An ongoing trend in the world of contract manufacturing is the rise of the “full-service” contract manufacturer (CM): a CM that vertically integrates what used to be several activities spread along a typical supply chain. By turning to full-service medical contract manufacturers, OEM’s can achieve vendor consolidation and reap its many resultant benefits: transportation and supply cost savings, in addition to supply chains that are more responsive to changing business demands, are simpler to manage, and help reduce risks involved with too many vendors.
In this article, we’ll discuss four current trends impacting full-service medical contract manufacturers, which will undoubtedly evolve as market forces continue to shape the global manufacturing landscape.
The U.S. manufacturing industry is starting to see the reversing of a decades-long trend of off-shoring the manufacturing of materials, parts, and assemblies to overseas factories, and some production is now making its way back to American manufacturers. According to a member of the Association for Manufacturing Excellence, this “on-shoring” movement is due to several reasons including the rising labor & material costs in “cheap” countries, the supply chain lag & costs inherent in overseas transportation/logistics (including customs), and in some cases the rising concerns over the continued theft of intellectual property.
Just as there are multiple factors pushing some production out of overseas plants, there are also forces pulling that production back to the U.S. For starters, the lessening of some governmental regulations and tax burdens has caused OEM’s to re-evaluate their business models, making it an enticing factor in deciding to realign partnerships with the U.S. manufacturing industry. Also, the average American factory worker’s productivity is multiplied by the increasing use of automation and robotics (which we discuss below). As technology is effectively leveling the playing field, geography delivers a home court advantage: domestic manufacturing means shorter transportation and lead times and at a lower cost. Negotiating more flexible delivery schedules and resolving supply chain issues are also far easier when the time zone differences aren’t a factor.
The on-shoring trend is boosting domestic contract manufacturing sales, especially for those who are already adapting to the next three trends.
3D Printing and Prototyping
Advances in 3D printing & prototyping are giving CMs the ability to provide the rapid turnaround of design iterations, which can then be trialed and refined long before even pre-production parts are molded. A tangible component for visualization and discussion during the project kick-off meetings means significant improvements in the manufacturability, performance, and the quality of the final molded products.
One of the ways 3D printing adds value for a contract manufacturer’s OEM customer is through the opportunity to develop quality inspection parameters prior to production. Since both the CM and OEM can literally look at the part from all angles, and thus produce correct and complete drawings which ensure fewer hiccups at first article inspection (FAI).
Supply Chain Management
Since logistics operations for parts and finished goods warehousing, distribution & fulfillment, and inventory management are naturally intertwined with production, it makes sense for CMs to broaden their offerings by bringing all of those activities under one roof. Not only does this free up precious OEM resources like warehousing space and procurement personnel, but it also produces the less tangible benefit of preventing OEMs from being distracted by activities that have very little added value. OEMs can then focus more on product innovation, strategic planning, sales, and customer support.
As a recent article from Medical Design & Outsourcing explains, supply chain management is one of the many additional services that have allowed CMs in the medical device industry to set themselves apart from their competitors and deliver compelling value for their OEM customers.
Increasing Use of Robotics and Automation
Medical contract manufacturers are increasingly leveraging the fast speed and high precision of robotics to increase production throughput and to help maintain consistent quality in tandem with the current workforce. The ability to use custom and interchangeable end-of-arm tooling on everything from tool & fixture building, to molding processes, and through value-add & packaging services, can lead to increased flexibility and shorter set-up times for new production lines and/or increased demand.
While individual robots are great for automating one step in a production process, integrated work cells combine robotics with multi-tasking processes to minimize potential safety risks from hands-on involvement across the whole process. Plastic injection molding CMs that use work cells encompassing cutting-age automation and technology with highly skilled workers, can easily edge out competition to secure the next great medical innovation from global OEMs.
According to Reuters, a large number of ageing baby-boomers are contributing to the increase in healthcare spending and medical costs. The availability, affordability, and quality of plastic medical devices will be paramount to keeping this trend from skyrocketing out of control. By recognizing the above trends, contract manufacturers are able to utilize the benefits of each, to bring added value to the entire product realization process, thus helping to keep products highly effective yet safe and affordable.
As OEMs increasingly see the value of turnkey, outsourced production solutions, medical contract manufacturers are responding by expanding their knowledge of current industry trends to make sure the investments in personnel and equipment make sense, in order to continue bringing a high level of added value to their global customers.
By investing heavily in 3D printing, automation, and other manufacturing technologies, Crescent Industries has been able to competitively provide full-service, medical contract manufacturing services for clients’ world-wide. From tool design & manufacturing, to medical injection molding, printing, assembly and packaging, Crescent’s technology and a commitment to world-class quality provide a much larger ROI value than the old trend of off-shoring.