Top Five Tips for Differentiating Your Medical Device Contract Manufacturing Company

Original equipment manufacturers (OEMs) want to ensure that their outsourcing partners diligently manage risk—from their design, quality assurance and manufacturing processes, all the way down through their supply chain.
While there’s no shortage of highly qualified medical device contract manufacturers (CMs) willing to provide their services and expertise, OEMs progressively have become more discerning in their evaluation of potential strategic partners.

In order for contract manufacturers to continue to grow and thrive in the medical device industry, they must position themselves strategically as the partner of choice for an OEM. Here are five ways in which CMs effectively can differentiate their capabilities and rise above the competition.

1. Focused Innovation
Although leading medical device OEMs are innovating internally, their growth in the last few years mainly has originated from acquisitions of intellectual property (IP) and smaller companies that add to their broad base of products in their respective portfolios.

While this can be an excellent strategy for the right company with the right applications, inevitably, there are specific technical capabilities that are difficult for a total solutions company to proficiently address.

This is where skilled CMs can distinguish themselves.

By focusing on their specific expertise and developing a sound approach to meet their customer’s particular need, a medical device CM can be more proficient in communicating the value they bring to OEMs in their target market.

This is a delicate strategy, however. Many CM companies feel pressured to offer more products and services to their customers. But in reality, less often can be more.

Companies that specialize in a specific capability (e.g., powered surgical devices, etc.) help OEMs engage in smarter business practices. By outsourcing less-utilized applications to a CM that can do it better and more cost-effectively, an OEM can alleviate overhead and resource pressures.

These CMs also can enhance the expertise and innovation of their OEM partner. Conversely, if a CM is trying to be everything to everyone, it’s incredibly difficult for them to innovate at the same level as a CM that is laser-focused on enhancing a few, specific capabilities to make them cutting edge.
These viewpoints are supported in a recent Frost & Sullivan article titled, “Change is in the Air: A Medtech Industry SWOT Analysis.”

Author Venkat Rajan writes: “Threats to the medical device industry encompass such areas as mounting recalls, and the increasing cost of materials and manufacturing. As part of creating a sustainable business model in the face of these threats and the changing landscape, it is imperative that companies proactively identify which markets they want to play in, and evaluate their product portfolios and solutions offerings accordingly. If an opportunity presents itself, medical device manufacturers need to act quickly and steer clear of just putting out a ‘me-too’ product. Fast-follower mentalities and simply offering a comparable product at a slightly lower price typically don’t support a strong long-term business model.”

In addition to refining their innovative solutions and capabilities, CMs must be strategic in communicating how their capabilities will enable an OEM to provide greater value to their end customer (including the surgeons, technicians and patients), and do so more economically, productively and reliably.

2. Strategic Alliances
Turning away business is never an easy thing to do. But if it’s in the best interest of the customer, then it’s the right thing to do.

Instead of trying to “do it all,” CMs better serve the medical device industry by working collaboratively and forming strategic alliances with industry partners who have expertise in different capabilities.

For example, your CM company might be proficient in developing and manufacturing powered surgical devices. If a prospective customer asks you to develop a surgical implant or to produce a part using injection molding, the honest, ethical response is: “No, that’s not us.” However, by deliberately developing diverse strategic partnerships with other highly capable contract manufacturers, you’re still able to provide value to that OEM. This also distinguishes you, and your CM organization, as a trusted industry advisor that values candor, integrity, and collaboration. Furthermore, when a strategic partner is approached about developing or manufacturing a powered device, they’ll be more inclined to pass that business on to your organization.

It can take years to achieve the trust required to develop a strategic relationship, but it begins with aligning complementary strengths, treating strategic partners with respect and cooperation, and doing what you say you’ll do.

Simple, but highly effective tips for developing strong strategic alliances withindustry partners, can be found in the October/November ODT article titled “Strategic Alliances: Simple Method for Creating Growth Without Increasing Resources.”

3. Customer Service
You can have the best product in the world, but if you aren’t treating your customer as if it is your only customer, then they’ll find someone who can.

Medical device companies looking to drive profits, sustain growth, and offer the most value to their customers must embrace high-quality, company-wide customer service. If they don’t, they risk losing business, or even outright dissolution. This has become even more applicable with the proliferation of supplier consolidation. Once a customer-focused, service-oriented supplier is identified, OEMs tend to outsource more projects to them.

At the end of the day, people buy from people they know, like and trust. If your CM team is not consistently picking up the phone, answering emails, and proactively bringing new innovations or ideas to an OEM customer, then differentiating your CM Company will be difficult—as will long-term survival in the medical device industry.

4. Teamwork
Anyone who has played group sports knows how essential teamwork is.

As baseball legend Babe Ruth put it, “The way a team plays as a whole determines its success. You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.”

Whether it’s baseball or business, teamwork breeds productivity and sustains excellence. People who work together to achieve a shared goal always will outperform groups that don’t.

And, as all the best coaches know, the key to accomplishing productive teamwork is delivering clear, consistent communication to all the players on the team.

For example, a sales meeting to discuss a potential customer, or to address a product issue, should include different disciplines within the organization (engineering, prototyping, regulatory affairs and quality assurance, etc.).

The different team members involved in the effort to develop and manufacture a medical device need to be kept in the loop and be given the opportunity to offer their input and insights. Everyone should have a stake in the game. If they don’t, a company is not maximizing their resources.

Teamwork also enables others to rise to higher levels of productivity and add more value. For example, if an associate who has been on the assembly line for 20 years hasn’t been asked for her feedback on the pros and cons of the process or whether she’s seen a better way to do something, the company is missing a huge opportunity to make process improvements. Her observations could result in significant improvements. At the very least, she’s been made to feel essential to the organization.
Winning business is only the beginning. In order to earn the second, third and even 1,000th order, all players need to work cohesively to consistently deliver the best products and service possible.

5. Features and Benefits
A common sales and marketing gaffe is to focus so much on the features of a product or service that the benefits of the features get overlooked. For example, if a contract manufacturing process is supported by concurrent engineering, design for manufacturing, and in-house prototyping, communicate how an OEM customer benefits. Don’t just assume that they know.

Or, if your medical device is lightweight, ergonomic and has high-power capabilities, explain in your communication materials why that is significant and what it will do to help the end user. If one of the benefits is that the device reduces a surgeon’s time to place implants and improve overall speed, then it should be clearly articulated.

Think of features and benefits as the twin pillars of persuasion. The more balanced your pillars are, the more they’ll support your ability to effectively differentiate your company’s value to the marketplace.

A Winning Mindset
In order for an OEM to best assess which CM will provide the capabilities they need, the CM must step up to the plate and do more than just say, “pick us because we’re better.” To soar above the crowd, CMs must listen to their customers’ needs as well as “proactively identify which markets they want to play in, and evaluate their product portfolios and solutions offerings accordingly,” according to Frost & Sullivan’s Rajan.

Every division must emphasize a service mindset and have a genuine desire to bring devices to market that benefit lives. There’s a lot to be said for feeling like you and your team have put in a good day’s work. That attitude is contagious and manifests itself in the products you develop, the professional relationships you build, and in the long-term OEM partnerships you attain.

Frank Noone is vice president of sales and marketing at Pro-Dex, Inc., a publicly traded Irvine, Calif.-based company that designs, develops and manufactures powered surgical devices, air-motors, metal components, and sub-assemblies for world-class medical device OEMs.