The unfortunate truth about manufacturing offshore is that unit cost is rarely reflective of total cost. Nor is every low cost country (LCC) contract manufacturer equally equipped to provide the support required by highly regulated medical product design and manufacturing. A strategy based on having your team train or continually audit a low cost contract manufacturer into compliance with your systems, typically doesn’t result in real cost savings if your internal costs as well as the supplier’s charges are measured. In short, for offshore contract manufacturing to consistently save money, the contract manufacturer needs to not only have a competitive unit cost. It must offer the same level of systems and processes found in domestic suppliers. The challenge for a supply chain management team becomes finding a contract manufacturer capable of delivering more than unit price reduction.
Forefront Medical Technology built its business model around examining that equation. This paper looks at the key support elements that are integral to achieving lowest total cost.
Finding the Value
So what are the elements a sourcing team should look for in terms of determining whether or not the chosen contract manufacturer mitigate the cost surprises that can otherwise come with working in a LCC? Seven areas stand out:
- Design expertise
- Focused transfer of work process
- Localized support
- A robust quality management system and a team experienced with working with the regulatory agencies in your product’s end market
- A strong commitment to IP protection
- Capabilities and expertise in line with project requirements
- The ability to identify opportunities for cost reduction over the life of the product.
For questions to ask to better determine supplier capabilities in each of these areas, access our full whitepaper here.