| Like companies across many industries, medical device | | | | learn whether the companies can comply with specific |
| manufacturers are increasingly turning to international | | | | regulations and what the quality of final products have |
| partnerships to find ways to exploit the efficiencies | | | | looked like. |
| that outsourcing offers. These companies are finding | | | | There are different ways to gather this information. |
| that successful and efficient outsourcing allows them | | | | Research firms can analyze information about |
| to allocate internal resources to projects more | | | | potential offshore companies, including their experience |
| strategically and prioritize tasks in their product | | | | and their track record of success in the device space, |
| pipelines. | | | | as well their ability to comply with regulations. Another |
| Outsourcing is nothing new. The term was first heard | | | | approach is simply to talk to medical device companies |
| in business circles in the 1980s. Offshore outsourcing | | | | that already outsource. Once this initial research is |
| traces its origins to the 1993 North American Free | | | | done, manufacturers should then conduct a careful |
| Trade Act (NAFTA). Economics historians will tell you | | | | analysis of the costs of outsourcing and re-evaluate |
| that outsourcing has been around as long as there has | | | | their options. |
| been trade. | | | | What Resources Are Available |
| Interest Increases | | | | Something else to consider is the potential partner's |
| Until recently, however, medical device makers have | | | | flexibility, resource optimization, and the value it can |
| not taken full advantage of offshore outsourcing. | | | | offer throughout the process, both short and long term. |
| Regulatory issues were a major stumbling block, and | | | | For instance, can the offshoring partner provide |
| companies were not confident that offshore workers | | | | resources during the testing phase and reallocate them |
| had the skills to become good partners. That is | | | | once their work is complete? |
| changing as these nations' workers develop skills and | | | | Like any partnership, establishing clear communication |
| gain the certifications necessary to meet regulatory | | | | is essential to improving efficiencies. For example, even |
| requirements. | | | | though speaking English would not appear to be a |
| A survey that Knowledge@Wharton conducted | | | | problem in India, where English is common, different |
| showed that most device companies now see great | | | | communication styles and other cultural issues can still |
| potential in outsourcing. "While a small number of | | | | cause problems. Saying "yes" to a task in United |
| device manufacturers and vendors have begun | | | | States means that the task is understood and will be |
| outsourcing, there is a large majority that sees potential | | | | completed. In India that means, "Yes, I will do my best, |
| in it," Wharton Business School professor Kaikat | | | | but I do not make any promises." |
| Chaudhuri said recently. "Over the next few years, we | | | | Anticipate Potential Conflicts |
| will see almost all companies in this space outsource." | | | | Potential conflicts need to be resolved in advance. It |
| Means to Save Costs, Reduce Time | | | | also is a good idea to arrange an on-site visit and have |
| With the United States market for medical devices | | | | a face-to-face conversation to establish lines of |
| approaching $100 billion, manufacturers constantly need | | | | communication. Resolving common cultural differences |
| to create improved and innovative products to keep | | | | and establishing open lines of communication are |
| up with the competition. But they also need to reduce | | | | crucial steps when offshoring, regardless of where the |
| costs and time to market. As a result they are | | | | partner resides. |
| beginning to send design, engineering and | | | | Other key factors include defining expectations, |
| manufacturing functions offshore. | | | | reviewing processes in a timely manner, and identifying |
| However, device companies need to be aware of | | | | contact persons in both companies. Product definitions, |
| potential risks and obstacles far in advance to avoid | | | | functionalities, technology, development costs, staffing, |
| costly mistakes. In addition to typical offshoring barriers | | | | and standards are all issues that need to be worked |
| such as distance, language, and communications, | | | | out throughout the process. Every detail should be |
| medical device companies should also account for | | | | mapped out before engaging the offshore partner in |
| economic and political stability in the countries where | | | | the project. |
| their partners reside, factors that can be adversely | | | | While technical expertise and track records of a |
| affected by fluctuating currencies, trade barriers and | | | | company's success in the device space are all crucial |
| regulatory and standardization processes. | | | | and significant, building the outsourcing relationship |
| Key Steps in Effective Outsourcing | | | | based on trust, knowledge, communication, and mutual |
| To determine the viability of an offshoring model, some | | | | respect are equally as important and can all contribute |
| key factors should be carefully evaluated: regulations, | | | | to a successful offshoring experience. However, the |
| accountability, cost structure, and resource optimization. | | | | quality of final product is the ultimate goal and should |
| Because the medical device industry is heavily | | | | be the No. 1 priority. Compromising that to reduce |
| regulated, manufacturers need to do their homework | | | | costs and time to market can lead to failure. |
| on a potential partners' background. They need to | | | | |