Five Hidden Costs In Medical Manufacturing
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Five Hidden Costs You Must Eliminate From Your Medical Manufacturing

10th Aug 2020
by Edward Moss

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Look Beyond Cost vs Quality – Dig Deeper

Medical devices are critical products: lives depend on them. Your company’s life-saving products rely on the quality of the components you specify and the validated processes of the suppliers you appoint.

Consistency of quality is crucial. In a Just-in-time (and currently very troubled) world, your suppliers must maintain that quality while hitting production deadlines with unerring precision.

Cheapest is seldom the best value in the long run. As Seth Godin put it: “Cheap is the last refuge of a product developer…who is out of great ideas.”

But against that backdrop, you and your procurement team are still under huge pressure to keep costs down; it can feel like a never-ending conflict of priorities. And yet many of those costs should never be there in the first place.

We’re not talking about the basic prices of the components you’re specifying and how low you can get those prices. We’re talking about five hidden factors that push up costs – and what you can do about them.


1. Technical Queries That Spiral Out Of Control

Like death and taxes, technical queries seem to have a certain inevitability – especially when you’re trying to purchase complex components machined to very fine tolerances.

Every procurement director or manager will have horror stories about the queries that delayed projects…forced up costs…or cast long shadows over their otherwise perfect purchasing process. All of which resulted in stressful extra work for their already-busy team.

A simple technical query at the beginning of a project is one thing; a swarm of queries over materials, measurements, tolerances, compliance – a welter of niggles that pervades every stage of the project from start to finish – is quite another. 

Solution: Choose suppliers that allow you to deal directly with experienced engineers. They are worth their weight in gold because they can:

  • identify potential problems in specifications before they arise
  • suggest alternative avenues of design that can result in significant cost savings and quality enhancements
  • provide superior solutions not previously considered.

But you need to get the engineers involved as early as possible. The sooner they can input their ideas, the sooner they can save you money. And in extreme cases, they can stop your project from disappearing down a very expensive blind alley.
    

2. Tying Up Capital By Holding Stock

Stock levels you can rely on are more important than ever in the global pandemic. But that doesn’t mean that your company has to be the one left holding the stock – with all the warehouse and inventory management costs involved.

Economies of scale help to keep costs down but stocking large quantities of components ready for assembly ties up cash. And besides, many products destined for hospitals, surgeries and other healthcare facilities may not require huge volumes. Medical equipment can be very niche – especially if the price is high.

Just-in-time enables you to pass the cost of storage and inventory management on to your suppliers. But you must be absolutely certain that they have the facilities, experience and trusted logistical support available to handle that essential requirement.

Solution: There’s an old Russian proverb much loved by the old Soviet security services, the late Ronald Reagan and (more recently) Hollywood scriptwriters: “Trust, but verify.”

Make sure that the precision engineers you choose to supply you just-in-time have validated processes for their warehousing and logistics as well as their CNC machining.


3. Quality Issues, Goods Not To Specification

This one seems so basic. You order the components…you provide detailed technical drawings and 3D models (in a range of formats)…you go into exhaustive details about the specifications of the materials…

But still your supplier messes it up. ‘Frustration’ does not begin to cover it…

Whether it is an entire consignment manufactured to the wrong specifications or a lack of consistency with one or two bad apples in the batch, the result is the same: components (and consequently a supplier) you worry about trusting again.
 
Solution: Choose ISO 9001 accredited manufacturers that specialise in medical equipment and are experienced in dealing with ISO 13485 accredited OEMs. Aim for long-term partnerships with experienced engineers who communicate well and are capable of delivering quality with care and consistency


4. Late Deliveries Can Have Disproportionately Costly Consequences

Delays caused by late delivery of key components does not bear thinking about. Not when you’re dealing with vital medical equipment. Not when lives may be at stake.

Late deliveries are at best an irritation that burns time and frays your nerve endings when you have to chase those responsible.

You’re committing resources. You’re wasting time and money because the supplier that seemed like a good cheap deal turned out to be incapable of delivering on its promises. Their components are no use if they’re not with you when you need them. 

“They’re in transit” and “they’ll be with you soon” are cold comfort when the financial consequences of your supplier’s failure are unpleasant numbers staring back at you from the expensive part of your spreadsheet.

At worst, delays can result in production downtime at your factories. Or stop your product from getting to market first – resulting in major losses of revenue, profits, market share and credibility.

Just-in-time is no economy when it turns out to be ‘just-isn’t-in-time’. Further down the line, it can have costly consequences far in excess of the original delay.

Solution: Industry 4.0 – all the data capture at the heart of this new technology is transforming not just manufacturing processes but also supply chains.

The fourth industrial revolution is leading to greater transparency in supply chains. It is giving companies much more of a 3D view, rather than the old vertical view in which each company generally knew only the customers immediately above them and the suppliers one level below them.

But – as desirable as Industry 4.0 is – why restrict yourself? You can also achieve improved security of supply by partnering with trusted manufacturers that offer validated processes that cover their shipping arrangements.


5. Gaps In Research And Specifications Affect Just-In-Time 

If products and processes are not highly researched and specified, just-in-time creates more risk to production. The devil is in the detail – especially when time is short. Impending deadlines and imprecise specifications have a nasty habit of ganging up to create a perfect storm when it comes to costs.

Solution: All the more reason to follow the advice you’ve just read and partner with engineers who have the right technical expertise needed to meet ISO 13485 medical manufacturers’ specialist requirements. They can help you to iron out the wrinkles in the specification process before they become risky and/or costly.


How To Select A Good Medical Machining Company

Precision engineering companies inhabit a crowded market. They’ll all tell you that they offer high quality and great service. So extensive experience of dealing with ISO 13485 accredited OEMs is a must.

They should also be a single source supplier capable of machining and finishing metal and plastic components to the highest specifications. That eliminates all the hassles involved with dealing with multiple suppliers – and underpins consistency of quality. Eliminating handovers dramatically reduces the chance of errors/issues occurring. 

Prioritise CNC machining suppliers that are prepared to invest more time in you upfront so they can truly understand the intricate nuances of your business and your long-term requirements. 

Look for companies that are prepared to take on much more hassle at the start – because they’re the ones that are obsessed with forging a long-term business relationship with you. Their future depends not on a plethora of short-term projects pouring in but on rock-solid partnerships built on lasting trust.

And that trust can be created only by them providing absolute consistency: quality, value, punctual deliveries – time after time. They’re very serious about continuous improvement. They have to be – their future depends on it.


What That Means For You

At a headline level: expect greater value and less stress. Forge a good working partnership with these suppliers and you’ll be able to place longer term orders with flexibility built in.

For you and your procurement team, that will mean:

  • spending less time processing RFQs and orders
  • production batches will be manufactured in a more stable and less reactive timeframe – improving quality outcomes 
  • lower stock levels
  • economies of scale, leading to best value pricing.

Here’s what you should be looking for:

  • a scheduled or called off orders process that virtually eliminates intervention by you and your team
  • Kanban-style orders – your demand pulls the product through when required (almost automatically); you will save time, orders will be processed faster
  • increased security of supply for emergencies
  • increased flexibility to meet sudden increases in demand or unexpected contract wins
  • invoice only on delivery, streamlining cash – better cash management.


How Will That Benefit You Personally?

Less stress – much less stress. You will enjoy more control and less hands-on management and juggling of suppliers.

You can then invest this extra time in adding value to your operation – instead of firefighting and chasing suppliers on a transaction-by-transaction basis. Your day (and your colleagues’ days) will run more smoothly – and you will enhance the reputation of your department.


Get Expert Technical Advice On Medical Manufacturing

Penta Precision manufactures high quality parts for ISO 13485 OEMs. Our systems ensure the same level of service to all, irrespective of where you are based in the UK.

We use modern CNC machines, quick set tooling and fixtures, and the latest technologies to ensure our processes and service exceed industry standards.

Discover the benefits of getting Penta involved in your medical equipment projects. Email our experienced team now for a fast quote.

"Penta Precision delivered an excellent service with a standard turnaround. The work was of a sublime level and the level of communication right from the start was outstanding." Ben - Technician

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