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Concurrent Engineering & Outsourcing: Ingredients for Success

Mon, 11/10/2008 - 6:52am
Stephen C. Cooper
Outsourcing using concurrent engineering practices provides the hands-on approach for a company that enables it to gain the most in efficiencies from manufacturing. It can be used by virtually any company of any size and applied to any medical device, product, or component. This article reviews the advantages of this strategy and illustrates it with brief, real-world case histories.

Stephen C. Cooper is a New York-based business writer, having concentrated on medical device-related topics for more than 20 years.

Today, outsourcing can be a prudent business practice for any manufacturer as it can reduce costs and free-up capital to explore and develop new products, keeping a company vibrant and profitable. The benefits for any medical product or medical component manufacturer can be highly favorable for current or ‘on-the-drafting board’ items. Further, the use of concurrent engineering methods adds to the value of outsourcing because the design engineer can play an integral role in the process.

The traditional, textbook definition of concurrent engineering is to develop products in parallel. The same concept and process can be applied to existing products once a company has approved the mission to review products for manufacturing outside the family. This business strategy can be applied to nearly each and every product.

Following the steps of concurrent engineering practices can speed up the process and eliminate cumbersome and unnecessary tasks, while actually making it possible to do more with less.

The key area is for the design engineer to bring in the outsourcing firm as soon as possible and work together to evaluate products for outsourcing; then, create the plan to move the product overseas.

According to Frank Pellegrino, vice president for Smart Sourcing Inc. (SSI), a New York-based outsourcing firm that enables clients to reduce the cost of product manufacturing, “The way to reduce the timeline and streamline the process is to work within the concurrent engineering framework. It’s important that the internal engineer and the outsourcing firm work together at the beginning. This enables a product, a series of products, or components to be identified, quickly evaluated, and the ones selected that will best benefit from being made elsewhere.”

Even products moving on an assembly line can recieve personal quality control attention in China. Smart Sourcing enables clients to reduce the cost of product manufacturing through its proprietary network of facilities in China. Savings can range from 30% up to 80% if the product is labor intensive. (Photo: SSI)
“The reason for this is simple,” he explained. “The design engineer knows the complexities of the product and the outsourcing person knows the capabilities of his overseas facilities. They work in a symbiosis state . . . two different disciplines coming together to form a very advantageous partnership.”

Pellegrino’s company has four divisions, each handling specific manufacturing areas in China—plastics, metals, electronics, and medical—for U.S. firms. Founded in 1999, Smart Sourcing was selected in 2006 and in 2007 as one of the Top 100 outsourcing providers by The International Association of Outsourcing Professionals, a global membership-based organization.

According to Smart Sourcing’s Pellegrino, the products that prosper most are ones that are labor-intensive and have reached maturity in the product lifecycle.

Burton Medical is an excellent example. A provider of high quality medical lighting for healthcare clients, it was fighting competition from lower-quality, lower-priced products, especially for lights used in a physician’s office or surgical areas. SSI was able to upgrade the material, provide the workmanship Burton is known for, and produce the product at a lower cost. This stopped the competition cold.

The key is that moving to the proper, qualified outsourcing program maintained Burton’s stringent UL and IEC standards. Burton is ISO 13485 certified, registered with the FDA, and is licensed as a medical device manufacturer. Burton’s lights are certified for medical use and perform to the strict regulatory requirements of different regions around the world.

Outsourcing can also solve a problem such as providing relief to a product line stable that is overflowing with too many products.

Smart Sourcing executives review products such as the Yankhauer suction instrument that their new medical division will be able to make in China to reduce costs for U.S. manufacturers. Pictured from left to right: David Hale, President; Bob Tilton, Vice President of Electronics; and Brian Strebel, Vice President of Marketing. (Photo: SSI)
Allen Field Company, a manufacturer of proprietary and custom fittings for the packaging, woodworking, and textile industries, found that delegating production to an overseas resource lowered costs and enabled its business to expand by adding to and diversifying its product line.

“We needed full-time support because of the large number of products we offer. The only way we were able to succeed is because we were assigned a dedicated, U.S.-based project engineer to help us,” explained Robert Ahearn, vice president of sales and marketing for Allen Field. “Outsourcing to China gave us a competitive edge in price and freed up internal resources so we were able to focus more on sales, marketing, and new product development.”

While the standard-bearer products of a company are usually the quickest to evaluate and turn over to an outsourcing firm, new products, even from small companies, can also benefit.

The Labor ‘Lert contraction timer required product design, electronic engineering, manufacturing, and packaging which was supplied by Smart Sourcing.

The compact, hand-held device tracks labor contractions with the press of a button. Functions include the contraction timer that measures length, frequency, and the averages of up to six consecutive contractions. Additional features include a due date countdown for the main display, date, time, and a convenient lanyard for wearing.

Patricia Conley, the owner of the firm, said, “We found Smart Sourcing and within eight weeks, we had a working prototype.”

Outsourcing projects that are labor-intensive such as delicately removing burrs from plastic parts reduce costs for U.S. manufacturers. (Photo: SSI)
“For us, it was a turnkey operation. We gave everything we had to Smart Sourcing and they were able to do it better. From the packaging clamshell, the insert with art, to the point-of-purchase display that holds 12 units, we were able to get all of this redesigned to work more efficiently. Now with Smart Sourcing, we’re dealing with just one company and getting the exact product we wanted, on time, and for the agreed to price.”

Dave Hale, president of SSI and his staff see the biggest error companies make is that with familiarity comes a false sense of security. He advises whoever is in charge of the project at the manufacturing company to be “ever vigilant.”

“That’s when you get recalls, when the reins are loosened,” Hale explained. “All is fine in the beginning. Products are delivered on time and within spec. The U.S. company is saving money and growing because it smartly moved labor-intensive manufacturing to a company in China. But then they become overconfident, and lose track of the products. Maybe some key people have moved. Maybe the product is actually being made in a different factory. You have to have a presence. It’s the only way to protect your assets. What we call PYA.”

With more than 80 pre-qualified vendors throughout China, and SSI-staffed regional offices in Shanghai and Ningbo, Smart Sourcing provides a hands-on-approach, unlike commonly found brokers who recieve a commission from the factory. (Photo: SSI)
“Outsourcing is the practical way to grow a business without any downside risk—as long as you PYA.”

The process for identifying and qualifying an outsourcing firm while protecting patents and product reputation can be broken down into six check points.

“We know from our clients that there is a strong concern for all products coming out of China. Matter of fact, a recent Harris Interactive poll found that a negative attitude extends to all products being made in China. We also know that many recalls are due to a design problem or a manufacturing error. This is all because no one is watching the store.

“Smart Sourcing’s solution is to have more than 80 pre-qualified vendors throughout China, and SSI-staffed regional offices in Shanghai and Ningbo, to provide a true hands-on approach, unlike brokers who receive a commission from the factory,” Hale explained.

“Interlacing concurrent engineering practices with the proper outsourcing firm that has the experience, knowledge, planning, and committed resources is the formula for success,” Hale summarized.

Online
For additional information on the technologies and products discussed in this article, see MDT online at www.mdtmag.com and the following websites:

www.smart-sourcing.com
www.burtonmedical.com
www.allenfield.com
www.laborlert.com


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