An evolving charge: a host of factors--miniaturization, taxation and even the "consumerization" of electronics, to name a few--are impacting EMS providers' role in medical device manufacturing

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Author: Mark Crawford
Date: January-February 2013
From: Medical Product Outsourcing(Vol. 11, Issue 1)
Publisher: Rodman Publishing
Document Type: Article
Length: 3,137 words
Lexile Measure: 1440L

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Business isn't as easy as it used to be for electronics manufacturing services (EMS) firms--it moves a lot faster and brings extra pressure to satisfy a growing list of quality and regulatory objectives. Some OEMs are asking EMS partners for complete product commercialization services such as prototyping, design for manufacturability (DFM), verification and validation, and transfer to best-cost countries for volume production--sometimes even putting a finished device into commercial service. Other medical device manufacturers expect EMS companies to provide design services that lengthen product lifecycles and take cost out of older products.

"This often requires product redesign and validation," said David Busch, vice president of corporate development for OnCore Manufacturing Services LLC in Fremont, Calif., which provides electronic product design, supply chain services, manufacturing, and high-level assembly. "EMS partners are also expected to evaluate product design using DFM and design for testing to reduce costs and improve manufacturability."

OEMs also are looking for more horizontal and vertical integration from their suppliers.

"Customers want a partner that can do complete box-build and also provide access to ancillary resources as they look for greater efficiencies," said Gregg Mozdy, vice president of business development for Cirtronics Corporation, an electronic contract manufacturer in Milford, N.H. "These services include full product design, mechanical assembly, painting, kitting, warehousing, direct ship/fulfillment, and depot repair."

Entrepreneurial medical device manufacturers also are pushing U.S. Food and Drug Administration (FDA) concerns upstream to their EMS providers, seeking more help with design and system integration. "This brings the challenge of balancing the desire to provide more full-product solutions to customers, while also mitigating the risks associated with FDA compliance and/or certification," said Mozdy.

Some customers seek reduced material liability yet also want the supply chain to support upside demand without annual purchase orders. Supporting this expectation, especially at lower volumes, can be challenging for EMS providers.

"Our solution is reaching compromises with customers that provide the volume pricing they want, but give us the coverage for long lead-time items and minimum buy quantities needed to achieve that pricing," said Ed Evangelista, vice president of business development for Federal Electronics Inc., an electronics manufacturing firm in Cranston, R.I. "As long as there is consistent consumption and replenishment, kanban and limited liability programs can be created."

In other words, medical device firms don't want an EMS partner who says, "I can't do that." This even goes as far as helping to pay the bills.

"Because of market uncertainty and regulatory change, many medical device startups are relying more heavily on their EMS providers to support them financially through their early stages of growth, including product design, prototype and first-article production, and supply-chain staging--all of which occur pre-revenue stream for companies like Cirtronics," said Mozdy.

Cost Reduction a Top Priority

Expectations are very high (and getting higher) for what EMS companies provide. The top concern, of course, is keeping costs down and doing more with less.

"Cost competitiveness and robust quality are always key issues," said Curtis Campbell, vice president of sales, west coast...

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Gale Document Number: GALE|A320069016