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A Guide to Forming Strategic Partnerships to Gain a Competitive Edge

Tue, 07/03/2012 - 1:42pm
James Field

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Fierce competition, economic pressures and increasingly stringent regulatory requirements are motivating medical device manufacturers to uncover new ways to introduce products efficiently while remaining tightly focused on the innovations that drive success. At the same time, manufacturers want to cost-effectively extend the lifecycle of product lines to maximize return on investment.

Today’s challenges are perhaps unprecedented. But savvy OEMs are finding solutions through strategic partnerships designed to help them better manage product lifecycle planning and engineering, as well as anticipating and reacting faster to marketplace, regulatory and supply chain changes.

Managing the product life cycle is critical for medical device makers but innovation is what largely drives value and success. Medical device companies consider new product innovation to be their core competency. Traditionally the need for rapid, endless innovation and the critical need to protect intellectual property have combined to make manufacturers relatively slow to adopt outsourcing of R&D and manufacturing processes. The new business reality is pressing companies to explore new business models and forging strategic supply chain partnerships that deliver a powerful mix of lower costs, improved efficiency, wider access to new skills and resources, and easier entry to new markets.

OEMs can expect a strategic partner to deliver a strong customer focus, a clear understanding of their needs, customized services and solutions, supply chain expertise, and thought leadership on regulatory legislation.

Celestica has a strong history of strategic partnerships with companies in highly technical and regulated markets such as aerospace and defense. The advantages we have introduced there are equally applicable to the healthcare industry. Our experience with medical device makers has shown us how strategic partnerships can help OEMs in today’s medical device industry.

Focus on core competencies: We are seeing medical device OEMs drive ahead with their core competencies by relying on strategic partnerships to provide deep skills in non-core areas like design, including interfaces, motherboards, industrial design and mechanical design. An OEM partnership can also deliver crucial skills and support in factory-related and non-core portions of engineering, such as sub-system design, design analysis, process development, manufacturing test development and product qualification services.

Manage cost pressures through the product lifecycle: OEMs we have partnered with are gaining new advantages in this critical area, including the benefits of value engineering projects. The goal there is to drive costs out of products while balancing that process with a return-on-investment analysis weighed against the costs of a product re-qualification. By using design analysis and optimization tools early in the product life cycle, a partner can avoid costly field failures and design issues by integrating those tools into the design process. Celestica has proprietary design analysis tools such as Coresim that use a suite of internally developed artificial intelligence routines that have saved OEMs millions of dollars, including avoiding product recalls and field failures due to design issues.

Supply chain optimization: OEMs looking to optimize their supply chain can use partnerships to more effectively analyze product BOM (bill of materials) against lead time, continuity of supply, quality and RoHS (restriction of hazardous substances) compliance. OEMs can also realize design improvements to drive supply-chain optimization into the product from the earliest stages, while managing parts obsolescence throughout the product lifecycle.

Consumer products, for example, are driving dramatic changes in the footprint of the supply chain. Parts that were designed for 1-3 years in the consumer market are increasingly included on the BOMs for products designed for use in the healthcare market where expected life is anywhere from 5-10 yrs. This increased convergence of consumer devices proliferating themselves into the healthcare market can cause immense issues relating to materials obsolescence, product reliability and supply-chain compliance. Celestica is helping our OEM partners through BOM risk assessments, managing last-time buy materials and continually monitoring the sustainability of the supply chain.

Effective partnerships drive efficient solutions through value engineering that is designed to solve such challenges.
Navigate change: The need to navigate change is being seen on many fronts, from organizational and supply chain to regulatory and engineering. The right partnership can offer immense advantages. A strategic partner with a global footprint, for example, can provide guidance, expertise and access to new markets, as well as experience in right-sizing current factory footprints and operations. Partners can drive new efficiencies through LEAN and Six Sigma processes that will impact the bottom line significantly.

Regulatory compliance, environmental compliance and product reliability: OEMs can tap into partnerships for expertise and thought leadership in areas such as mixed metallurgy issues, RoHS reliability and ‘tin whisker’ studies. The FDA, for example, expects OEMs and electrical component manufacturers to adopt practices to assess and mitigate the risk of tin whisker-induced failure in products. OEMs with solid partners can keep abreast of such issues and effectively navigate required changes. On the regulatory front, of course, the medical device industry is currently grappling as well with pending changes to the FDA’s 510(k) process, changes that are forcing OEMs to rethink entirely how to operate on an altered landscape. Beyond the 510(k) changes, manufacturers are troubled by coming changes to the industry's IEC 60601-1 standard governing the safety and reliability of electro-medical equipment and systems. Plagued by uncertainty over both the 510(k) process and the IEC 60601-1 standard, many industry players will rely on strategic partners to reach a successful conclusion.

While partnerships can drive clear advantages, what goes into forming and managing a strategic partnership? Here are few guidelines based on our own experience:
Know your needs and objectives: Develop a set of explicit objectives, analyze your capabilities, understand your core skill sets and identify where each partner can add value. <Commit at the top levels of your organization: Convey the benefits and seek buy-in from all levels of the company, including top executives.

Manage partnerships toward desired outcomes: From the start, build a team that’s dedicated to managing the strategic partnership. Create mutual goals with your strategic partner and consider having the strategic partner involved in the development process as soon as possible to ensure product manufacturability.

Identify the right partners: This is considered fundamental to the success of strategic partnerships. For example, supply chain partners must have quality and process systems that are proven to meet requirements. Be sure your supplier has the right infrastructure and the right resources available. Seek outside partners who are considered “best-in-class” in delivering very specific areas of expertise.

Build a mutually beneficial relationship: A successful partnership is built on a common foundation of trust, aligned incentives, a commitment to investing in each other’s capabilities, joint management structures, and the contractual and operational flexibility to change direction.

James Field is a solutions engineer for Celestica, Inc. James collaborates with Celestica’s healthcare customers to find solutions to overcome today’s technical and business challenges – from new product introduction to analyzing legacy product processes to managing obsolescence James delivers solutions that balance cost, quality and time-to-market objectives. Trained as an electrical engineer, James has over 15 years of manufacturing test, Lean Six Sigma and solution development experience. Leveraging his expertise in test strategy and coverage analysis methodologies, James has traveled around the world to engage with OEM customers and Celestica's global engineering team. He has presented numerous technical papers. James conceived and developed a high-accuracy, high-precision real-time solder-joint monitoring system fundamental to Celestica's lead-free research and RoHS roadmap.

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