Looking to Smaller, Specialized Suppliers for

Emphasis On
Micro Molding
Looking to Smaller,
Specialized Suppliers
for Innovation
This article will attempt to challenge the basic principles of outsourcing and to bring a different outlook on
this highly publicized and challenging subject. Two examples of larger medical device OEMs innovating new
products and processes are presented, generating thoughts on how they could have been more successful
bringing products to market utilizing smaller, specialized suppliers.
John Whynott, Technical Director,
Mikrotech LLC
G
rowing up as a child, I learned a
lot by watching my parents. For
instance, my father would always
purchase the same used and unreliable car
because the engines were simple and easy
to maintenance. Then it would happen! The
car would break down. It would sit idle for
several days while my father tried to fix it.
After he couldn’t fix it, he would send it
to a mechanic. The car would sit idle for
several more days because the mechanic did
not have enough training or experience to
fix it. As a result, my father missed several
days of work and we missed a number of
holidays and celebrations with family and
so on. Had he gone to a mechanic who
specialized in the type of repair he needed,
the time and aggravation could have been
greatly reduced. The initial cost might have
been more, but in the long run, he probably
would have saved time and money. Larger
medical device OEMs tend to go down the
same path when it comes to innovating new
products and processes. Similar to my father,
they choose a supplier they are familiar and
comfortable with rather than the specialized
supplier that can do a far better job of
meeting their needs.
Most larger medical device OEMs
typically shun smaller, specialized suppliers.
There might be good reason for that. Larger
suppliers have lower costs, are perceived
as being more financially stable, have more
12 / May 2014
capabilities, and offer fewer capacity constraints. The drawback is no specialization.
Not working with the right supplier can lead
to long delays in product launch and high
scrap costs. Working with smaller, specialized suppliers can help larger medical device
OEMs be more innovative and competitive.
How is it that smaller medical device
OEMs can be more innovative regardless
of their limitations – less manpower and
limited access to capital. Perhaps it’s more
than just size and bureaucracy that makes
larger OEMs less innovative. The key might
be the way the OEMs choose to innovate.
It may have to do with procedures and
policies put forth that determine the level
of risk tolerance and R&D commitment.
Smaller medical device OEMs are less risk
adverse and are not constrained by functional strategies such as limiting the number of
approved suppliers. By working with smaller
specialized suppliers, such as micro molding,
smaller medical device OEMs expand their
ability to innovate, giving them a competitive advantage over their larger counterparts.
Case in Point #1: Orthopedic
A larger medical device OEM was looking
for a micro molder for two components
used in a orthopedic application. An expensive, implantable, PEEK polymer was specified for the two components. The OEM performed a small amount of molding in-house
but no micro molding. The OEM’s engineers attempted to micro mold these two
components in-house but encountered two
Miscellaneuous micro molded components
problems. First, the plastic injection molds
were creating an unacceptable amount of
flash, and second, the OEM was losing
$250,000 in runner waste per component
per year. The root cause was a lack of any
previous experience designing and fabricating micro molds for PEEK components and
molding the components in a conventional
molding machine. The machine type limited
the ability of the runner to be reduced in
relationship to the size of the components.
The OEM formulated a team and visited
the Mikrotech (www.mikrotech.com) facility
to perform an on-site audit. Mikrotech was
selected as the supplier of choice and the
visiting team’s recommendation was to place
the company on the OEM’s AVL (approved
MDTmag.com
Emphasis On
Micro Molding
vendor list). Over time, the level of correspondence between the OEM and Mikrotech diminished. After nine months, correspondence
ceased and the program was put on hold. In
one and a half years since, the OEM has not
conducted any business with Mikrotech on
this project. As a result, the opportunity cost
for not moving to a specialized micro molder
has reached over $750,000.
The OEM has decided to attempt to micro
mold the components again. They are going
to make the capital investment in equipment
specifically designed for micro molding.
Being that this is not a core competency or
a sustaining competitive advantage for the
OEM, it will take approximately two to three
years for the OEM to see the results they are
seeking. Moving the work to a smaller, specialized supplier in micro molding may have
been the better solution. Overall, the OEM
PEEK cable support micro molding
may have seen approximately $2,400,000
in savings going to a supplier specializing
in micro molding. In addition, the capital
investment in micro molding equipment could
have been deployed for product development
or enhancement of competitive advantages or
core competencies.
Case in Point #2: Neurovascular
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A larger medical device OEM was looking for a
micro molder to supply four components used
in a neurovascular device. The OEM did not
perform any molding in-house. After a number
of weeks working on the design, Mikrotech lost
the business to another supplier. The reason was
that Mikrotech was not on the OEM’s AVL
(approved vendor list) and was too small of a
company. Two years later, the OEM reinitiated
correspondence with Mikrotech. The current
supplier was a larger supplier that could not
supply the components to specification. The
OEM was once again seeking a supplier for the
necessary micro-molded components.
Similar to the first example, the OEM formulated a team to visit the Mikrotech facility
and perform an informal audit. Again, the
company passed the audit and was selected as
a potential alternate supplier. Soon after, there
was no communication from the OEM with
regard to any updates on the program. The
OEM then decided to pull the product off the
market and redesign it. At this point, the OEM
decided to dual source the components once
the product was redesigned; Mikrotech was
selected as one of the suppliers.
Following the product redesign, the OEM
decided to re-tool with the original supplier.
They chose not to dual source due to a limited
MDTmag.com
smaller medical device OEMs. Larger medical
device OEMs try to alleviate this problem by
creating skunkwork development teams, but
this is simply a method of circumventing the
root cause of the problem.
Functional strategies must be aligned
throughout the organization, which should
be based on marketing and innovation. When
an OEM limits suppliers, it may be limiting
the ability to innovate, which can create a
negative ripple effect. By limiting the ability
to innovate, the ability to optimize product
and process engineering teams is impacted.
Limiting the product and process engineering
teams may lead to frustration and disengagement. Not working with specialists suppliers
may be prolonging development cycles,
creating cost overruns, and jeopardizing the
sales and profit potential of a medical device
product launch. MDT
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amount of time and resources available. Since
then, the OEM has re-tooled the supplier, but
is still having problems with the company.
Moving the work to a smaller, specialized
supplier in micro molding may have been the
better solution. Overall, the OEM may have
seen a more successful product launch going to
a supplier specializing in micro molding. And
again, similar to the first example, the resources required to troubleshoot and re-tool could
have been utilized to enhance other areas to
further supplement a competitive advantage.
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Conclusion
What is your level of R&D commitment? Are
you OEM #1, OEM #2, a little of each, or
neither? Both of these examples offer a similar
story. The reasons larger OEMs may not be as
nimble and quick as their smaller counterparts
may be due to more than just size and bureaucracy. It may also be that they limit their ability
to become successful. By not working with
smaller, specialized suppliers, larger medical
device OEMs cannot innovate as effectively as
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