A major medical OEM was in the development stages of a device that required an interface between the main device controller and the working “tool.” This complex umbilical interface needed to provide multiple fluid paths, multiple electrical lines, and quick-connect capability on both ends. It also needed to be easy for technicians to use, easy to service, and aesthetically blend with the overall device chassis.
This OEM's core technology was in the device itself, not in the interface between the controller and the tool. Regardless, in a move toward vertical integration they had designed a similar interface on previous versions of their device and they were capable of producing this component. However, this time the OEM chose to partner with Colder Products Company to design and supply a turnkey solution.
There were multiple considerations in this decision, but the main drivers were the tight project timeline and quality issues with the previous internally designed interface. By partnering early in the device development process, the OEM was able to work engineer-to-engineer to specify the component requirements and define a project plan that would meet production timelines.
Since Colder's core competency is designing innovative quick connectors for transferring fluid, some of which incorporate RFID connections, the requirements of this “hybrid” assembly were a strong fit for its engineering team. The assembly contains all of the cables, wires, and connectors and is supplied as a complete sub-assembly. Instead of the OEM design engineer finding individual suppliers for each of these items and then having to pull them together in some type of connection interface, the OEM now receives the complete sub-assembly as one part number from an ISO 13485 certified supplier.
Although it is difficult to completely capture all of the costs, it is estimated that the OEM initially saved more than $50,000 in costs associated with designing and manufacturing the umbilical assembly using internal resources. Along with the savings in development costs, there are many other benefits associated with purchasing a turnkey assembly including reductions in suppliers, inspections, and the internal resources needed to manage them.
Such benefits are necessary components of today's lean manufacturing world, where the make vs. buy decision is more important than ever, causing medical device makers to rethink current practices. That is, in the past many medical device OEMs moved toward vertical integration and burdened themselves with more component design and manufacturing in an effort to drive down overall device costs. The recent economic downturn, however has taught that this vertical integration can have a negative impact on these companies' bottom line. The new capabilities developed cost more in overhead, require capital investment, reduce inventory turns, and hurt manufacturing efficiencies. In addition, they distract product development and thwart innovation efforts by focusing attention on manufacturing components that are not part of the company's core device development competency.
The truth is device manufacturers are experts in their core technologies; they have the engineering teams and facilities to design and manufacture state-of-the-art medical devices. That, however, doesn't mean their resources are being put to good use.
Partnering with strategic suppliers to develop components allows the OEM's internal resources to remain focused on the overall device instead of micro-managing component design.
- Early partnering results in savings of $50,000
- OEM-supplier partnership blend core competencies
- Vertical integration may be a modern-day burden