Today’s chilling economic climate is accelerating the adoption of cost-cutting initiatives. Outsourcing component and sub-assembly manufacturing, as well as application development, has long been standard practice for high-tech and consumer manufacturing, and medical electronics manufacturers are now increasingly following suit.


What was once a vertically integrated approach – where all functions and controls are kept in-house by a medical OEM – has morphed into an outsourced manufacturing model to take advantage of a variety of benefits including service to global markets, accelerated cycle times, and the ability to focus internal efforts and investments on core competencies.


But this model has one major downside: An exposure when quality compromises occur, especially when the time to detect and respond is exponentially longer, magnifying the potential for damage.


The Pitfall to Outsourcing: Lost Quality

Outsourcing introduces two major challenges for medical electronics manufacturers: Higher risk in product quality issues and difficulty in maintaining FDA regulations.


In a world where lives depend on medical devices performing continuously at peak levels, quality gaps can be devastating, risking patient safety and the potential to eliminate savings gained from the move to lower-cost overseas manufacturing. Throw litigation into the mix and it’s a veritable brand crisis and financial nightmare.


The hard reality is that remote outsourced manufacturing locations often lack the accountability and oversight that can be tightly controlled in a vertically integrated model – as seen with high-publicity recalls on products and components originating from China.


Realizing the benefits of outsourcing requires close management of product quality and the collection and management of quality record data. The simple answer would be to keep manufacturing in-house altogether, but the potential upside of contract manufacturing is too great to ignore – and the need to remain competitive too pressing, especially in this time full of economic concerns.


Developing and managing a successful outsourced manufacturing operation is a complex endeavor. Much has been written on how to successfully outsource, but missing from the conversation has been the concept of holding outsourcing partners to the same level of scrutiny and expectations for integrity. Like many best-practices, there are general rules and guidelines which, when followed in very basic sense, can go a long way to moving the needle on managing product quality with manufacturing in low cost countries.


The ability to control quality does not need to be lost. It just means that new and innovative methods and tools that boost operational control and visibility into the manufacturing process must be adopted to ensure that products are being built with adequate quality, and at low cost.


Manufacturing Process Risks

Each production line has an inherent failure rate or process capability (Cpk). In process improvement efforts, the process capability index, or process capability ratio, is a statistical measure of process capability. It’s defined by the ability of a process to produce output within specified limits.


It is important to understand the exact factors that contribute to yield loss and product failures. These aspects are established by the various pieces of equipment in the production line, as well as operations personnel and the process they use. Since an OEM does not own most of the production equipment, it can be difficult to characterize the process capability and identify improvements.


The time lag between when product quality issues are discovered (often by customers), and the problems are identified and fixed, can be days to weeks. This creates product “escapes” which may lead to dreaded recalls or costly field repairs.


  • Key subsystems and components which are faulty, out of spec or are of poor quality, creating a huge cost burden in both material and labor costs and leading to poor yields and missed shipments.
  • Quality related failures discovered in the design phase, limited to material and development time since typically low numbers of products are built, rework is a normal part of the design process and products are not exposed to the general public
  • Failures and recalls of field installed products, which are hugely costly in light of shipping, material, labor costs and brand damage.


Visibility Into the Manufacturing Process

One of the ways OEM’s are lowering risk, and bridging accountability, in the move overseas lies with gathering, organizing, and analyzing manufacturing process and test data, across multiple outsourced locations. This enables them to identify controllable sources of variance that eliminate waste and improve production yields and product quality.


This data encompasses multiple functions of the manufacturing process – including component data from component manufacturers, manufacturing test step data, functional test data – all the way through to post-sales and repair center data.


This information is one of the most advanced forms of intelligence manufacturers can gain, paving the way for a real-time view of reliability and quality. Gathering, and integrating, it into all manufacturing processes – from design through assembly – streamlines production lines and provides a safety net, eliminating the major triggers for quality issues – such as failed components, process and mechanical design issues, common behavioral issues, and inadequate pass/fail rates.


A Better Way

Striking the quality-cost balance requires the convergence of people and technology. Manufacturers must engage, educate, and evolve outsourced production models to focus on maintaining high quality development.


Medical manufacturers are discovering that one of the best ways to reach this point lies with outsourcing product quality management functions to a technology-enabled services provider. This gives them the experienced personnel and real-time data collection and analysis where it matters most: In the core of an EMS providers’ remote operation.


Despite massive opportunities to capitalize on obtaining insight from test, process, and quality data, most manufacturers have no coherent access to this information. Large amounts of time and resources are spent developing custom solutions which are obsolete before even being deployed – as the data landscape is subject to frequently-changing business and product demands. Global manufacturing requirements provide additional challenges and more complex supply chain relationships, making remote management and monitoring of manufacturing even more essential.


Data collection and analysis should be implemented throughout the entire production lifecycle. This entails creating complete product genealogies from the end-to-end production process. By leveraging test, process, and quality data throughout the entire product lifecycle – from assembly to return and repair – insight into process optimizations, quality improvements, and cost reductions can be a reality.


Doing this on a global, outsourcing scale means enabling real-time two-way communication between the manufacturing floor and a central product quality management application. Quality, testing and production performance data from around the world can be remotely monitored which can speed troubleshooting, drastically reduce travel costs and employee downtime.


Technology-enabled services can deliver on the promise of improving test engineering and product quality management practices by providing expertise and insight into the product quality lifecycle on the manufacturing floor and from remote resource pools. Outsourcing these capabilities enables more efficient use of internal resources, brand owners to focus on their core strategies of developing new products and EMS providers to increase yields and reduce costs.


The optimum benefits of contract manufacturing are difficult to reach, but can be struck with an adequate strategy, revolved around quality management. The big key: Delicately considering how contract manufacturers are used across functions, and structuring the organization accordingly.


Chris Rehl is director of marketing at CIMTEK and may be contacted at 781-726-6227 or