Multitasking with Multiple Suppliers

Originally Published MDDI July 2004

Guide to Outsourcing



Finding outside suppliers and vendors is difficult—and coordinating them to work on a single project is even harder. But with good communication skills and a little preplanning, it can be done.

Christina Elston

Your company is developing a new product—a medical device that will improve the lives of doctors and patients. It will be the first of its kind on the market and will put your company on the map. But, like many OEMs, you aren't equipped to do every piece of the project in-house. You'll need a supplier or two. But what if you need more than two? What if you need five, or eight?

As medical devices become more complex, combining new and diverse technologies, project managers become more likely to find themselves in just this situation. And this, says Bill Evans, founder of Bridge Design (San Francisco), is not the time to learn the ins and outs of outsourcing with multiple suppliers. Rather than waiting until you are managing a critical project done on a large scale, Evans recommends that all companies routinely develop outsource skills on smaller, noncritical projects.

Choose Your Partners Carefully

Then, when you are ready to try blending the efforts of several suppliers into one successful project, make sure they are the right ones. Susan Hart, director of development at Inovise Medical Inc. (Newberg, OR), says a good place to start is with an examination of the project requirements. “Think about which pieces of it are in your core competency, versus which pieces are better handled by someone else,” Hart suggests. Inovise went to four outside firms for help creating its Audicor cardiograph expansion system.

Hart stresses the importance of knowing your criteria for qualifying suppliers, and understanding what each of your suppliers will bring to the project. You need to understand each company's core competencies and company cultures. 

The supplier selection process, if done correctly, requires more time and effort than most OEMs invest, according to Evans. “People in industry are, on the whole, not very prudent buyers of services,” he says. Many project managers get outsource referrals from “their friend Joe on the golf course,” but don't ask the right questions about the company. Evans suggests that instead of asking, “Who is the right partner or vendor?” you should focus on “Why is this the right potential partner or vendor?”

It is imperative that all partners be fully competent to perform their tasks, says John O'Mahony, vice president of research and development at CHF Solutions Inc. (Brooklyn Park, MN) “One fatal flaw is to allow a partner to learn on your time,” explains O'Mahony, who coordinated the efforts of some 30 suppliers on the company's System 100 fluid-removal system. “Doing so will result in multiple delays, and the focus may turn to trying to debug environment tools instead of to product design issues.”

State Goals Clearly

It's a good idea to have your own in-house expertise to help you qualify outside companies and set clear goals that will keep your project on track. “Have the process really well defined,” advises Barry Boaz Groman, president of Groman Inc. (Margate, FL). “Don't rely on other people to define the process for you.” 

In working on the PrepMaster disposable abrasion instrument, Groman spent time puting together a team of experts who understood the molding and machining technology necessary for the device. This team worked with five outside suppliers to gather input about what the technology and materials were capable of. “We went to the suppliers with our requirements,” says Groman. “We didn't go in with a finished design, say ‘Make this for me,' and walk away.”

Groman says planning and coordination were easier with smaller suppliers that offered direct access to the people doing the actual work. “We went to the small suppliers where I could talk to the mold designer and he could take ownership,” Groman says. Talking directly with the people who are performing the work simplifies communication and helps project managers avoid “playing broken telephone,” says Groman. “You want to know the guy who's running the machine. Make sure he understands the requirements.” 

You should also make sure that all the suppliers selected for the team understand, and are comfortable with, the pace at which you intend to develop your device. Suresh Vishnubhatla, vice president of product development at BodyMedia Inc. (Pittsburgh), suggests that you “do your work up front. Make sure your suppliers understand the whole plan before you sign them up.”

Schedule Collaboratively

Keeping suppliers on a single schedule is one of the biggest challenges of multivendor projects. But involving your suppliers in schedule planning can help you avoid some pitfalls. Make it clear that you want a realistic idea of what suppliers can accomplish and when, rather than a timetable seen through rose-colored glasses. Evans says that what a project manager needs from suppliers is “accurate data from which to act, not people agreeing with him.” The time to gather these data, stresses Evans, is before promising the CEO or investors that something can be delivered by a certain date.

Make sure to allow time in your schedule to get all your vendors working together. A good collaboration isn't a given, even if each individual vendors or suppliers can do their piece of the job well. “People underestimate the amount of time [that is needed] to integrate multiple vendors into a project,” says Evans. 

During schedule planning at BodyMedia, heads of internal departments—such as the hardware development group—are all present. They work with outside suppliers and contractors and are aware of what their suppliers can accomplish, and in what timeframe. “It is almost impossible to create good products in a timely, cost-efficient manner unless we have all of these people together,” Vishnubhatla says.

To schedule with multiple suppliers, you need a clear understanding of how each supplier or contractor views deadlines and project milestones. “If one side sees them as a guideline and the other sees them as rigid, you're going to have a mismatch,” Hart says. It doesn't matter whether suppliers take the “guideline” or the “rigid” approach, as long as all parties involved have a common understanding.

You also need an internal understanding of how realistic your suppliers are about their ability to meet deadlines. “There are some suppliers that are too optimistic, and some that are right on the money,” says Groman. He recommends taking pains to learn which are which, and checking up on the “optimistic” companies to make sure they are on track with your project.

It can be a challenge to identify the suppliers on your team that are on the critical path and to speed them up “so that everything hits when it's needed,” says Jeffrey C. Cerier. The vice president of product development at NDO Surgical (Mansfield, MA) notes that “unless everything is perfectly synchronized, someone is gong to be the slow cog.”

Sometimes creating a bit of collaborative competition can help. If the deadline goal is to have the product ready for a physician meeting June 15, “you can have everyone competing to see who can get their projects completed first (carrot), or at least to make sure that they're not the ones delaying the project (stick),” says Cerier.

Choose Solid Leaders

Evans stresses that because a schedule is by nature fluid and constantly changing, OEMs need a single, clearly defined project leader. This person should be devoted to understanding the project and its schedule thoroughly. This takes “good, old-fashioned leadership,” he explains. And managing the outsource relationship is a full-time job. Each company you work with should also have a strong project leader in charge of accountability, resources, and management-level decisions.

“Product design management issues arise at the interfaces,” says O'Mahony. “Understanding these risks and making one person responsible for a given interface is critical. Understanding these interfaces from the start of the project cuts down on a lot of heartache later.”

Many companies strive to nurture successes and groom future leaders. One way to do this is by putting them on the team with successful project managers. Project managers should be defined as mentors, and potential project managers should be aware of their status. This breeds goodwill and motivation that benefits the project at hand as well as future projects.

Communicate, Communicate, Communicate

Having one point of contact in-house and one at each supplier will also help facilitate communication. Hart recommends starting the project with face-to-face meetings all around, and following up with a plan for ongoing status checks. The frequency with which you and your suppliers need to be in touch will vary depending on the project, and on the individual supplier's style. Hart exchanges daily e-mail with a partner in Japan, while a different project with two outside partners requires a conference call each week.

Maintaining ongoing communication makes it easier for everyone involved to raise issues before the issues turn into major problems. Good personal relationships build honesty and trust and ensure that suppliers will keep you well informed. “It's all about preventing problems,” says Hart. “The worst thing you can have is a problem that doesn't get raised. What you want is for everyone to be interested in each other's success.” This means that even though you have notification processes in place, it is sometimes just better to pick up the phone. “Everyone needs to understand the goals, roles, and responsibilities, as well as the operating culture, of the other party.”

Sometimes, there's just no substitute for being there. For the PrepMaster, Groman chose suppliers that were local. “We actually planted people at the facilities during the production process,” Groman explains. 

The opportunity for face-to-face interaction with outsourced developers is one reason Curon Medical Inc. (Fremont, CA) is located in the Silicon Valley, says John Gaiser, vice president of research and development. “There is a world-class network of local suppliers and developers of every kind, close enough to visit whenever necessary in order to get problems resolved or provide feedback on 
prototypes.” This also offers the chance to help partners understand a product's end application. “We will bring a developer along to an animal study if it will help them see how the product is used or what the performance issue is,” Gaiser says.

If your suppliers are remote, you should at least have an initial face-to-face meeting, recommends Ronald Franklin, stereotactic technology development manager at FHC Inc. (Bowdoinham, ME). FHC used a German-based software development firm as one of five suppliers for its MicroTargeting Platform System. The firm flew one of its representatives to the United States for introductions. If you've met in person at least once, “you can call someone and know who you're talking to, and they know you,” Franklin says. The company has since established a teleconference link with Germany for teleconference meetings. “You miss so much in e-mail and telephone calls,” says Franklin, adding that without the benefit of facial expressions and body language, it is easy to misinterpret things.

To overcome the challenge of not having everyone in the same room, Vishnubhatla says BodyMedia project managers often coordinate conference calls to bring all the suppliers on a project together. Having everyone on the line can be especially helpful in resolving problems. “We encourage our suppliers to talk to each other, and we coordinate the calls to make sure that happens,” Vishnubhatla says. 

Sending e-mail with a carbon copy to the whole project team is temptingly easy, but beware of its overuse. “Cc-mentality oftentimes means that nobody ever reads anything,” says Evans. He recommends stating your purpose in the first sentence of any e-mail you send and specifying what actions you want each recipient to take or what information each recipient will receive. Evans considers project Web sites an ideal way for suppliers and OEMs in diverse locations to stay in touch. They are secure and always accessible, allowing everyone involved to log files and progress, or access downloads.

Invest in Supplier Relationships

Sometimes your ability to keep projects on schedule is directly connected to your relationship with the suppliers involved. Still, OEMs often underestimate the importance of the interpersonal aspects of their relationships with suppliers and vendors, says Evans. “We routinely go the extra mile for clients with whom we have a good personal-professional relationship,” he says. “When these clients ask for extra hours or some other favor, we do it without thinking.” These are clients who keep them informed and are respectful of team members. 

Because timing is such a challenge in juggling multiple suppliers, Groman says his company pitches in to move things along. “Being the small guys, we can't buy their time with money,” Groman explains. Instead, the company tries to be flexible and performs some of the supplier work itself. His company orders material and makes sure it meets specs before delivering it to suppliers. The company also provides physical models, not just specs, for them to follow. 

The plastic for the PrepMaster had to meet five or six separate requirements, so the company provided suppliers with testing equipment and trained them to perform initial tests to save time. And sometimes, the company pays for suppliers to work after hours. “If you really know them well, they come through for you,” Groman says.

Be realistic, however, when asking favors of your suppliers. “Recognize that you're not the only company they work with,” says Vishnubhatla. “Be fair. They have other customers.” You can't expect your supplier to drop everything else because you suddenly decided to move a timetable up six weeks. And Vishnubhatla points out that suppliers that will shortchange other customers to get your work done might do the same thing to you on another project. 

Set Boundaries

Along with your relationship to your suppliers, invest some time in the relationships among your suppliers. If some of the parties involved are competitors, it will take effort to get everyone working as a team, on the same schedule, and toward the same goals. “Get the suppliers to see themselves as collaborators rather than competitors,” says Cerier.

Clearly define the boundaries between the disciplines of the participants and specify who is responsible for what. As the architect of the project, float potential boundaries with all parties you are considering working with, and do some risk management up front, Evans suggests. Ask supplier candidates about potential problems that they see with the project, and how they might manage them. If they don't believe the boundaries are set as they should be, ask for advice. “Good people, if they see a potential problem, will make practical suggestions,” Evans says.

Establishing parameters and integration points up front allows for parallel development, says Hart. This means that vendors can work independently and get their part of the project done more quickly. Accomplishing this is easier if you have maintained ongoing relationships with your major suppliers. “We want to have these partners for the long haul,” Hart says. “You can actually work much faster that way. You know how to work together.” And if your partners have worked with each other on projects before, then things will go even more smoothly, Evans says.


Manage Crises

When things don't go smoothly, you'll come to a solution more quickly if you create a blame-free environment for your suppliers. This will encourage innovation and potential solutions. “You want people to open up sooner with ideas, rather than later,” Evans says. And, if a 
multiple-supplier project has fallen behind schedule, don't assume you can fix things by just adding more suppliers. “It takes one woman nine months to have a baby. Nine women can't have a baby in a month,” Evans says. “People too often think that a schedule is resource limited, rather than coordination limited.”

Use coordinated risk management to keep tabs on potential problems. “Pick some points where you're going to revisit your risks,” advises Hart. Focus on key points, such as the top five, with an eye toward eliminating them as early as you can. If there is a risk of not getting a key component from a supplier on time, you might be able to second source. When this is impossible—such as in the case of an involved technological component—your relationship with your supplier must be solid. “Do you believe they can meet your goals? You do have contracts, but the last thing you want to do is depend on your contract alone as your accountability tool,” warns Hart. 

Sometimes turnkey manufacturing agreements can help avoid squabbles between suppliers. Gaiser recalls one situation in which Curon purchased a component from one vendor, and then sent it to an outside supplier for a subassembly process. “Things worked fine until we had a quality issue with the subassembly,” Gaiser says. “Then the subassembly vendor blamed the problem on the poor quality of the component. The component supplier naturally pointed in the other direction.” The solution was to outsource the whole process, including purchase of all components. “That way, the subassembly supplier owns the quality of the entire supply chain,” says Gaiser.

The same system can work for molding processes, says O'Mahony. “We have all heard of and seen the industrial design that looks great but cannot be molded, or when the mold is turned over to the assembly house they want to wash their hands of it,” he says. “To avoid this pitfall, we made the industrial firm responsible for ensuring that the final product could be molded and the assembly house responsible for choosing the mold manufacturer and injection house. This ensured compromises were made early in the project and not at the time of mold manufacture.”

O'Mahony also suggests giving some development tasks to the same partner. “I would suggest that software development and hardware development not be separated,” he says. “When the initial boards are made there will be finger pointing between hardware and software engineers unless the same partner is responsible for both.” 

When BodyMedia works with suppliers whose work is dependent on each other (for instance, a tool manufacturer and an injection molding company), it tries to make sure both suppliers have worked well together before. This way, each company understands the way the other works, and it can make things easier if and when problems do come up. If one supplier's schedule slippage does impact another, the company steps in. “We're going to work with both vendors to make sure this is not going to be a domino effect,” says Vishnubhatla.

It is also a good idea to have some backup capabilities in-house, in case a component supplier doesn't come through. “We're fairly diverse in what we have at the company,” says FHC's Franklin. Its electronics and machine shops, used mainly for development and prototyping, allow the company to do some small-scale production if the need arises. “Having the capability to do it yourself in small quantities if you have to is important,” Franklin says.

Recognize Success

When things go right, your efforts to recognize the hard work your suppliers do for you are really investments in future projects. “It is very important to provide positive feedback to good suppliers. Recognition for a job well done is a primary motivation for all of us,” says Gaiser. “Generally, suppliers get the most attention when something goes wrong. It is good business to acknowledge the suppliers who are really helping you to be successful and to provide positive feedback when a supplier fixes a quality problem.”

Hart recalls one particular project where one partner, Oliver Products (Grand Rapids, MI) faced the challenge of creating a gel with the right level of stickiness and the right electrical properties for the patient adhesion and electrode functionality of a sensor to work correctly. “They worked so hard in doing that,” says Hart. “We readily share with people our appreciation and enthusiasm for what they're doing.”

OEMs face many challenges in coordinating multiple suppliers and vendors in a single project. But, Hart says, it is ultimately always worth the effort, because suppliers bring added capabilities that lead to better products. “You can do so much more with them than you can do by yourself. It's all about bringing together everyone's expertise and their own core competencies,” Hart says. “You can make the best stuff that way.” 

Copyright ©2004 Medical Device & Diagnostic Industry