Negotiating with Medical Device Contract ManufacturersNegotiating with Medical Device Contract Manufacturers

Early-stage medical device companies seeking contract manufacturing should give priority to the manufacturer’s quality assurance, engineering support, experience with startups and scalability, and commitment to communication and transparency, according to Olga Fernandes, founder and a principal consultant at High Impact Supply Chain in Toronto, Canada.

High Impact Supply Chain is a consulting firm specializing in supply chain and operations management for highly regulated industries, including medical device manufacturing. The firm serves clients across North America and beyond, helping businesses navigate complex challenges to achieve operational excellence.

At the upcoming MD&M West tradeshow in Anaheim, CA, in February, Fernandes will speak at a session titled “Crating Win-Win Scenarios: A Case Study on Startup OEM Negotiations with Medical Device Contract Manufacturers.” She shared with MD+DI some key considerations and challenges.

What are some important considerations for a medical device company seeking external manufacturing?

Fernandes: For regulatory compliance, ensure the manufacturer has extensive experience with FDA and International Organization for Standardization (ISO) standards applicable to medical devices. This guarantees that the production processes meet stringent regulatory requirements.

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Quality assurance is also key. Evaluate the manufacturer’s quality management systems and a proven track record for consistent product quality. Thorough audits and customer feedback are essential to assess performance in these areas.

Partner with a manufacturer that provides robust engineering support, particularly during critical phases like design transfer. This ensures a smooth transition from design to production while maintaining product integrity.

Additionally, it is helpful if the contract manufacturer has experience working with startups and has the ability to scale production. These manufacturers often understand the unique challenges of early-stage companies. Also, ensure they can offer future cost-reduction opportunities and handle production scale-up as demand grows, providing flexibility for future expansion.

Finally, look for a manufacturer that prioritizes open communication and aligns with your company’s culture. A strong partnership requires clear expectations and a collaborative approach, especially during different stages of the product lifecycle.

Once a contract manufacturer is selected, how should it be monitored by the medical device company?

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Fernandes: Monitoring should focus on metrics such as key performance indicators (KPIs) on a routine basis to track variables like defect rates, on-time delivery, and adherence to regulatory requirements; audits and inspections, by conducting periodic audits to ensure compliance with quality standards; and open communication, by establishing regular check-ins and maintaining a collaborative relationship.

Document control, by ensuring proper documentation of processes, changes, and non-conformances; and risk management, by working together to identify potential risks and create mitigation plans, are crucial as well.

What is the best way to manage supply chain issues?

Fernandes: Effective supply chain management entails a strong relationship by building collaborative partnerships with suppliers to ensure quick resolution of issues and shared responsibilities to bolster mutual success; proactive planning by anticipating potential disruptions through demand forecasting and risk assessments; and diversification to avoid over-reliance on single suppliers, if possible, or on certain geographic regions to reduce vulnerability.

Agility, by being prepared to pivot quickly, by maintaining safety stock and alternative sourcing options, if possible; and digital tools, by using supply-chain visibility tools and real-time data analytics to monitor performance to address bottlenecks promptly, are also key.

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What is the best way to approach changing regulatory requirements?

Fernandes: Navigating changing regulations requires vigilance in continuous education by staying updated on evolving standards via industry subscriptions, tradeshows, and workshops; cross-functional collaboration by engaging regulatory experts and quality teams to ensure alignment; and documentation by maintaining thorough records to demonstrate compliance during audits.

Two other ways to keep abreast of changing regulations are proactive adaptation, by incorporating regulatory changes into processes early to avoid costly delays; and consultation, by partnering with legal and compliance specialists to interpret complex regulations accurately and to ensure you are aware of the latest standards and changes.

Overall, how can you increase the odds of a good fit between the medical device company and the contract manufacturer?

Fernandes: A strong fit depends on alignment of values and goals, by ensuring both parties share similar priorities for quality, compliance, and innovation; due diligence, by performing comprehensive assessments of the manufacturer’s capabilities, financial stability, and reputation; and transparent communication, by fostering open dialogue to set clear expectations and address potential issues proactively.

Also, when dealing with international partners, understanding cultural differences can significantly enhance collaboration. In addition, flexibility, by selecting a partner that can adapt to evolving business needs and technological advancements, along with being upfront about challenges and changes, will build mutual trust.

Lastly, choosing a manufacturer that understands your company’s vision and culture will likely result in a smoother collaboration.