Though now somewhat cliched, "unprecedented" is genuinely the most succinct way to describe our current circumstances. The initial outbreak of COVID-19, over two years ago now, marked the beginning of a period nothing short of turbulent in all areas of life, and its effects continue to be felt around the world today. This time, the global supply chain encountered difficulties unlike any before seen in the modern era. Given Russia's recent invasion of Ukraine, it would appear there are more on the way. While repeated and widespread shutdowns created the mass material scarcity during the pandemic's peak, the recent return to operations has done little to assuage them, with suppliers and manufacturers now wrestling with geopolitical interruptions and shortages, and increased costs experienced across the board.
With our proximity to COVID, the world of medical technology has been rocked in these last two years. From raw material supply to component manufacturing, assembly, and market, the entire industry has felt the effects of the supply difficulties at hand, and what was previously considered the definitive best method for efficient, cost-effective production— JIT (Just-in-Time) manufacturing paired with Lean Inventory Management— has proven incompatible with the realities of operation today. In a world where procurement and transportation are no longer guaranteed, to order based on need alone while forgoing safety stock is a recipe for delays and additional costs at best.
This period, for MIDI, marked a trial by fire in refining our AGILE development methods to continue achieving rapid time-to-market and enjoying the quality, flexibility, and reduced waste of JIT operations while incorporating steps to prepare for manufacturing complications. We found that the key to ensuring long-term success is prioritizing risk mitigation at the corporate level, integrating contingency planning into all operations, and disseminating new strategic methods to the engineering, manufacturing, and supply levels.
Strategies in Advanced DFSC
Our advanced Design for Supply Chain (DFSC) strategy, operationalized under the DevelopmentDNA™ approach and detailed within our ISO-13485 QMS, is a distillation of the best of these risk mitigation methods. But what exactly does it entail? How can you best ensure resilience in an uncertain supply chain?
- RETHINK your strategy for inventory management. To retain the benefits of JIT while preparing for ongoing supply chain issues, consider adopting strategies towards replenishing stock that will ensure the existence of a safety stock sans high cost or effort. Johnson & Johnson currently employs a "sell one, stock one" policy in which products are restocked as they are sold, integrating safety stock to maintain regular stock rather than setting it aside continuously. Important to note is that, for success, this policy requires that inventory be continually moving and should not be used to cover ordinary production unless approved at the executive level.
- INCREASE supplier count. Move towards an increase in the number of suppliers you source from at a component level. Secondary sourcing was the standard, now a move towards tertiary and quaternary components and supplier sourcing is needed. Of course all of the suppliers need to comply with the regulatory scrutiny of the medical market and your ISO-13485 QMS vendor onboarding process.
- DIVERSIFY your suppliers, especially by geography. The shutdowns and border closings cascaded across the globe throughout the pandemic have shown the risks inherent in relying too heavily on particular suppliers. Those risks only grow as geopolitical circumstances evolve each day. To avoid being left at the mercy of suppliers suddenly unable to do business, distribute your supplier base across locations while emphasizing domestic support. To evaluate these conditions within your supply chain, consult tools like Resilinc's cloud-based real-time monitoring app. (www.resilinc.com)
- INDEPENDENT DISTRIBUTORS should be considered as part of your supply chain. Particularly in the case of specialized parts such as printed circuit boards or PCBs, traditional distribution channels like ODMs have been struggling to obtain and deliver components in the face of today's unprecedented difficulties. Taking on an independent distributor and working with these channels is key to ensuring complete coverage, as these partners specialize in tackling the challenges of their industries. They also usually come with benefits such as:
- Utilize procurement intelligence platforms that act like a “Control Tower”. Meaning cloud based real-time monitoring data systems, tied to their global supply chain connections, enabling faster and more informed preemptive decisions in response to component shortages.
- Deploying more stringent quality control methods to ensure the quality and authenticity of delivered parts. This includes thorough testing and screening processes.
- Continuously examining components' EOL (End of Life). While many device manufacturers do this already, component shortages make it easy to become distracted by the "growing wave of obsolescence" underway.
One such Independent Distributor that focuses on difficult tasks like this is a company called Converge an ARROW company (www.converge.com)
- PURCHASE PIVOT: Obtain supply earlier and in larger quantities. One strategy MIDI employs with new medical device developments is purchasing components with each development iteration of the device and doing so in quantities enough for an entire year's worth of production, particularly critical parts and assemblies that must be acquired at a system level. Although designs will evolve over iterations the majority of components will remain unchanged thus requiring only acquisition of modified components. In this manner, most of the required components will be en route during development and guaranteed for production's entire first year. For this strategy to succeed, corporations must institute a robust demand forecast analysis program to ensure engineering and manufacturing can correctly estimate preemptive order quantities.
It is a near certainty that the supply chain challenges will continue to grow and filter through the medical device industry. Developers will need to prepare themselves to weather further hardship to see sustained business success. MIDI's DevelopmentDNA™ approach is designed to rapidly bring safe, effective medical devices to the market, but this is not its only goal— with our integrated advanced DFX strategy, it is also intended to create and secure continuous revenue streams for our customers. Today, that means shifting the paradigm of how medical device technology companies interact with the global supply chain.
For more tips on mitigating risks in the supply chain while developing your medical device,
visit the MIDI Innovation Vault.
To hear more about Advanced DFX Strategy at MIDI, check out our new MIDI Innovation Vault™ podcast series: Advanced DFX Strategy & Supply Chain Paradigm Shift for Medical Device Development.