3 Strategies for MedTech Manufacturers to Maximize Profits in 2016

By Steve Bieszczat, Chief Marketing Officer; Ed Potoczak, Industry Manager; IQMS

If the latest report by the Institute for Supply Management (ISM)* is right, 2016 will be a bright one with a projected 4.1% net increase in manufacturing revenues. Yet many contract manufacturers and parts suppliers within the medical device sector are not well positioned to take advantage of this growth.

Among med-tech manufacturing executives we’ve met, three requirements consistently emerge as being critical to driving growth in today’s economy: optimized production capacity, enhanced customer relationships, and effective management of team changes.

For some, creativity and focus have helped to resolve these challenges. For others, progress has been elusive. So, what has worked for those who are at the top of their game?  Following are some best practices that have helped manufacturers and suppliers prosper.

1. Optimize Production Capacity

The numbers tell the story. The same ISM* report states that manufacturing companies currently operate at 81.6% of normal capacity. That is a healthy percentage, but clearly there is an opportunity to grow the business by tapping the extra 18.4% of available capacity. The challenge is that med-tech product volumes, marked by frequent demand fluctuations and multiple configurations, can be very difficult to forecast.

Central to maximizing manufacturing capacity is the use of real-time capacity planning. However, too many manufacturers rely on simple spreadsheet models or mental juggling to calculate the required capacity. The more effective approach is employing software designed for scheduling production in real time against finite (real) capacity constraints. This allows you to run what-if scenarios to fit shifting demands into every bit of processing time available to maximize output while following validated processes—providing deep insights into what commitments you can keep and capacity for additional business.

Next to consider is automated production monitoring, which is increasingly viable as the cost of sensors and electronics trend down while capabilities expand. Automatic monitoring of your process and product parameters lets you build comprehensive production history records (PHRs), including traceability for each lot, enabling the 100% accurate inventory tracking needed to support the FDA’s Case for Quality. Additionally, integrated error-proofing of the work-order setup, including verification of the correct label format, prior to each production run assures compliance with product labeling regulations.

Finally, by integrating automated production data capture with statistical process control (SPC) tools operating in real time, you can receive alerts when processes start to trend out of control before they become serious problems. Relying on prediction and prevention instead of reaction will give you a lights-out quality system, a sign of a healthy manufacturing system.

2. Manage Customer Relationships Proactively

Ensuring consistent, timely delivery of high quality products is one dimension of the customer relationship. However, many customers also look at the services included with those products. They put a premium on suppliers who serve as partners and can effectively mesh with their supply chain processes—from product lifecycle documentation and labeling to compliance and certifications.

To be an effective partner, start your product lifecycle management at the beginning of a new RD project. Capture intended outcomes, specifications, designs and test results in a smart document management system, preferably one with change control logic and automated workflows for review and electronic approval to build robust design history records (DHRs). Simply managing this process with network file folders and email threads leaves you at risk of human error leading to multiple, uncontrolled versions of critical information files. By relating all up-to-date design information together in a comprehensive system from the beginning, you can speed FDA approval and get to market faster.

Further reduce the risk of misunderstandings with your supply base by storing single copies of original files in a common, controlled library. Then use a smart enterprise system to reference or link the originals to multiple design history records: engineering item masters, design drawings, change orders, reports, and supplier purchase orders. In this way, all stakeholders—suppliers, employees, clinicians, and customers—can access a single version of the truth.

Finally, put a comprehensive system in place to capture field issues, complaints, and related corrective action preventative action (CAPA) reports, and integrate them with the DHR and PHR files in your enterprise resource planning (ERP) system. This information will be invaluable if you are ever involved in an inquiry or recall notice, allowing you to quickly and accurately respond.

Develop and Lead Your Changing Team for Success

While solidifying customer relationships, you also need to invest in your team. This year, the 20- to 35-year-old “millennial” generation represents 50% of our North American workforce. The baby boomers on staff, often the most experienced contributors and top leaders, are probably planning their retirements. At the same time, many manufacturers are straining to find knowledgeable and skilled talent for their teams.

Now is the time to capture important knowledge about your business—essentially your corporate DNA. Otherwise, a senior employee’s two-week notice or sudden illness can leave your business scrambling.  To assure that your new employees learn from your experienced team members and contribute to your business as quickly as possible, there are several ideas to consider.

Hold company intelligence in a comprehensive document management system with change controls, as discussed earlier. Consistently vetting important work instructions, files and records while providing access to all of your team members helps prevent misunderstandings and mistakes.

Housing up-to-date “how we correctly do things here” instructions in a logical, easy-to-access system will improve your training results for new employees as well as existing ones migrating to a new group.  Using the same document system to support the creation of robust DHRs and PHRs will reduce doubt and frustration and save time for current and future team members.

Using technology will make your work environment more appealing to younger tech-savvy employees. Product structure and lifecycle databases in the ERP system should take advantage of data residing in your engineering design tools. Many modern ERP systems integrate product information with the bill of material (BOM) structure from computer-aided design (CAD) systems used by your design team. This can help minimize redundant work that frustrates all employees. At the same time, it provides your team with a seamless flow of key parameters from CAD into ERP as you prepare for testing, validation and launch—allowing them to work smarter, not harder.

This is also a good time to rethink your team’s organization. Create cross-generational teams to expose new and typically younger employees to important knowledge and build skillsets. Encourage more experienced team members to mentor the younger ones and show them the ropes on project teams and special committees. This approach provides opportunities to take advantage of the enthusiasm, creativity and comfort with technology that the young generation brings.

Last, be sure to invest time and resources in role definition, training for job enrichment, and career planning. Young people in the job market are looking for this in your on-boarding process, and this approach will help your business retain valuable team members of all ages.

By proactively managing your RD process, people, suppliers, production capacity, product quality, and regulatory compliance with modern information systems, you will be able to optimize profits and demonstrate your company’s commitment to being an exemplary partner. The resulting confidence that you inspire will be a differentiator for your company in med-tech market.


*Source: Report issued by the Business Survey Committee of the Institute for Supply Management (ISM). December 8, 2015.

For more information, visit www.iqms.com

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