The ConstantSearch for BestPractices
Are your suppliers and outsourcing providers doing what they’re supposed to?
With tougher controls and increased warnings from the U.S. Food and Drug Administration (FDA) and international regulatory bodies, and more demands from OEMs for better quality, consistency, time to market, and lower costs, a medical device manufacturer is walking a high-risk tightrope if it isn’t taking best practices seriously. Not only could it mean life and death for a patient if a device fails, but not providing the best practices OEMs want will reduce business and, if not corrected, lead to painful corporate death.
Best practices are the lifeblood of medical device manufacturing at all levels, from planning to delivery. It also is just as important to be certain that your downstream suppliers are following the same practices. Being told what to do by your OEM is one thing—it’s much harder and more time-consuming being the sheriff of your own supplier base and making sure the best practices you require are in place, validated and performing at peak efficiency.
Investing in top-notch best practices (including automation) also is an effective way to fight offshore competition. By keeping costs down and quality high, domestic companies can compete with China, India, and Europe, especially for critical or complex parts and devices. Even if OEMs still send their product overseas to take advantage of the cost savings, an increasing number rely on the established best practices of U.S.-based outsourcing companies to manage post-manufacturing functions.
Although investing in the best practices possible seems like an easy decision to make, a surprising number of companies have not fully embraced this mindset, or pursue it in only a minimalist way. For example, the rate of FDA inspections and warning letters continues to rise. According to FDANews, as of June this year the FDA had issued 874 letters in fiscal 2011, compared with 673 last year. Leading concerns were quality unit deficiencies, inadequate batch failure investigations, lack of follow-up procedures, validation of manufacturing processes, and handling deviations. For international inspections, deficient laboratory controls, quality unit deficiencies, and deficient procedures led the list last year.
A direct relationship exists between best practices and regulatory affairs (RA)/quality assurance (QA)—one won’t excel without the other. Customer satisfaction, regulatory compliance, and lack of attention from the FDA are the ultimate measures of best practices—to attain these objectives medical device companies must carefully plan, implement and maintain best practices throughout the supply chain.
“The level of best practices varies according to level of risk for the product or process,” said Joe Rotino, vice president of RA/QA and engineering for Pro-Dex Inc., a developer and manufacturer of medical products and components based in Irvine, Calif. “It is absolutely essential to characterize your supply base by risk. For example, critical parts or products with high tolerances or complex designs typically comprise the ‘A’ level of highest risk. These processes include EDM (electrical discharge manufacturing), passivation, heat treatment, coatings, and anodization, all of which require tighter controls. Level-D suppliers and products are the lowest risk, like office supplies from Staples. ‘A’ suppliers will require a higher level of best practices, including on-site audits to be sure validation processes in place, workers are properly trained, and processes are fully monitored.”
Oberg Medical in Freeport, Pa., a full-service contract manufacturer that produces implants, instruments, and assemblies, focuses its high-level best practices on “special process suppliers” that are critical to its supply base—processes such as heat-treating, cleaning, passivation and welding.
“Our special process validation procedure establishes specific requirements for critical suppliers of special processes and is required by our formal purchasing controls system,” said Shawn Schafer, vice president of sales and market development for Oberg. “We help educate these suppliers on the need and the value of having fully validated manufacturing processes. We want to be absolutely certain our OEM customers are protected by having validated suppliers and it is our responsibility to make that happen—and that also applies to our own full-service manufacturing and special processes. Several of our OEM customers have been driving validation requirements both within our organization and within our supply base.Oberg Medical has taken the approach of carrying forward those OEM requirements to our suppliers with the same methodology and success criteria that was expected from us.”
Tegra Medical, a manufacturer of medical devices and components in Franklin, Mass., has a similar approach. It concentrates its best-practice programs on high-spend suppliers, sole-source suppliers, and critical suppliers.
“High-level best practices are also needed for suppliers that have long lead times and/or capacity constraints,” commented Linda Stanford, Tegra Medical’s supply chain director. “When it comes to selecting overseas partners, past experience has shown me suppliers that have a U.S. presence and align the project through the U.S. entity to their overseas facilities have provided the best results.”
Establishing Best Practices
SQA Services, a global, on-demand quality management and third-party auditing firm based in Rolling Hills Estates, Calif., works with a number of clients in the medical device market on establishing best practices, including large global OEMs.
“The key drivers we are seeing are risk management, regulatory compliance, and competitiveness,” said SQA Services executive vice president Gerard Pearce. “The [medical device manufacturer] world is extremely competitive and time to market is essential for business. Forward-thinking companies are eager to adopt as many best practices as possible to pull ahead of the competition. They are especially keen on advanced ideas and practices that come from leading-edge suppliers in other industries, such as automotive, that haven’t reached the medical device market yet.”
The first step in establishing best practices is identifying the business need of the client and then evaluating the suppliers for meeting that need.
For Orchid Design, a designer and developer of orthopedic and dental products and devices in Memphis, Tenn., these requirements include a strong utilization of Internet-based tools for manufacturing process capability and lead-time requirements.
“An additional requirement is having a dedicated expert available to verify the designs and manufacturing requirements that were analyzed through automated software were checked by someone knowledgeable in the field to make sure the manufacturing plan was relevant,” said Mike Cordonnier, engineering manager for Orchid Design.
Once the suppliers are selected, the best practice programs begin by reviewing key data such as spend data, supplier capacity, quality data, commodity trends, lead times, on-time delivery, and payment terms. Key drivers for establishing best-practice programs are improving quality, reducing lead times, increasing on-time delivery, developing stronger business partnerships, and setting clear, measureable expectations.
“If companies have been using these criteria for years, then best practices are a standard procedure,” said Stanford. “However, every project is unique and, depending on the data, product requirements may need to be adjusted. Usually the tactical teams will work together to identify and adjust as needed. The goal is to standardize the process, data, and tasks to make the best-practices easy and effective.”
Tools of the Trade
Although there are plenty of procedures, tools, and technologies for establishing and tracking best practices and critical metrics, one of the most important is communication—frequent internal and external communication, as well as education and training.
“Early education is the key,” said Pearce. “This also allows supplier partners to offer valuable input about best practices from their own unique perspective. Points of contact and authority must be also clearly defined in the earliest stages.”
Pearce highly recommends “stealing with pride,” a concept that is gaining traction across a variety of manufacturing sectors—identifying and implementing quality procedures and practices from leaders in other industries. This can be done at all levels—ideas can be incorporated from other divisions within a company, its competitors, industry associations, suppliers, and other industries. Automotive, for example, has advanced systems in place for assessing and developing quality systems and best practices.
“So does the pharmaceutical industry,” indicated Pearce. “Its initiative Rx360 is supported by a consortium of pharmaceutical companies with the mission of creating and monitoring a global quality system that meets the expectations of industry and regulators and also assures patient safety. Its members share ideas to create tools of best practice and quality management that everyone in the industry can use to guarantee quality and authenticity throughout the supply chain.”
Best-practice tools include supplier scorecards (delivery cost, lead time, on-time delivery), quarterly business reviews, capacity and capability assessments, SWOT analysis (strengths, weakness, opportunities and threats), financial and bankruptcy analyses, audits, and capability study plans.
Operational benchmarks that are useful for tracking best practices are product quality, on-time delivery, cycle times, first-pass yield numbers, non-conformances by reason codes, and many other critical metrics. The principles of Lean manufacturing, a waste-reduction program that has long been a cornerstone in the automotive industry, also are being used by medical device manufacturers to increase operational proficiency, reduce costs, and speed time to market.
However, all the best practices in the world won’t matter if there are not enough resources to fully support them.
“Nothing trips up best practices like a deficiency of resources,” warned Pearce. “Guidance and training are absolutely essential. Companies must invest in the educational process before rolling out best-practices initiatives. They must bring suppliers in and train them, or go on the road and train them at key manufacturing centers. This gives the suppliers and their employees a sense of ownership of the process and makes them feel like they can contribute, ask questions, and share their own perspectives. It is a great way to make best practices even better.”
Then, sometimes, it is the other way around, where the contract manufacturer conforms to the specialized requirements of a downstream supplier. For example, Orchid Design identified Proto Labs, a Maple Plain, Minn.-based provider of quick-turn CNC machined and injection molded prototype and low-volume production parts, as a strategic supplier to shorten its product development lead times.
“Our engineering team’s expertise is in developing innovative and functional orthopedic device concepts and our prototyping team’s expertise is in high quality, low volume clinical implants and instruments,” said Cordonnier. “Proto Labs fills in the gap between 3-D prototypes by using automated
RIM and CNC processes that reduce the cost and turn time.”
A key factor in selecting their quick-turn prototype partner was operational best practices. Proto Labs provided feedback on cost manufacturability and schedule, allowing Orchid Design and Proto Labs to jointly develop the best plan for the end application and monitor performance against the plan in a real-time manner that allowed quick, informed decisions.
“With our automated processes we can take a 3-D CAD file to production with very little human interaction, making us very cost-competitive and typically much faster than overseas competitors,” said Dan Rasmussen, account manager with Proto Labs. “We have set requirements and tolerances for our unique injection-molding systems and our customer service engineers work with our customers’ engineers to design parts that will fall within our capabilities.”
As FDA and OEM demands for quality and validation increase, manufacturers must take the lead in identifying and establishing best practices throughout their supply chains.
“This requires over-communication, not under-communication or assumption,” said Pearce. “Take the time to mentor and lead. Don’t manage relationships with a 2 x 4. Focus on suppliers that are a good strategic fit for the company and will be likely partners 15 years into the future. There is not a lot to be gained by forcing suppliers into best-practice demands—they must culturally embrace the idea to see the benefits.”
Oberg Medical established teams of quality engineers to work closely with each key supplier to develop the specific parameters for the validation requirements—some suppliers are ahead of others in this effort. The company provided all the necessary materials for testing where required and also provided assistance on-site with the validation test reports and protocols.
“The issue as we see it right now is that the FDA requirements include process validation, but it is not prescriptive,” said Schafer. “There is lots of interpretation on what is the best practice.At the end of the day, you must meet the requirement and do what is best for your business.”
Benchmarking Best Practices
It takes time to establish best practices—a company must invest time, manpower, and resources to have a solid launch. “As you begin establishing the expectations of the best-practice programs, there are lots of meetings,” added Stanford. “It takes time to establish a well-balanced team with representation from each of the functional groups and review the current metric results for quality, lead-time, on time delivery, costing, etc.”
After best practices are implemented the “mechanics” of their operation must be benchmarked and validated, especially to satisfy regulatory agencies. The goal is getting all the suppliers involved in manufacturing a product to meet certain benchmarks for quality and risk management so that the entire manufacturing process—from design to production to delivery—is advancing on the same track.
“Depending on what they already have in place,” said Pearce, “necessary improvements to meet these benchmarks might range from making a few process adjustments to building a new plant or clean room.”
As best practices move forward, internal and external expectations must be revisited and possibly recalibrated. Suppliers must be kept informed of any changes.
“Even if they are highly trained, there can be differences in interpretation,” cautioned Pearce. “Knowledge must be transparent. It is also possible to raise the bar too high, or too quickly—the quality management system must also work for your suppliers as well.”
Benchmarking can be done by analyzing daily/monthly metrics results, reviewing supplier scorecards, conducting business assessment of supplier capacity and capabilities, visiting the supplier, having the supplier visit the manufacturer, and establishing quarterly business reviews.
“What you will find is that, once you get the program rolling and the expectations established, the relationship will grow and there is more open communication, brainstorming and cost improvement ideas flowing,” said Stanford.
Kelly Lucenti, president of Millstone Medical Outsourcing in Fall River, Mass., an outsource service partner to the orthopedic and medical device industries, described a recent situation that involved an OEM client manufacturing a product in China. Millstone was called in to help with inspection and sterile packaging and to investigate why the OEM was rejecting 25 percent of the product coming from this manufacturer. Millstone sent staff to the facility in China to train the workforce in best practices and develop innovative ways to communicate issues in a more timely way so that problems could be fixed before a product run was too far along. The end result is that the OEM now benefits from a rejection rate of less than one percent.
“We worked hand and hand with our customer for six months to refine their manufacturing process,” said Lucenti. “First our professionals went to the OEM’s headquarters and were trained and certified as trainers. They then went to China to train the OEM’s operators and help set up their inspection cell. We also programmed and validated their equipment.”
After the training initiative ended, Millstone continued to inspect the critical features of the machined product. It also provided up-to-date feedback through various online tools on product quality and helped the OEM make modifications to improve first-pass yield rates.
“Now the OEM conducts inspection,” said Lucenti, “but we still provide independent verification to help keep the quality top notch. We are finding that more of our customers want the cost savings that comes from manufacturing overseas, but they don’t want to lose their tight control over quality.”
Stronger Relationships
Relationships and trust are a huge part of the success of any partnership. A challenging situation can be overcome with a good relationship, while a perfect situation can be ruined with a poor relationship, according to Pearce.
“Best-practice programs, when implemented properly, will ensure stronger business relationships, set clear and accountable expectations, eliminate surprises in the business relationship, and help to ensure both parties can succeed,” added Stanford.
Installing best practices with smaller suppliers, who may be set in their ways and content with their production volume, may be challenging at times—but if they continue to resist, or take too long in getting started, you’ll probably have to let them go.
“You may have a great, long-term relationship with a smaller shop, that makes certain products,” said Rotino. “They have great craftsmen and make beautiful parts. But now you have a Level-A part you want them to make, some critical component, and they need to show validation and gauge studies. You can devote some time and resources to help them implement these, but ultimately they have to be motivated to do it on their own. They may decide it’s not worth it. And even though they may seem perfect for the job, you won’t be able to use them unless they have those controls in place.”
Communicate early and often. Be proactive in addressing any likelihood about deviations in expected product quality or schedule. “In a recent job, for example, the requirement was for a quick-turn, machined polymer component with tight tolerances on articulating features and loose tolerances on all other features—a complicated part,” said Cordonnier. “The communication between the engineers on the project allowed everyone to understand the critical features and critical timelines for parts that would have otherwise not met the print requirements or the project schedule requirements.”
Rotino points out you don’t necessarily have to spend hundreds of thousands of dollars on software and quality systems to have quality systems that work; regardless of the best-practice tool kit you utilize, the key is dedicating the time, focus, energy and personnel to create cross-functional teams that are empowered to manage best practices.
“In putting together the Pro-Dex 2011-2012 fiscal budget I have definitely allotted more money for supplier audits, especially for A-level suppliers, he said. “We will be traveling to their facilities to audit their operations and be certain their quality controls match our expectations.”
Over time, working together to establish best practices can create deeper relationships (and even friendships) between OEMs and contract manufacturers, and contract manufacturers and suppliers. This loyalty and shared vision can be beneficial, especially in tough economic times; however, the decision to renew contracts will still largely be based on business parameters.
“At the end of the day,” said Schafer, “quality management is a process, a journey. It is never done or over. The shared effort does strengthen the relationship, but it should never preclude strengthening the lineup, if the opportunity exists. Always be on the lookout for good suppliers, and be open to change.”
Editor’s note: Interactive workshops and discussions at this year’s ODT Forum Supplier Expo in Fort Wayne, Ind., will address manufacturing best practices. Sessions titled “Streamlining the Supplier Quality Audit Process” and “Getting on the Same Page: Establishing a Standard OEM/Supplier Protocol, a Status Report” will provide tips, tools and insight into creating useful, implementable standards. For more info, see our event preview on page 70 or visit www.odtexpo.com.
Mark Crawford is a full-time freelance business and marketing/communications writer based in Madison, Wis. His clients range from startups to global manufacturing leaders such as Kohler. He also writes a variety of feature articles for regional and national publications and is the author of five books. Contact him at mark.crawford@charter.net.