Michael Barbella, Managing Editor05.21.24
Earlier this year, Japanese additive manufacturing provider Ricoh and North Carolina State University teamed up to tackle the challenges beget by a perpetually problematic supply chain.
The pair’s solution? A new “nerve center” for the research, development, and application of 3D printing technology. Specifically, Ricoh’s Center of Excellence (COE) aims to accelerate innovation and product development, and develop effective uses for 3D printing technology in the supply chain process.
“Additive manufacturing has significant potential to reduce supply chain complexity and drive innovation in a myriad of industries,” Mark Schmidt, Ph.D., associate vice chancellor for partnerships at NC State, said in announcing the COE’s establishment in March.
Indeed, a simpler supply chain would universally benefit all industries, especially healthcare—and more specifically, orthopedics. Such a streamlined value chain is possible through 3D printing, as the technology helps to reduce costs, improve productivity, and simplify the production process.
The complexities of supply chain management was among the major topics of conversation earlier this spring at the ODT Forum. Held at the FedEx Institute of Technology at the University of Memphis (Tenn.), the one-day event examined various issues affecting the orthopedic industry: domestic and international regulations, contract manufacturing consolidation, product design, 3D printing, and technological advancements.
A panel session on consolidation (OEM/CMO Relationship Outlook: The Impact of Consolidation) explored the impact of mergers and acquisitions on the OEM-contract manufacturer (CM) relationship. Panelists debated whether supplier-focused M&A has reached its “tipping point,” and whether consolidation is keeping pace with companies’ expanding interests.
“Probably not,” Avalign Technologies Chief Commercial Officer Ben Thompson replied in response to the first question. “It depends on how well you explain to orthopedic manufacturers the benefits of the acquisition. You still need to spend time on it.”
Maybe so, but Cretex Companies Chief Operating Officer Nick Morrison said communication and tactical alignment can help ensure a smooth, uncomplicated post-merger integration.
“We like to engage,” he explained. “The more you can inform them [customers] of your strategies and align them with your corporate culture the more successful you will be.”
Panelists agreed that future supplier consolidation will likely be influenced by artificial intelligence’s (AI) ever-expanding role in healthcare. Industry data predict the AI healthcare market to snowball this decade, going from $11 billion in value (2021) to $187 billion in 2030, driven by more access to data, better machine learning (ML) algorithms, cheaper hardware, escalating medical costs, and the availability of 5G, among other factors.
The ability of AI and ML to sift through vast quantities of health data and analyze it considerably faster than humans is transforming healthcare and accelerating the pace of change. And that tempo shows no signs of slowing down.
“The world is moving very rapidly down the AI path. Very rapidly. And that’s going to transfer over into healthcare...we’re already seeing that manifested in solutions,” noted Kip Roberts, vice president of Strategy, M&A and Portfolio Management at Medtronic. “How AI then translates into the broader digital health [realm] over the next two to three years is going to be a massive conversation. From a supply chain perspective, it’s absolutely a critical conversation. I don’t know we are there yet from a supplier standpoint but I think it will cause a lot of folks to sit back and take a look at their business plans to see how they can meet these needs. That train is moving fast.”
More like warp speed, actually. Ultimately, however, the train’s velocity is not as important as its passengers: panelists concurred that partnerships will be key to successfully riding the AI bullet train.
And that requires improving the supplier-customer dynamic.
“There’s still work that needs to be done,” Thompson said. “Most OEMs want a partner with fewer strategic partners. OEMs that can bring suppliers into the decision-making process earlier in the game are really going to differentiate themselves from OEMs that treat their suppliers in a transactional way. We recognized that we can’t be everything to everybody.”
Morrison agreed. “There are some OEMs doing a fantastic job in engaging their supply chains. There still is a long way to go but it’s a great start.”
Besides AI, supply chain maturity, and areas of potential future consolidation, the panelists also discussed the lessons they learned through M&A, and the common mistakes suppliers make during transactions.
“If you scale through M&A, be mindful of your special sauce and find a way to protect that,” Roberts advised. “We talk a lot about ways we can make customers and partners feel special. Committing the synergies too quickly is not always good, be mindful of that. And have the freedom to let the dust settle and work with partners on the other side.”
The pair’s solution? A new “nerve center” for the research, development, and application of 3D printing technology. Specifically, Ricoh’s Center of Excellence (COE) aims to accelerate innovation and product development, and develop effective uses for 3D printing technology in the supply chain process.
“Additive manufacturing has significant potential to reduce supply chain complexity and drive innovation in a myriad of industries,” Mark Schmidt, Ph.D., associate vice chancellor for partnerships at NC State, said in announcing the COE’s establishment in March.
Indeed, a simpler supply chain would universally benefit all industries, especially healthcare—and more specifically, orthopedics. Such a streamlined value chain is possible through 3D printing, as the technology helps to reduce costs, improve productivity, and simplify the production process.
The complexities of supply chain management was among the major topics of conversation earlier this spring at the ODT Forum. Held at the FedEx Institute of Technology at the University of Memphis (Tenn.), the one-day event examined various issues affecting the orthopedic industry: domestic and international regulations, contract manufacturing consolidation, product design, 3D printing, and technological advancements.
A panel session on consolidation (OEM/CMO Relationship Outlook: The Impact of Consolidation) explored the impact of mergers and acquisitions on the OEM-contract manufacturer (CM) relationship. Panelists debated whether supplier-focused M&A has reached its “tipping point,” and whether consolidation is keeping pace with companies’ expanding interests.
“Probably not,” Avalign Technologies Chief Commercial Officer Ben Thompson replied in response to the first question. “It depends on how well you explain to orthopedic manufacturers the benefits of the acquisition. You still need to spend time on it.”
Maybe so, but Cretex Companies Chief Operating Officer Nick Morrison said communication and tactical alignment can help ensure a smooth, uncomplicated post-merger integration.
“We like to engage,” he explained. “The more you can inform them [customers] of your strategies and align them with your corporate culture the more successful you will be.”
Panelists agreed that future supplier consolidation will likely be influenced by artificial intelligence’s (AI) ever-expanding role in healthcare. Industry data predict the AI healthcare market to snowball this decade, going from $11 billion in value (2021) to $187 billion in 2030, driven by more access to data, better machine learning (ML) algorithms, cheaper hardware, escalating medical costs, and the availability of 5G, among other factors.
The ability of AI and ML to sift through vast quantities of health data and analyze it considerably faster than humans is transforming healthcare and accelerating the pace of change. And that tempo shows no signs of slowing down.
“The world is moving very rapidly down the AI path. Very rapidly. And that’s going to transfer over into healthcare...we’re already seeing that manifested in solutions,” noted Kip Roberts, vice president of Strategy, M&A and Portfolio Management at Medtronic. “How AI then translates into the broader digital health [realm] over the next two to three years is going to be a massive conversation. From a supply chain perspective, it’s absolutely a critical conversation. I don’t know we are there yet from a supplier standpoint but I think it will cause a lot of folks to sit back and take a look at their business plans to see how they can meet these needs. That train is moving fast.”
More like warp speed, actually. Ultimately, however, the train’s velocity is not as important as its passengers: panelists concurred that partnerships will be key to successfully riding the AI bullet train.
And that requires improving the supplier-customer dynamic.
“There’s still work that needs to be done,” Thompson said. “Most OEMs want a partner with fewer strategic partners. OEMs that can bring suppliers into the decision-making process earlier in the game are really going to differentiate themselves from OEMs that treat their suppliers in a transactional way. We recognized that we can’t be everything to everybody.”
Morrison agreed. “There are some OEMs doing a fantastic job in engaging their supply chains. There still is a long way to go but it’s a great start.”
Besides AI, supply chain maturity, and areas of potential future consolidation, the panelists also discussed the lessons they learned through M&A, and the common mistakes suppliers make during transactions.
“If you scale through M&A, be mindful of your special sauce and find a way to protect that,” Roberts advised. “We talk a lot about ways we can make customers and partners feel special. Committing the synergies too quickly is not always good, be mindful of that. And have the freedom to let the dust settle and work with partners on the other side.”