Recently we had the opportunity to query Jeff Russell, director of the Global Medical Device Practice at Camstar, about the top challenges facing medical device manufacturers. He relayed five overarching challenges, then provided a more detailed look at how those challenges affect large, mid-sized, and emerging enterprises. The five top challenges:
- Reduce costs to offset margin pressures.
- Reduce the costs and risks of compliance.
- Ensure supply chain stability.
- Speed up and stabilize new product introduction (NPI).
- Manage top line revenue impact.
Here’s how these challenges shake out, depending on the type of enterprise:
For large manufacturers:
- Reducing costs to offset margin pressures is essentially the classic issue of driving down headcount, waste, and inefficiencies across operations.
- Reducing the costs and risks of compliance translates into strategic investment into electronic systems for better, faster, more efficient compliance practices.
- Supply chain stability efforts are a response to the increase in manufacturing velocity and scope, which minimizes supply chain disruptions and improves customer satisfaction at all levels.
- NPI efforts are targeted at reducing the traditional headaches associated with new product launches, thus realizing faster repeatability and greater profitability per launch.
- In terms of top line revenue, large companies are looking to protect their brands and market share while growing vis-à-vis competitors with consistent, predictable product quality output. Further, reduced review and release times (through the elimination of inefficient manual review and release processes) are allowing significantly more product to be shipped per quarter. All these efforts work to satisfy shareholder expectations.
For mid-sized manufacturers:
- These enterprises are reducing costs to offset margin pressures as a means to compete with larger enterprises (despite sparer resources) and to funnel operational savings into research and development. They’re also looking to reduce the impact of the medical device excise tax.
- Because of their relatively smaller scale, mid-sized manufacturers must reduce the costs and risks of compliance because they cannot compete if product quality, reliability, or brand reputation becomes an issue.
- Mid-sized manufacturers want to establish agile supply chains as a means of maneuvering with or out-maneuvering larger competitors. They, too, must configure their supply chains to meet rising customer demand.
- To a greater extent than larger companies, mid-sized medical device manufacturers depend on product enhancements and new product development for growth. As such, they will ramp up volume, establish repeatability, and capture market share more rapidly than ever.
- In terms of top line revenue efforts, the objectives of mid-sized manufacturers are essentially the same as large companies (outlined above).
For emerging manufacturers:
- For newer ventures, reducing costs to offset margin pressures is more a cost-avoidance benefit. This happens when they minimize or reduce the need for more headcount as they ramp up to commercial volumes.
- These companies’ compliance efforts are increasingly focused on new product releases (due to strict FDA scrutiny), particularly pre-market approvals (PMAs). They also focus on investing in “greenfield” electronic systems as bona fides for world-class manufacturing status, as well as meeting goals for sustainability (i.e., environmental) efforts.
- Establishing supply chain stability is particularly critical for emerging medical device enterprises, as their supply networks are not as well established. Stabilizing and standardizing manufacturing processes across the chain is essential for emerging players to meet customer product quality and order fulfillment expectations. They need flexible capacity to handle spikes or surges in demand.
- As these concerns typically come on the scene with new, innovative, and often complex products, their need to establish stable, predictable, and repeatable processes is paramount in NPI. Especially at early stages, they need to reduce variability for high repeatability.
- The top line revenue impact of emerging companies has a greater skew towards new products; as such they must address the traditional issues (quality, repeatability, field issues) to meet investor and shareholder expectations.
Regardless of type, all medical device manufacturers are facing the challenge of moving from paper-based to paperless manufacturing because of the cost, quality, regulatory, and supply chain benefits associated with the latter. This move is not an option for the sector, but rather an imminent necessity.