Outsourcing Guide

By: R. Hugeneck, Jabil Healthcare & Life Sciences, Vienna, Austria

The relationship between medical device companies and contract manufacturers (CMs) has grown and diversified significantly over the past 10 years. Originally, CMs simply manufactured parts for OEMs. They later began to produce subassemblies and, eventually, complete products. Today, CMs offer OEMs a broad services portfolio that includes industrial design. In fact, CMs are now so well versed in design services that they are often referred to as original design manufacturers (ODMs).

A number of healthcare trends have contributed to the expanded role of CMs. For instance, the world’s ageing population and the drive to reduce medical costs are causing many devices to be used in patients’ homes rather than in the hospital. Adapting devices for consumer use calls for new attributes, such as easy-to-use interfaces, ergonomic design, portability, and automatic and wireless communication of data. These requirements mirror those of the consumer electronics industry, a sector in which CMs are particularly active. Because of CMs expertise in these areas, OEMs naturally gravitate to CMs for assistance—not just in manufacturing, but also in development, design, prototyping and value engineering. Some OEMs outsource services such as direct order fulfilment and aftermarket services to CMs as well.

 

OEMs and CMs can develop a collaborative approach that meets the needs of a product’s technological requirements, risk-mitigation demands, intellectual property (IP) protection, target markets and so forth. Roles and responsibilities can be defined for each stage of the programme. For example, the OEM might choose to align the product’s industrial design with its existing portfolio (including past and present models). Conversely, the company could ask the CM to design a novel device that stands out from its existing product line. The device maker might define product specifications and requirements and then hand them over to the CM for complete product development services including verification, validation, manufacturing and distribution.

 

Device development phases that a CM may undertake to assist the OEM customer in progressing from art to part and, ultimately, to commercialisation are listed below. Figure 1 provides an example of where design input from a CM has proven beneficial.

 

Good medical device design not only meets high standards for appearance, usability and quality, but also ensures functionality and manufacturability. A CM, thus, should be involved from the beginning of the product development lifecycle. The earlier the CM can be involved in the design process, the better manufacturing efficiency and product performance tend to be. To support their customers with critical design services, CMs have started partnering with design firms or creating their own industrial design departments.

 

In the concept design phase, it is important that the collaboration between the OEM and CM be especially strong. Frequently, this work is done jointly, as the OEM often owns IP, such as application software, needed to retain control of a new product. If the OEM chooses to assign concept work to the CM, all resources must be made available to the contractor. The OEM also needs to participate in the final concept choice, however. This involves understanding each concept’s advantages and pitfalls in regard to regulatory approval, usability and manufacturability.

 

In this phase, the challenges for the CM are to understand the OEM’s requirements thoroughly, translate them into technical specifications and, most importantly, define the product’s parameters that will ensure desired performance in production and in the field.

 

A concept design also must consider environmental implications and existing and future regulations. In contrast to traditional design work, where a concept is defined first and materials are chosen later, today’s material and component choices have a significant, up-front impact.

 

The European Union’s (EU) Restriction of Hazardous Substances (RoHS) directive limits the use of lead, cadmium, hexavalent chromium, mercury and two brominated flame-retardants. Avoiding these substances can require significant resources for new technologies and supplier management. The Waste Electrical and Electronic Equipment (WEEE) directive sets forth requirements for end-of-life disposal, again influencing initial design to minimise or eliminate special handling.

 

There is also an ongoing discussion about the restriction of PVC, which is used extensively in the device industry owing to its flexibility and endurance. To be prudent, OEMs may wish to consider alternatives to PVC in concept designs, particularly for devices with extended life spans. A CM with extensive expertise in plastics technology can be a key resource in identifying such materials.

 

After the concept has been chosen, the CM must convert it into a fully validated design. Typically, there is minimal interaction with the OEM during this process; the OEM focuses on schedule tracking and commercial cooperation.

Besides validating the design according to defined requirements, the CM expends significant effort on design for manufacturing (DFM). CMs use a set of tools they have developed in-house to enable collaboration among the design/process, engineering/test engineering and supply chain departments. DFM output is used to take corrective action on the design and to set up the manufacturing process accordingly.

 

As soon as the first prototypes are built, verification of the design can start. The prototypes are subjected to a predefined set of tests to make sure specifications are met and the product can reliably fulfil requirements. Typically, medical devices must go through regulatory compliance reviews along with software, hardware and environmental tests. Every test must conclude with a report, and deviations to the specification require corrective action. Examples of such actions include design changes, process changes or even adaptation of a specification.

 

In the next step, the production process is finalised and all equipment undergoes process qualification to ensure that the correct product design is produced on a fully validated production line. This is a critical step in preparation for the formal device certification process.

 

CMs typically perform verification of the design against requirements and OEMs handle validation (clinical testing) and product certification (CE marking in the European Union and the 510(k) process in the United States). OEMs are increasingly outsourcing part of this certification work to CMs, namely, the generation and compilation of required documentation.

 

During noise verification of a mechanical drug dispensing device, the opening of a latch was considered too loud by the OEM’s marketing department. A different opening mechanism was designed to meet OEM requirements. See Figures 2, 3 and 4.

 

During this phase, a complete design is brought to manufacturing. Previously, this phase began after the device design was finalised. It was less work to present supply-chain and manufacturing staff with ready-to-go drawings and specifications, but there was a huge drawback: the design was not optimised for the supply chain or for manufacturability. This situation led to the need for redesign, production-line rework or the recruitment of new suppliers.

 

Adding to the disconnect, supply chains and manufacturing processes are going through evolutionary changes of which designers may not be aware. So it is important to involve those departments from the beginning of the product development cycle. This is why the new product introduction process actually begins at the project kickoff. Every project team should include representatives from purchasing, manufacturing and testing. The members from these groups go through the design phases with the rest of the team, keeping in mind the needs of the supply chain and the manufacturing process. They provide feedback to developers on a continuous basis.

 

In most cases, a CM can exercise great leverage when purchasing standard components and commodities. Because the CM uses these items in large volumes for multiple customers, it can generally achieve much better pricing, lead time and quality than an OEM. By contrast, the OEM usually concentrates on supporting the CM to achieve the best pricing and lead times for key components containing proprietary technologies.

 

Because manufacturing is a CM’s specialty, a CM can provide an optimised manufacturing process featuring standardisation, efficiency, high quality and cost control. Over the past decades, OEMs have developed a set of design rules to conform to standard manufacturing and testing processes. CM process engineers try to use those standard processes and, if that is not possible, try to influence the product design and supply chain as much as they can so process changes are kept to a minimum.

 

CMs typically try to use existing manufacturing processes within a new product development cycle, as the risk of failure from a new and immature process is high. If a new manufacturing process is unavoidable, however, the engineering team will work on it as early as possible in the product development schedule. Today, the expanded relationship between OEM and CM aims to share product and process roadmaps several years in advance of new product developments so that new technologies or processes can be developed, tested and brought on line before they are needed for a product that will be launched in a relatively short timeframe.

 

After the OEM has obtained certification of the product, production ramp-up will start. All components supplied by vendors will be monitored closely by the CM in terms of efficiency, quality and costs and to take corrective actions, if required. Non-commodity components are the focal point of monitoring and investigation during ramp-up to mass production of a new product. Most CMs, however, employ engineers to monitor the mass production tools (for plastic and metal parts) used by their subcontractors to make sure tools are running under defined yields and specifications. Vendors’ production batches are closely monitored to ensure that different batches meet the component specifications and also that the components meet the tolerance specifications. The CM’s quality organisation handles incoming inspections and takes immediate action, if problems arise.

 

Once ramp-up has proven successful, the OEM has approved product shipments, and product-sustaining, warranty and repair processes have been installed, the OEM’s technical project manager will formally hand over sustaining activities to the manufacturing cell and release the project team from the development project.

 

The expanded collaboration between device makers and contract manufacturers leverages the strengths of each party, helping to shorten time to market for a new device while optimising cost, quality, standardisation and compliance. The array of services and expertise offered by large global CMs gives OEMs tremendous flexibility in choosing which portions of a project to outsource. A key to success, however, is early involvement of the CM team in design—and even before that, in new manufacturing processes and technologies, if they are anticipated for a novel product. Only through longstanding, proactive collaboration can OEMs obtain the best results from engaging with a CM. 

 

is Director of Medical Technology

Jabil Healthcare & Life Sciences

Gutheil Schoder Gasse 17, A-1230 Vienna, Austria

tel. +43 66105 3277 e-mail: ralph_hugeneck@jabil.com