Outsourcing Supply Chain Management

The FDA has steadily increased its enforcement focus on supplier controls – a critical potential weak link in medical product manufacturing. Manufacturers can outsource goods and services but not regulatory responsibility or product liability.

Devices pose a unique set of challenges because of the exceptionally wide range of supplied products and services and a reliance on suppliers from other fields, who have limited knowledge of medical risk factors and regulatory requirements.

Another hot-button issue in all segments of the life sciences industry is full service fulfillment outsourcing. In the medical device sector, outsourcing initially took hold in the manufacturing phase, and companies raced across borders and oceans to capitalize on low-cost labor for potentially large profit gains.

Several trends are driving the need for single-source partners. Among these trends are rapid market growth and the emergence of new industry-spanning market segments. New markets, such as those for combination products and advanced drug delivery, are more complex than traditional markets.

Top business thinkers have known for some time that logistical success often equals business success. If you can find a better way to move goods in and out of your
organization and put the right things in the right people’s hands at the right time—your chances of success go up dramatically!

As the logistics outsourcing model continues to mature, companies are realizing that outsourcing key areas of sourcing, kitting and fulfillment can impart large productivity gains that translate into competitive advantages.

Medical device companies and medical marketing consultants, in turn, expanded their universe of external partners. But problems arise when too many outsourced firms are involved. Relying on a number of different suppliers to get a medical device to market can be inefficient and time-consuming. In response, medical device manufacturers have begun seeking partners that can provide full-service outsourcing and mail order fulfillment services.

Partnerships typically begin with a formal assessment process that helps evaluate the strategic elements of an organization’s outsourcing needs and short or longer-term “consult-to-action” retainer relationships often develop.

Programs for a formal logistics assessment look at an integrated supply-chain management approach to ensure more efficient movement of materials in and out of an organization including: procurement, warehousing, packaging, assembly, kitting, distribution, returns management, quality inspections and tracking with the ultimate goal of improving inventory visibility and velocity. 

By storing, assembling and distributing all manner of goods more efficiently, you will be able to positively impact your bottom-line. To learn more about how you can capitalize on low cost outsourcing, click here.



Jon Nugent | Director Client Services
Business Intelligence Solutions | www.busintellsol.com

A comprehensive global report on medical devices outsourcing titled “Medical Devices Outsourcing: A Global Strategic Business Report” projected the outsourcing market to reach $42.6 billion by the year 2015.

In today’s global marketplace, manufacturers are faced with intense competition, which is driving a demand for innovation, faster time-to market, and lower price premiums. Consequently, manufacturers must develop higher quality products faster and at a lower cost.

Primary drivers for medical device outsourcing include not only the growth pattern of overall medical device market, but also the extent to which device manufacturers choose to outsource their manufacturing, sourcing, kitting and assembly operations.

Medical device manufacturers face an even larger challenge by having to comply with strict regulatory requirements. Compliance requires that every decision and every step of the process be tracked and recorded, which adds a huge burden to medical device manufacturers trying to remain competitive.

When finished device manufacturers produce components specifically for use in medical devices they produce, whether in the same building or another location, such production of components is considered part of the device manufacturing operations, and the production should comply with the Quality System regulation.

The Quality System regulation is in Part 820 of Title 21 of the Code of Federal Regulations (CFR). This regulation covers quality management and organization, device design, buildings, equipment, purchase and handling of components, production and process controls, packaging and labeling control, device evaluation, distribution, installation, complaint handling, servicing, and records - full service fulfillment.

Companies that compete globally must assemble and label their medical device/diagnostic products to meet the specific regulatory requirements of the countries in which they are marketed. When you’re considering outsourcing, you need to address Quality System regulation regulations that pertain to the critical phases in the medical device development and production cycle.

Whether it is a few phases in the project cycle or the entire project, you need to work with a company that ensures the highest level of service and understands the regulatory requirements.

Growth in the market is especially driven by factors such as rising demand from device end market, an increased interest exhibited by OEMs on improving productivity and simplifying supplying chain network, emergence of one-stop shops, and ability of contract manufacturing to slash costs, an added impetus for adoption especially during tough economic and financial climate.

Concordia Medical, a medical device company that modernized their business practices, was driven by the need to remain competitive, and retain critical survival capabilities, agility and flexibility in a fast changing marketplace.


Jon Nugent | Director Client Services
Business Intelligence Solutions | www.busintellsol.com

According to a new article on third party logistics in Next Generation Pharmaceutical, “traditional pharmaceutical and medical device companies, along with newer biotech and equipment enterprises, are increasingly working together to produce systems that link drugs with devices and diagnostics. Their products are sent to consumers through multiple distribution channels: traditional wholesale, direct to pharmacies, to retailers for sale over-the-counter and directly to consumers’ homes”.

Bill Hook, UPS vice president of global strategy for healthcare logistics writes “These diversified channels can provide new revenue streams and new growth areas. However, manufacturers’ focus can be lost and critical errors made, particularly in transportation and distribution, when dozens of participants are involved”.

Outsourcing supply chain fulfillment operations is increasing for companies to regain their focus and remain competitive despite new market challenges. A third-party logistics (3PL) provider can help streamline the process – particularly in post-manufacturing handling and distribution.

In fact, more than two-thirds of pharmaceutical, medical device and diagnostics manufacturers surveyed in recent years by consultants at PRTM said they use or plan to soon use a 3PL. By using a 3PL, products can be moved quickly from manufacturing site to store shelf or dispensary. Quick market introduction is enabled because the distribution channels are already in place.

As the medical device industry continues to expand, companies are searching for ways to become more competitive. Medical device manufacturers are faced with intense competition, increasing regulatory pressures, shorter product life cycles, rapid new product introductions, globalization and higher quality standards. As a result, there is an increased focus on creating efficiencies in the supply chain similar to other industries.

Companies today are looking for Supply Chain Services and innovative technologies with proven best practices to improve service levels while reducing inventory and labor costs. In the process, customers gain end-to-end visibility to align their corporate business strategies and processes to their global supply chains.

Globalization

Perhaps the most prominent factor that medical device companies have embraced supply chain outsourcing has been the increase in the number of companies operating in the global marketplace.  Companies are embracing global sourcing, production, centralization of inventories and the centralization of information. 

The difficulties of operating in a global environment can’t be understated; logistics and supply-chain networks have become far more complicated.  Meeting the need to plan and manage logistics as a complete and integrated system has also become far more difficult. 
The best solution for a global company or a company wanting to become global is to outsource their logistics operations.

Jon Nugent | Director Client Services
Business Intelligence Solutions | www.busintellsol.com

I have been asked to provide several key definitions surrounding the Supply Chain:

Supply Chain Management is the organization, planning, control and execution of a product from development and purchasing, through production, warehousing and distribution to the final customer in the most cost effective way possible. 

Logistics management is the planning, implementation and coordination of the details of the supply chain.  

Third Party Logistics (3PL) is the function by which the owner of goods (The Client Company) outsources various elements of the supply chain to one 3 PL company that can perform the management function of the clients inbound freight,  warehousing, order fulfillment, distribution, and outbound freight to the clients customers.

The Allied Group is a 3PL provider to the Life Science industry.  While we don’t create the product we assist our customers with the logistics on the assembly, kitting, warehousing and distribution of medical devices to physicians and consumers.  We are an outsourced Supply Chain Management solution.

Love him or hate him Bill Belichick knows football. Year after year he baffles the draft guru’s and picks players that no one ever expected him to pick. It is fun to watch the draft guru’s opine why they are right and try to convince us indeed Belichick made a mistake. Yet year after year the Pat’s win. Watching the draft unfold made me think about what made the Pats so successful.

Like any winning franchise the Pats have a system that they constantly work to improve upon. They depend on the 11 players on the field to act in unison to be successful. They like smart and talented team players who can work within the definition of the system they have created. They don’t need the most talented player at any one position to win. They win because the 11 on the field all know what is expected of them and their teammate’s so they can react to the unexpected.

As a company that offers business process outsourcing solutions we have built our company on similar principles. We work hard to create an environment where we have created repeatable systems to minimize quality issues. The Allied Group has used this system to help create supply chain management strategies that work for our customers. We don’t have anyone on our team that can run the 40 in 4.23 seconds but we do have a group of people dedicated to a common cause of exceeding our customer’s expectations. When a group of people work together as a team and they posses a common goal they can produce extraordinary results.

Time will tell if the picks the Pats made were wise or not but if they have the skills and learn the system I bet they will be OK!

An international market leader in the development, manufacturing and distribution of medical devices approached The Allied Group with an issue they were experiencing concerning the distribution of an adjunct product necessary in the demonstration of their device.

In other words, they needed help with third party fulfillment.

Their primary selling tool is to invite physicians to a weekend workshop to explore how they can expand their practices by offering new revenue streams. The company conducts approximately 80 workshops per year, avoiding the summer months and December. Typically, thirty-five to forty physicians will attend a workshop (the smallest being twenty and the largest being close to one hundred).

During the workshop, they demonstrate a variety of equipment and have testimonials from local doctors who have expanded their practice by offering these services. There are extensive hands-on demonstrations during break-out sessions that allow the physicians to see the tools in action.

Download the case study

ISSUES:

The Marketing Department at this company is responsible for the determination and coordination of these workshops. Marketing and Sales are responsible for the logistics of where and when to conduct the meetings, who to invite, and how to drive attendance. They are also responsible for coordinating the contracts for the locations and making sure all the participant materials are in place for a successful workshop.

• The company had tried several approaches to solve this issue and there was confusion among the ranks on how to return the protective eye wear.
• Some thought they were to forward to the next workshop in the area and others thought they needed to be returned but weren’t sure where
• Many times protective eye wear were mixed in containers and nobody was checking them before they went back out.

Click here to read about the other issues.

SOLUTIONS:

The Vice President of Marketing came to the realization that the coordination and distribution of the supplies was neither a core competency nor a focal point of their company and looked to an outside resource for help.

The company was experiencing issues with the coordination of protective eye wear needed and with properly conducting demonstrations at the workshops. Allied investigated what was happening and spoke to numerous workshop leaders, sales reps and other stakeholders in the process. The Allied Group was invited to help with the coordination and distribution of the supplies and marketing materials for each of these workshops.

To learn more about how The Allied Group’s Turn key Supply Chain Services helped an international market leader make continued improvements and save $70,000 in one year download the case study.

Jon Nugent | Business Intelligence Solutions
www.busintellsol.com | 1.800.782.0580 ext 6

Wow, you guys are brilliant! I can honestly say that I have not heard that statement too many times in my career. Those words were spoken to The Allied Group team by the member of a genomic testing company. I have to be honest; I had to ask my son who is in medical school to explain everything his company did. They were brilliant; we were a company that could supply them with business process outsourcing solutions like supply chain management, marketing solutions, contract packaging and direct mail fulfillment services. 

We entered a dialogue and one by one we were able to help them improve their business processes.  They understood what they do best which is the science and the laboratory to process the blood.  We understood how to market the service, create a package that we could ship their clients and how to bill the client for the service. We became part of their back room operations. 

How much time do you spend focusing on your supply chain as opposed to growing your business? Let the experts at The Allied Group take away that burden so you can focus on what you do best: growing your business.

At The Allied Group, we can assist you with true 3rd Party Logistic (3PL) solutions that will positively impact your efficiency, and in turn your bottom line. Our warehouse management system allows you to outsource with confidence and help you with:

* Cross-docking of products, samples, parts, supplies and literature
* Decreasing operating costs
* Reducing staffing levels
* Concentrating on core competencies
* Improving customer satisfaction

Business experts all over the world continue to emphasize the need to improve supply-chains to improve productivity and profitability. Does your system measure up?

The Allied Group has resources that help you control the 7 key aspects of supply-chain management; planning, sourcing, production, assembly, packaging, inventory control and distribution. Because we do all this in-house, under one roof, we can offer a streamlined process that ensures superior efficiency and superior results!

For more information on the fulfillment supply chain fulfillment process, contact us today!

Qualities of a successful outsourcing partner continued...

It is imperative that you find a well managed company especially if they have direct contact with your customers. You want to make sure that in a crisis their sense of urgency will match your company's. It is imperative to sit down and understand in advance how issues will be escalated. A policy statement is fine as you need to know if the people responsible will react and do so in a way that mirrors your culture.

A well run company focuses on financial metrics to ensure they are in good financial condition. Talk to the management team about their philosophy about managing their business.

Up next: Your outsourcing supply chain management partner must be able to meet your needs...