Improving Supply Chain Resilience in the Medical Device Industry through Supplier Management

The medical device industry faces unique challenges when it comes to supply chain management. Suppliers and manufacturers must navigate strict regulatory requirements, ensure product quality and safety, and maintain a reliable flow of critical medical devices.

To get ahead of these challenges – and those just now appearing on the horizon – medical device companies must look toward supplier management as a tool for building resilience.

Done right, supplier management helps medical device orgs build collaborative, forward-looking SCM strategies that focus on the entire picture.

Supplier-centric strategies ensure the availability of critical components, maintaining quality standards, reducing overall risk, and even fueling growth and innovation.

In this article, we look at some ways medical device companies can enhance their supply chain resilience by focusing on supplier management:

Top Supply Chain Challenges Facing Medical Device Suppliers

It’s hard out there for medical device suppliers. COVID hit the industry hard – causing shortages of PPE and critical materials.

As CDRH’s Tammy Beckham points out, shortages and supply chain issues aren’t unique to public health emergencies. If anything, there were issues before COVID, and those issues will likely continue well into the future.

But – post-pandemic, existing supply chain issues are becoming more systemic and complex. This list is far from comprehensive, but here are some of the top challenges medical device companies are up against:

• Regulatory compliance
• Quality assurance requirements
• Demand variability and seasonality
• Short product life cycles
• New products/SKUs
• Complex supplier networks
• Geopolitical volatility

The medical device industry faces so many high-stakes supply chain challenges that the FDA has developed a special program dedicated to strengthening supply chains to prevent shortages that impact public health outcomes.

The Resilient Supply Chain Program for Medical Device Companies (RSCP) aims to prevent shortages by proactively monitoring, analyzing, and communicating vulnerabilities and risks.

While the FDA does provide resources and support for building strategies, mitigating threats, and communicating information, you can also improve your situation by leveling up your supplier management game.

Below, we’ll look at some ways to bolster existing strategies by focusing on supplier relations.

Use Tech to Enhance Visibility & Mitigate Supplier Risk

Leveraging the right technology and data analytics can provide valuable insights into your supply chain, enabling proactive identification of potential disruptions and the ability to quickly respond to them.

A few things you might do here:

Embrace Predictive Modeling & Scenario Planning. Medical device companies can use predictive models and collaboration tools to work directly with suppliers to avoid potential disruptions.

For example, Dynamics 365 uses built-in AI to spot patterns in resource allocations or supplier networks, then use that information to help orgs fill gaps in their SCM strategies. Think – diversifying supply sources or reallocating resources to critical areas.

They can also help you develop contingency plans and conduct scenario planning exercises with your suppliers. Consider various disruption scenarios, such as natural disasters, geopolitical events, or supplier bankruptcies, and create response plans accordingly.

Enable End-to-End Traceability. Solutions like Azure IoT enhance traceability throughout the entire lifecycle of a medical device, from the earliest stages of planning and sourcing, on through to production, distribution, and use. Medical device suppliers can track and record all relevant details including, component origins, manufacturing processes, and post-market performance.

Traceability data can help you keep things compliant, of course. But data can also be integrated into other systems and processes – making it easier to share critical insights with suppliers and collaborate on solutions.

Identify & prioritize key suppliers. Identify suppliers that provide essential components, raw materials, or services that are crucial for the production and distribution of medical devices. These suppliers should be prioritized in terms of their importance to your supply chain.

If you’re using D365, you can create scorecards to track progress toward goals, define scoring criteria to measure and rank supplier risks, and design embedded supplier performance reports in Power BI for your Teams workspace.

These tools will help you measure suppliers’ capabilities, financial stability, quality control processes, and ability to cope with disruption and track changes over time.

Continuously monitor supplier performance. Tracking supplier performance provides valuable data and insights that can be used to drive continuous improvement efforts, collaboratively develop contingency plans, and address weak links in your chain.

This can be done through regular audits, performance evaluations, and feedback mechanisms. You’ll want to establish a new set of key performance indicators (KPIs) to measure supplier performance against current priorities and critical risk factors.

KPIs should always reflect your org’s unique goals, pain points, and priorities. But, they might include things like on-time delivery, quality levels, or average response/turnaround times.

You can use this data in several different ways, including:

• Holding suppliers accountable.
• Proactively addressing issues to ensure QC standards/reliability/compliance/etc.
• Identifying potential supply chain risks/ disruptions.
• Surfacing opportunities to improve supplier management strategies. Say, by pursuing diversification efforts or renegotiating contract terms.

Prioritize Supply Chain Collaboration

Medical device orgs can boost resilience by teaming up with the suppliers, partners, and providers in their network to tackle common problems.

Supplier collaboration allows medical device companies tap the collective knowledge of the network and achieve a range of mission-critical goals from cost-savings and efficiency gains to full-on medical breakthroughs.

It also helps streamline processes and reduce inefficiencies. This can result in faster production cycles, reduced lead times, and improved overall productivity. By working together to identify bottlenecks and implement solutions, medical device companies can optimize their supply chain and enhance operational efficiency.

Nurture supplier connections with the right collaboration tools. Regular communication, collaboration, and transparency are key to building trust and understanding each other’s capabilities and limitations. This enables proactive problem-solving — allowing orgs to ID potential risks before they escalate.

Invest in solutions that make it easier to communicate with suppliers, share information, and collaborate in real-time.

For example, Copilot in MS Supply Chain Center (in preview) uses generative AI and collaboration tools to generate contextualized, custom responses to high-priority issues that might impact critical orders.

Look for opportunities to pool resources. Collaborative supply chains directly support innovation and knowledge sharing. For example, engaging with industry associations, regulatory bodies, and other stakeholders to stay updated on industry trends, best practices, and regulatory changes.

Collaborating with these entities can provide access to valuable resources and insights to strengthen your supply chain resilience. This allows everyone in the network to solve problems and bring new solutions to market much faster than they could on their own.

Choose collaboration solutions with compatibility in mind. In order to make collaboration happen, you’ll need to make it really easy for suppliers to embrace this new approach. In a recent Appian white paper, Spark Equation CEO Vlad Filippov explained that companies should look for ways to create more “interconnections” between your company and the partners, providers, and suppliers in your network.

Filippov says, any time you deploy a new product, you’ll need to plan for connectivity from the very beginning. Public API enablement must be built-in to the architecture of your systems and processes — otherwise, he says, your business ends up being closed off from the rest of the world.

Invest in supplier training. Offer training and support to your suppliers to ensure they understand your product requirements, quality standards, and regulatory obligations. Well-informed suppliers are more likely to meet your expectations consistently.

Diversify Your Supplier Network

Most medical device companies know that relying on a single supplier for critical materials or components is risky.If something happens with one supplier, it can cause delays, quality issues, and worst case scenario — patients can’t get the devices they were counting on to stay healthy (or alive).

For that reason, many regulators now require medical device makers to prove that they have a resilient supply chain with a reliable flow of materials and components that enables them to meet demand — even if something (or several somethings) go wrong.

Align diversification efforts with critical business goals. With more suppliers in the mix, medical device companies gain more flexibility, negotiating power, and resources they can leverage toward a range of outcomes.

For example, you might reduce costs by partnering with near-shore suppliers or bundling shipments with local partners. Or – reduce waste by optimizing inventory management or implementing better quality controls. Or – maybe you have big plans for a new device.

Like any other initiative, diversifying your supply chain starts with building a business case, getting buy-in from the C-suite, setting goals, and making strategic investments (this blog provides a brief overview of the entire process if you want more info).

Evaluate alternative sourcing options for critical device components. As you know, it takes a while to take care of all the verification requirements, quality testing, and approvals involved with bringing a  new device to market.

At the very earliest stages in the design process, you’ll want to start exploring new strategies for qualifying potential suppliers — and maybe even identifying some prospects that might be a good match.

One option is dual- or multi-sourcing. This approach sources the same component from multiple suppliers, building redundancies into key supply chain processes and reduces risks associated with single supplier failures.

Tap your network for vetted connections. A diverse network provides greater access to a range of experts, resources, and technologies that can help you improve product quality, innovate faster, and develop new products or services — with fewer regulatory hurdles.

Final Thoughts

In the face of regulatory requirements, demand variability, and short product life cycles, medical device companies have an awful lot on their plates.

With these supplier management strategies, these orgs can better prepare themselves to weather disruption, maintain product quality, and consistently meet patient needs.

As a veteran Microsoft partner, Velosio has deep expertise that spans the entire portfolio – from Dynamics 365 and Microsoft 365 to Azure and the Power Platform. Our distribution team works with small- to mid-sized manufacturers and distributors – including those operating in the medical device space.

Contact Velosio to learn how your org can improve supply chain resilience through supplier management.