Andy Hyatt, vice president, medical market sector, Plexus Corp., Neenah, WI.
For OEMs, there are several advantages to outsourcing. By outsourcing manufacturing services, they can convert fixed costs--such as brick and mortar, surface-mount technology equipment, and manufacturing overhead--into variable ones. In other words, they pay only for the units they order.
Outsourcing also enables OEMs to focus on their own core competencies, leaving electronic product development and manufacturing to electronics manufacturing service (EMS) providers--companies that have core competencies in these areas. In addition, outsourcing can enhance efficiency, utilization, and quality.
EMS providers are constantly challenged by their customers and competitors to invest in new technology. Equipment upgrades, advancements in placement technology, and government requirements such as the Restriction of Hazardous Substances and Waste Electrical and Electronic Equipment directives all promote technological enhancements. Such investments require expertise, capital, and focus. If an OEM outsources, it can leave this work to its EMS partner and focus its attention on product- and market-specific activities.
Many EMS suppliers also design products, and many provide core EMS services, including prototyping, manufacturing, service, and repair. Medical companies that can outsource these services to a limited number of providers can benefit from fewer handoffs and a tighter communication chain.
There are also disadvantages to outsourcing, however. For example, outsourcing may cause OEMs to experience a perceived lack of visibility or control. Perhaps the most common concern voiced by OEMs that are considering whether to suspend internal manufacturing is that their engineers will no longer be able to walk out to the production floor to make a change or grab a unit off the line. However, these practices can cause production dysfunctionalities and result in higher costs. The problem is, these liabilities remain hidden and misunderstood until they're gone.
At the end of the day, OEMs must achieve a true realization of the cost of doing business. Many of us in the medical device industry can tell stories of OEMs discovering the hard way when they first outsource why diligent demand planning, efficient management of excess and obsolete materials, and coordinated maintenance of disciplined and robust engineering processes are important. If OEMs fail in these areas, they may blame it on outsourcing itself. But in the end, this failure provides the impetus to strengthen business processes and achieve favorable outcomes.
For EMS suppliers, there are several advantages to pursuing an integrated business model. Companies that specialize in a full suite of services from product development through manufacturing services tend to have a keen focus on design for manufacturing, testing, sourcing, costs, etc. Additionally, they tend to avoid "throwing things over the wall," since they are in the position of catching an incomplete or unmanufacturable design. Finally, companies that follow an integrated business model consider manufacturing needs early on in the design phase. This advantage minimizes redesign risks, enables cost optimizations, and allows companies to learn closed-loop lessons from their mistakes. To borrow from Stephen Covey, author of The 7 Habits of Highly Effective People, such companies "begin with the end in mind"--they meet specifications, manage costs and time, and consider market conditions.
A disadvantage of the integrated business model is that specific EMS tasks such as industrial design, prototyping, and service may be performed more effectively if they are outsourced to niche partners, since no single company can be the best at each individual task in a product development or manufacturing life cycle. This consideration, of course, must be weighed against the benefits of an integrated solution, which is often measured in terms of quality, cost, and schedule.
-- Andy Hyatt, Vice President, Medical Market Sector, Plexus Corp., Neenah, WI.
Contract Manufacturer Makes Electronics-Based Devices
A medical device outsourcing company specializes in the design, manufacture, and support of electronics-based medical devices. The contract manufacturer provides expertise in a range of Class II and Class III medical equipment, such as cardiovascular systems, point-of-care diagnostic instruments, therapeutic devices, implantable devices, and monitoring equipment. It is ISO 13485:2003 certified and FDA registered.
Minnetronix Inc., St. Paul, MN
Manufacturer Designs and Assembles Connector and Cable Systems
A contract manufacturer designs, molds, and assembles medical connector and cable systems. The ISO 9001:2000–certified and FDA-registered company works with developers of body-worn diagnostic testing and monitoring products. It creates designs for the electroencephalography, electromyography, nerve integrity monitoring, polysomnography, electromuscular stimulation, and electrocardiography markets. The manufacturer’s offerings include single- and multipin safety plugs and jacks, snap and tab electrode clips, EEG cups, bar and digital ring electrodes, multipin yokes incorporating safety connectors, miniature two- and three-pin connectors traditionally used for hearing enhancement, and round and D-sub multipin connectors for standard machine connections.
Plastics One Inc., Roanoke, VA
Device Maker Provides Electronic Assemblies
A vertically integrated contract manufacturer provides electronic and mechanical subassemblies, PCB assemblies, full-system box-build assembly, medical instrumentation, single-use device assembly and packaging, and plastic molded components. In addition to its U.S. headquarters, the company operates a manufacturing facility in Xiamen, China, which is FDA registered, ISO 13485 and ISO 9001 certified, and compliant with 21 CFR requirements for medical device recording. Products are made in a Class 100,000 cleanroom.
Sanbor Medical, Allentown, PA
Service Provider Produces Electronic Medical Instruments
A manufacturer of electronic medical technology uses radio-frequency energy, low-frequency ultrasound, high-frequency focused ultrasound, high-voltage x-ray, microwave, and cryogen to manufacture electronic medical instruments that deliver these energy modalities. Employing electronic, electromechanical, user-interface, and software systems, the company specializes in Class II and Class III medical instruments. It makes devices for atrial fibrillation ablation, solid tumor ablation, esophageal ablation, and pain management. Its facility also has a controlled environment for the manufacture of energy-delivery catheters, surgical tools, and other sterile devices. The company also provides fabrication, product assembly, final test, packaging, and postproduction services.
Stellartech Research Corp., Sunnyvale, CA
Contractor Offers Electrical Device Engineering, Manufacturing
Providing contract engineering and manufacturing services for electronic medical devices, a company performs product design, simulation and analysis, printed circuit board design, industrial engineering, software design, digital engineering, mechanical engineering, prototyping, and design verifications. With medical manufacturing facilities in North America, Europe, and Asia, the QSR-compliant, ISO 13485–certified, and FDA-registered company manufactures Class II and Class III medical devices for imaging, diagnostic, monitoring, and therapeutic equipment. It offers printed circuit board assembly, microelectronics, design for excellence, higher-level assembly, global supply-chain management, direct-order fulfillment, and installation and repair services.
Plexus Corp., Neenah, WI