approach to finding the right supplier is by reaching out to others in your industry, or 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.
 
5.Outreach and Selection
When speaking for the first time with a potential new supplier try to connect with the people you will actually be working with, not just the company’s sales person.  This is important because once the relationship is established the majority of your time won’t be spent with their sales people rather those delivering the service or product. What is their communication like?  Do they respond quickly and address mistakes immediately?  What is their customer retention rate? Find out how long their employees have been with the company too.  If the company suffers from consistent turnover that should be a big red flag as you will likely have to be much more involved with this supplier helping coach and direct new employees to ensure the work is done properly.  You don't want to be in a situation where you're training your suppliers new employees just so they can turn around and bill you for it.  Also, where are you in the pecking order of the level of importance to the supplier?  Don’t be fooled, not all clients are treated equal, even if they tell you otherwise.  When you know where you stand it is easier to build a relationship based on realistic expectations.  In the end, supplier selection should come down to three things, in ranked order:

1. Performance
2. Relationship
3. Price

At the end of the day 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 don’t matter.  I’ve also found that paying a bit more for the right service and relationship often times is worth the investment it in the long run.