In this episode of Medtech Snapshot we discuss strategic supply chain strategies with medical device supply chain and manufacturing executive Jeff Brown. Key points in this discussion include addressing situations similar to China and Taiwan, solutions to hedge yourself against such global challenges, including but not limited to supplier risk, back-up capacity and vertical integration.
Need help sorting through your supply chain and or contract manufacturing challenges? Learn more about Square-1 Engineering's capabilities as it relates to all things manufacturing engineering: NPI, tech transfer, pilot manufacturing, process development and improvement, supply chain management, etc. Click HERE to learn more.
DID YOU KNOW
On January 6, 2023 the European Commission, a political and regulatory steering committee consisting of a group of 27 Commissioners, known as 'the College', adopted a proposal to give more time to device OEMs to certify medical devices under EU MDR to mitigate the risk of shortages. The proposal, which now needs to be adopted by the European Parliament, could push out MDR requirements several years. Higher risk devices such as pacemakers and joint implants would have a shorter transition period till December 2027, whereas lower risk devices, such as syringes or reusable surgical instruments wouldn't be until December 2028.
WHAT DOES THIS MEAN FOR YOU?
Regardless of EU Parliament's decision to potentially extend MDR, device OEMs should consider the following as we hedge through 2023:
1. Strategies for US product approval and or commercialization will continue to increase as OEMs seek alternative pathways to potentially avoid EU MDR compliance.
2. As a result of #1, support to aide OEMs in their go-to-market strategy will intensify causing a shortage for resources, while potentially lengthening the process to get to approvals (supply & demand constraints - notified bodies and consulting firms experience increases in demand causing support shortages). This will be especially true with remediation work.
3. The idea of putting off or slowing MDR related efforts in the interim to re-focus on other activities may provide momentary relief, however it also creates a long-term liability in the business. This liability comes with a variety of future unknowns: regulatory landscape, inflation, cost of resources, CRO and notified body constraints, etc. If you must achieve MDR compliance our recommendation is to get it done and over with in the present.
4. Work associated with achieving MDR compliance can be easily underestimated, especially if you have legacy product where your CE mark was granted pre mid 2000s. The burden to meet MDR requirements may be steep, which is all the more reason to avoid procrastinating said efforts as outlined in #4.
SOLVING THE PROBLEM
The quickest way to overcome a business challenge is to get help from those who are experienced in besting your beast! The team at Square-1 Engineering is comprised of a variety of technical and project management professionals who are subject matter experts in the areas of NPD, Quality, Compliance (and yes - remediation) and Manufacturing Engineering. Learn more about how we can solve your compliance problems while besting your EU MDR beast!
Learn about Square-1 Engineering's mission and what it means to be fearless!
One of the biggest business challenges I run across today impacting both large and small companies alike is bandwidth issues – too much work, not enough ‘resources’ to get the job done.
A lack of resources in any business is a problem, indeed. Whether those resources are people, materials or relationships (supply chain), having the right number of resources to handle your needs while also being able to get a head requires both strategic forethought and action.
It can be a daunting task to get beyond the fire fighting stages to then be able to actually start focusing on longer term strategic plans. For this reason its smart to get help.
Despite the back and forth about the health and standing of our present economy, employment remains strong as the US unemployment rate as of December 2022 was at 3.5% according to the Bureau of Labor Statistics. For professionals in a technical setting the unemployment rate is estimated to be closer to 1.7%. This means if you need technical help most of the good resources are already in use elsewhere.
When resources are constrained, yet work is plenty, this is where the consulting industry comes conveniently into play.
The consulting industry has grown since 2011 by close to 5% YOY on the coattails of increasing supply and demand. With a multitude of options now available to companies looking for help one of the biggest challenges afflicting buyers seeking additional resources to solve their bandwidth issues is how they will find the right support while ensuring the money they’re paying for it results in a positive outcome.
A Lesson in History
Consulting isn’t new by any means, we’ve just reframed it to fit our present marketplace. Henry Ford, the USA automotive tycoon, used consultants prior to the 20th century to help build out his automotive empire ultimately creating what we know today as the Ford Motor Company. Consultants like Oliver E. Barthel are credited as key contributors to Fords success by developing combustible engines for commercial use which could be scaled for production. Needless to say consultants like Barthel and their associated contributions are immeasurable to the success of their industries.
As with all things, time has a habit of bringing about change. The consulting industry is no different. One considerable difference today versus even 10 years ago is many people who are in the practice of consulting are doing so as a means to uphold a particular lifestyle. This is relatively new to the consulting game as its initial pioneers worked around the clock perfecting their art, driven by a passion to create, help and succeed on their own accord. Even as late at the early 2000s traditional consulting firms like EY, Deloitte, etc. offered excellent top notch service albeit for a hefty price. Their employees worked tirelessly to execute, the idea of a work life balance wasn’t even on the horizon.
Today thousands of people go into consulting for the work flexibility. With these changes along came a fractured approach to the consulting business. The way one goes about their work (the process, focus, communication and execution) is often not the same as the next company or individual, especially when dealing with stand alone solopreneur consultants. As a result, I’ve witnessed palpable discord between consultants and their customers as an increased sensitivity between service (value and experience) and cost (time and monetary investment) unfolds.
The age old discussion of value versus price isn’t new, what is new is the approach many consultants take today to justify their pricing and how they deliver their service without correlating their price to the actual value garnered by the client from the experience. I’ve witnessed, more times than I can count, consultants indicate their pricing model is based off of what is required to keep their current lifestyle in good measure, not necessarily what they’re delivering. When pricing is done without consideration of value, we may be able to gain some work in the interim, however we run the risk of leaving behind us a wake of clients who feel like they’ve been overcharged and undoubtedly under delivered. This is what I refer to as a 'consulting dilemma'.
Fixing the Consulting Dilemma
Pricing is important, but so is a positive outcome. While the two of these are not necessarily mutually exclusive, they do tend to have a comingled relationship. When buyers are looking for additional support price will always be a factor however it should never be the leading indicator for a decision. If you’re in a situation where you’re maxed out with your current bandwidth and you’ve determined getting consulting support is a viable option to get ahead, consider the following leading up to your buying decision:
Once you can answer these five (5) questions then you can address the pricing component of this new potential resource relationship.
In order to effectively solve a customers problem a consultant must provide a service which delivers the intended results at a cost which is in alignment with the problem being solved.
Long term successful consultants know and understand the importance of leaving customers feeling good about their decision to hire them for work. In fact, Salesforce, one of the largest sales CRM software companies in the world did a study with their clients where they discovered 67% of their customers said “their expectations for good experiences [with sales people] are higher than ever”. This same report revealed 76% of customers report it’s easier than ever to take their business elsewhere. This means it’s no longer about having a great tool or the best consultant qualifications, you have to provide a good experience, complete the work successfully while ensuring the price paid is in alignment with the work performed.
A Key Consideration
It is indeed important to give your customers a good experience while facilitating their work, it’s just as important to price work appropriately. This is sound business advice for any professional, regardless of industry or role. A key consideration beyond experience and price, empirically important to a consultants’ success is the ability to successfully execute their work. At the end of the day if a consultant can’t successfully execute a project it doesn’t matter how great their customer service was or how affordable the price because the problem which brought the consultant to the table wasn’t solved in the first place. This is even more exacerbated in situations when a consultant charges a client using the indifference pricing model and yet still fails to successfully complete the project. When prices are high, so too are the expectations and there is often little wiggle room or understanding for anything which falls short of successful execution.
When in doubt, close the project out – successfully!
To solve your business issue of to much work and not enough resources you can’t just bring in a consultant, you have to bring in the RIGHT consultant at the right price who can deliver the goods. While this may sound obvious to some, its vital consultants understand both for their future as well as reputation in the industry they serve.
A Word to Consultants
Davy Greenburg, a content and branding marketing consultant in Los Angeles became famous overnight in 2018 for his comment, “If I do a job in 30 minutes it’s because I spent 10 years learning how to do that job in 30 minutes. You owe me for the years, not the minutes.” When a consultant prices their services based on their ability to do such work in correlation to the problem being solved they’re much more likely to get repeat customers down the road. Lifestyle requirements and emotional decision making have no place in the process to develop your price.
We’ve all experienced it – too much work, not enough time or resources to complete it. Day after day passes, the work doesn’t slow down but your timeframes become shorter and shorter furthering the stress of the looming workload.
All companies, start up to conglomerate, experience this same situation. They’ve got work they can’t get to given the circumstances of their business. Usually it’s…
We can all agree we’ve seen this first hand and very well may be living it now within our current companies. The key question then becomes, “How do we address the ‘too much work, not enough [blank]’ commonality we all share?”
First, we need to assess the work in question and is it mandatory to keep close to the chest? Meaning, are we the only ones who can do the work?
If your answer is:
NO – “the work can be done by someone else”; we should begin looking for alternative means for getting the work done via our supply base or strategic partners. First, review your existing base of suppliers and their capabilities to see where work can be sent out. Second, identify firms which provide outsource services. Many times the word ‘outsourcing’ is used as an all encompassing description for service providers that offer project or work package support, often which can be done onsite with the client just as easily as offsite – which would be the traditional method of outsourcing.
YES – “the work can only be done by our organization”; we should review the matrix of resources versus project loads. Undoubtedly there are resources within the organization that aren’t working at full capacity and or are assigned to projects which aren’t immediate. The trick with this approach is it may not satisfy the situation long term, often times when we try to keep things in house all we do is push off the situation to a later date. If that doesn’t work, test your bias on ‘the work can only be done by us’.
If you are in fact going to consider using an outsourcing or consulting firm to support you in your work projects be sure to follow this simple three step process to ensure you’re picking the right partners:
Key Take Away:
Sometimes the best business decision we can make is deciding what work we want to do [internally] to increase our capacity and efficiencies while outsourcing work to suppliers or service providers which specialize in project work. In turn, this means we can focus on the mission critical work, that we enjoy and are great at doing while giving someone else the work and or projects we can’t handle or don’t want to deal with.
Utilize the below decision tree diagram (yes, it’s overly simplified) to help you determine if the work you have in question should stay internally versus would benefit from being handled by an outside source.
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:
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:
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.”
Businesses of all sizes must make strategic decisions to ensure its operations and outputs are optimized, functioning at an effective level to help them grow, increase speed to market, improve ROI, etc. One tool which helps to achieve those metrics, and more, is outsourcing. For the purposes of this paper we’re define ‘outsourcing’ as the act of packaging internal work to be sent outside to an external supplier to facilitate on behalf of the company, now client. There are many positive attributes of outsourcing, yet there are a bevy of deltas which accompany outsourcing if the client doesn’t carefully vet and manage their suppliers. Outsourcing, a valuable strategic business tool, is best experienced where expectations are managed while relationships are allowed to develop overtime. This produces fruitful outcomes for both client and supplier.
Author: Travis Smith
Contributor(s): Bill Colone, Achilles Young
To view the full article click on the download link below:
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.
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.”
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.
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.
About the Author
Travis Smith is the founder and managing director of Square-1 Engineering, a life sciences consulting firm, providing end to end technical project services to companies which design, develop and or manufacture products in Southern California. He successfully served the life sciences marketplace in SoCal for over 15 years specializing in engineering services, consulting, project outsourcing and leadership development. In 2019 he was recognized as a ‘40 Under 40’ honoree by the Greater Irvine Chamber of Commerce as a top leader in Orange County, CA.