Machining, Tooling Get More Cutting Edge to Meet Demand
Manufacturers review how to provide more value-added programs for their customers.
Mark Crawford
Meeting or exceeding customer expectations is the key to success in a competitive market such as orthopedic devices, especially in a wobbly economy where hungry machine shops from other industries are trying to penetrate the market and undermine well-established relationships between OEMs and their current suppliers.
Cost-cutting efforts have been initiated by OEMs as a result of the slow economy and healthcare cost initiatives being proposed by Congress. “It seems that all our customers are concerned about the recession, even those that have stayed busy,” remarked Tom Travia, director of operations for Everite Machine in Philadelphia, Pa., which provides grinding equipment and associated tooling for manufacturers. “The customers that are slow are not purchasing new technology, and the manufacturers who are still busy have been delaying capital spending until the confidence returns. Most machine tool manufacturers are off at least 50 percent from a year ago. The specialty and nontraditional machine market is a little better, but still down from the last few years.”
“For the first time in the nearly 20 years I have been in the medical industry and the 11 years that Five Star has been providing instrument services to the market, we have seen a flattening of revenues and pressure from our customers to review opportunities for cost reductions,” added David Cabral, president of Five Star Manufact-uring in New Bedford, Mass., which manufactures products for the orthopedic device industry. “Due in part to both the U.S. economy and overseas competition, we have taken a close look at our relationships to see how we can provide more value-added programs and services, such as concurrent engineering and inspection assistance.”
OEMs Turning to Suppliers for Cost-Cutting Measures
OEMs want their partners and suppliers to be part of the equation in helping them achieve their cost-cutting goals and production expectations. This, of course, creates new challenges for manufacturers, who are already doing their best to cut their own costs internally. “There is no question clients are aggressively looking for cost-saving methods from their suppliers,” said Dennis Donovan, general manager for Centex Machining in Round Rock, Texas, which machines both orthopedic implants and instruments. “This generally includes reducing lead times because it has a direct impact on the amount of inventory needed on hand.”
Vendors are producing more turnkey systems as OEMs apply more pressure to reduce costs. Demands for shorter time to market continue to escalate. “Speed of delivery is critical, regardless of the difficulty in finding materials and the shorter lead times,” said Tanya DiSalvo, president of Criterion Tool in Brook Park, Ohio, which produces Class-I and Class-II medical devices.
“On-time delivery is huge,” agreed Cabral. “If the low-cost producer cannot deliver a product when the customer needs it, the customer will go elsewhere to get it—not a cost savings at all in our view. The ability to deliver custom instruments in one to three weeks can make or break the opportunity to win the order. Price is less of a critical factor in the purchasing decision than is the ability to meet a delivery date.”
OEMs are designing smaller orthopedic components that are more technically difficult to produce—this also requires more time and money to inspect features on the parts.
Medical device engineers also are using more exotic materials and expect their suppliers to be able to handle the materials efficiently and cost-effectively, which usually means investing in new machining and tooling equipment. “We’re seeing more products incorporating Nitinol to enable greater functionality/control in vivo,” said Tom Burns, vice president of business development for Franklin, Mass.-based Tegra Medical, which produces components and assemblies for minimally invasive instruments and delivery devices.
Newer materials such as cobalt-chrome, medical grades of stainless such as 455, titanium and nickel-titanium alloys are difficult to machine by conventional methods. “The electrochemical grinding (ECG) process offers advantages since the cutting forces are low and little or no heat is generated,” said Travia.
Finally, customers want to feel comfortable in “handing off” bigger, more complex parts of a project and being able to count on the supplier to manage its portion to specifications and budget. “Having the relevant product experience is very desirable to OEMs as it increases their confidence in the supplier’s ability to execute,” Burns indicated.
The Most Expensive Partof Machining and Tooling
Machining and tooling processes—such as electrochemical grinding and cutoff, CNC milling, turning, and Swiss turning—are key functions in orthopedic device/implant production. For Everite Machine, the initial engineering and set-up costs are the most expensive part of the process. “Larger quantities allow companies to amortize those initial costs over longer part runs, but we don’t see the trend towards larger quantities,” said Travia. “We are doing everything we can to keep costs lower. There are quite a few small shops that are hungry for work, so we try to outsource what we can and focus on the design and engineering.”
Cabral indicated the skilled machinists who run the many processes are the highest daily expense for Five Star Manufacturing. The second-highest level of expense is tooling and materials.
For some jobs, such as carbon fiber machining, materials are very expensive and the tools needed to efficiently machine the material are made of diamond. “This represents a significant upfront cost for us and must be strictly managed,” said Cabral.
For Tegra Medical, “dialing in” a process is the most expensive step in production. It requires talented technical resources, machine hours for set-ups and considerable dialogue with the customer. “This is not an efficient process when dealing with complex geometries and tight tolerances,” said Burns. “Many customers now insist on the partner proving process capability, which requires greater up-front investment by both parties, but establishes a more robust and reliable manufacturing process.”
Capital investment is not always required to improve production—a lot can be achieved by simply making current operations as efficient as possible. At Donson Machine Company in Alsip, Ill., which machines orthopedic im-plants and instruments, every job in the plant is evaluated daily for its level of efficiency. Any rating below a certain level is looked at by a lean team to identify the root cause. “Most companies’ sales have gone down, and with lower revenues, expenses must be cut,” said Donson president Joe Bettinardi. “Last year was a great opportunity to become very lean. I like to use the term ‘smart manufacturing’—the goal is to eliminate every second of waste that does not add value. Our employees are great people who want to provide for their families—they truly believe if we run the most efficient plant possible, our customers will give us more business, and in turn, they can work more hours.”
The most important metric in Donson’s lean program is the increase in total dollars of output per employee. This is measured each month and shared with top management. Key elements of the program include:
• Every job, before it hits the floor, is evaluated to confirm the setup time and piece rate per hour are accurate. This is reviewed by the plant manager and working supervisor.
• Once a month, each supervisor is required to turn in a certain number of cost improvements depending on the size of the department. Each cost improvement is validated and then documented in a master spreadsheet.
• A drawing is held each month for any employee in the shop who turns in a valid cost reduction idea. A $50 check was awarded in June.
Keeping Up With Technology
A big emphasis in the industry is consolidating several operations into one dedicated machine function, which is cheaper to purchase than the combined machine tools that would normally perform those operations. Ad-vances in cutting tools are providing faster cut rates, while computer modeling and machining simulation help reduce set up time. “Five-axis simulation milling is critical to the soft angle and shapely parts that engineers are now designing,” said DiSalvo. “Nothing is square and edgy anymore.”
“Machines today are very expensive, and the time cutting chips is the biggest cost for us,” said Bettinardi. “That is why continually updating equipment is so important for lowering cycle times. Capital equipment investment is essential for staying super-competitive.”
The tooling companies are developing new advances in machines and tooling quickly. Some machines can do everything in one operation with no setups, which saves a great deal of time. With all the changes in materials and the uses of more exotic and carbon-filled polymers, leading tooling manufacturers are eager to assist a machine shop’s programmers and machinists with the latest in cutter technologies. In fact, the shift toward new materials is driven in part by the fact that new technologies have been developed that can handle them.
“For example, the ability to shoot X-rays during a procedure has been an area Five Star Manufacturing has been exploring, and we are actually helping a client develop this technology,” said Cabral. “The use of radiolucent materials for many of the instruments allows the continuation of the procedure without a breakdown of the instruments in the surgical site for visibility.”
Everite, a provider in ECG technology, continues to refine the CNC electrochemical grinding process for closer tolerances and more flexible set-ups to reduce startup costs. The refinements in the process have enabled Everite to hold tolerances of less than .0003 inches on certain parts. “This has opened up new markets previously thought impractical for ECG,” said Travia. “We have also developed a new wheel dressing technology for short-run form grinding. The advantage here is that we can produce a dressing tool in a very short time and the dressers can be refurbished when worn to extend the useful life and reduce cost.”
The numerous advances/upgrades to CNC equipment allow for faster speeds and feeds, better surface finishes and overall increases in productivity. With the use of bar feeders and pallet changes, many companies look to manufacture 24/7 with little to no operator involvement. “Most advances in the CNC technology are focused on the complexity of the product being manufactured and the CNC equipment manufacturer’s ability to make contract manufacturers more competitive,” said Cabral.
The latest CNC machines are about twice the price of the older manual-type machines, but provide newer capabilities with significant improvements in productivity and process capability. “In one instance a customer upgraded from a 20-year-old machine and improved output over 100 percent with a dramatic improvement in process capability and elimination of secondary deburring and polishing operations,” Travia reported.
It’s also important to truly think through your technology needs and not just invest in new equipment because everybody else is. “Multi-spindle, multi-axis and concurrent machining equipment is awesome technology and can pay for itself in a short time if the product is available to run,” Cabral said. “Same with the numerous high-performance milling machines available today. But for companies that do not require these types of machines, they can still have significant improvements in cost savings and time to market by educating their workers how to use the tools—when they are used properly and efficiently, the overall process, as well as the bottom line, are improved.”
Regulatory Challenges
Increased regulations targeting OEMs regarding the safety and reliability of their products are being pushed down to contract manufacturers in the form of ISO certifications and stringent OEM audits. “There is greater scrutiny of suppliers now by the FDA,” said Burns. “It is increasingly important for suppliers to be QSR-compliant and to have a robust quality system. This will mitigate risk for the OEM and reduce the amount of management/ oversight required.”
To manage the additional scrutiny being placed on process controls and validations, “manufacturers need to establish multifunctional teams to assure that projects move forward and have the required information and testing,” said Donovan.
With increasing regulatory requirements, the ability to validate machining processes is critical. “The game is no longer just ‘inspecting in’ quality,” said Bettinardi. “To meet today's requirements, you must have stable processes. This is where having the latest-generation machine tools is essential. It is a huge advantage to be able to machine parts completely in one operation—this requires higher-order CAM software and engineers who can implement optimal, documentable machining approaches.”
In the near future, Cabral expects to see the ISO certification standards being set at ISO 13485, versus the current minimum of 9001-2000. “In fact,” he said, “the new 2008 ISO standard has just been implemented so our new current minimum will be ISO 9001-2008.
Although these requirements pose a challenge, I believe all companies playing in the medical arena know and understand the requirements and realize the importance of compliance to consistent standards; not only for the most important aspect being patient safety, but for the overall well-being of our companies and OEM relationships as well.”
Moving Forward
In general, companies are still reluctant to invest in new equipment and technologies until the market really recovers. Both OEMs and first-tier suppliers have been slow to invest this year. “Our orders are off from last year, but our inquiry level and quoting is as high as ever,” said Travia. “This tells me of a pent-up demand for new technology. Most of our customers tell us the same thing—quotes are up but not orders. That has been the trend, but I slowly see things improving.”
The orthopedic device industry continues to look for lower costs and more imaginative solutions. To be an effective manufacturing partner and problem-solver, a supplier must perform both functions to the highest degree possible. “We continue to add capacity and capability,” indicated Burns. “Instead of providing a single-level component, we are typically combining multiple machining and secondary processes. This greatly simplifies supply chain management for the OEM.”
The trick for the contract manufacturer is being able to meet the needs of OEM customers relating to cost containment, competitive pricing and on-time delivery, while maintaining its own internal requirements for profitability. “One of the biggest challenges industry-wide is trying to get the business jump-started again,” Cabral said. “Many people without jobs and health insurance have chosen not to have surgeries that they cannot afford on their own and that don’t require immediate attention. We as an industry must continue to find better ways to manufacture, design and introduce products that will sustain the long term, while managing the financial side for short-term viability.”
“The manufacturing industry is shrinking in general,” concluded DiSalvo. “More companies from other industries are trying their hand in the medical device marketplace. The constant progress in technology is exciting; however, the tightening of finances from lending institutions may make it challenging going forward without a perfect credit for those hefty investments. The goal is to maintain our current customer base with continued quality, on-time deliveries and constant process improvements to offer them the most cost savings and earn the right to work with them and develop their new projects/products."