Why OTD Matters When Choosing a Medical Contract Manufacturer

This is the second in a three-part series on how to improve medical device on-time delivery performance.

medical device on-time deliveryYour customers constantly evaluate your medical device manufacturing performance by your on-time delivery (OTD) performance. 

One of the first questions we're asked when discussing a potential project is, "When can we have it?" OTD is critical to everyone's success. Does your promised delivery date match the actual delivery date? 

Efficient medical supply chain management improves medical device manufacturing on-time delivery performance.

If you’re under pressure to speed up delivery time, read on to find out how supply chain management can fuel your success. 

Whether manufacturing your own medical equipment or a partner’s, proper control processes, supply chain management and customer forecasting can all speed on-time delivery.

Drive on-time delivery through supply chain management

An experienced medical contract manufacturer has efficient supply chain management practices. We discussed some supply-chain time-saving techniques in a previous post on control processes. Not only do you need proper control processes to manage supply chain, but you need to ensure that your supply chain companies also have proper processes in place.

To improve OTD, you need fewer links in the supply chain, improved tracking, communication and collaboration.

Shorten the chain to success with medical device supply chain management 

According to Todd Traub’s Arkansas Business article, Wal-Mart Used Technology to Become Supply Chain Leader:

In the 1980s Wal-Mart began working directly with manufacturers to cut costs and more efficiently manage the supply chain. From 1993 to 2001, Wal-Mart grew from doing $1 billion in business a week to $1 billion every 36 hours, growth that was attributed as much to supply chain management as to customer service.

Sure, B2C Wal-Mart has a significantly different supply chain than B2B medical device manufacturers, but a lot of the principles are the same.

KMC Systems medical device parts replenishmentIn medical device manufacturing, this link-trimming process equates to the lean practice of setting up a feedback loop directly from the manufacturing floor to the supplier for parts replenishment and more.

Reducing the number of links in the supply chain allowed Wal-Mart to further save time, money and increase quality by reducing inventory, confusion and red tape.

When you set up communication with your supply chain directly from the manufacturing floor, you can implement the build-to-order lean manufacturing technique. Building to order reduces the amount of stored inventory, reduces failures and speeds correction times to reduce cost and improve on-time delivery.

KMC’s Assembly Manager, Dave Burns, says, “By building to order, KMC is able to react to failures in real time, and communicate and correct issues as they happen. Building to order allows KMC to meet the changing demands of customers in a dynamic marketplace while accurately and efficiently delivering complex products with optimal quality and accelerated time to market.”

Medical OTD through supply chain tracking

Tracking parts replenishment

The article says that Wal-Mart’s “supply chain, by tracking customer purchases and demand, allows consumers to effectively pull merchandise to stores rather than having the company push goods onto shelves.”

AKMC Systems 2-bin kanban systempply this same concept to medical device manufacturing by implementing a two-bin kanban system.

Using a two-bin kanban system shifts the medical device manufacturing environment from a wasteful push method to a lean pull method. Instead of stockpiling parts, assemblers reorder them directly from suppliers as needed by scanning the label on the empty parts bin, which speeds on-time delivery because there’s no waiting for new parts to come in and no shuffling replenishment tasks through a middleman.

Tracking parts in this way is possible through a robust medical manufacturing execution system (MES) with integrated quality management system (QMS) and enterprise resource planning (ERP) system.

Maintain and track pretty much everything supply-chain related through your MES to improve medical device on-time delivery performance.

Track supply chain in MES for OTD Success

Keep track of supplies and suppliers through a robust MES with built-in QMS and ERP. Some of the supply chain management capabilities of KMC’s MES include:

Supplier Approval System:

  • Used to manage the supplier approval process.

Supplier Rating System:

  • Used to develop a Supplier Rating based on the number of items received (Oracle transactions) and the number of items rejected via NCMR.

Receiving Inspection Part History:

  • System is used to log all Receiving Inspection activities associated with inbound parts.

Non-Conforming Material Report:

  • This system handles non-conforming material and includes all FDA required elements.

Corrective And Preventive Action:

  • Used to manage all Corrective and Preventive actions per FDA expectations.

Supplier Corrective Action Rreport:

  • Used to manage Supplier Corrective Actions.
  • Includes automated notification to the Supplier when responses are due or past due.

Customer Complaints:

  • Used to manage all customer complaints per FDA expectations.

KMC Senior Software Systems Engineer Doug Finner says that our ERP helps us get the right parts in on time.

“Scheduled/Automated data extractions from ERP/MES/QES provide intelligent and integrated snapshots of production, and help the buyer/planners assure we have the right quantity of parts on order and scheduled for delivery when they're needed.”

Doug Finner
Senior Software Systems Engineer
KMC Systems 

Finner explains that it’s all about coordinated activities. When updates to products are cut in by coordinating change through the ERP system in concert with the related changes to the assembly and test processes on the manufacturing floor, efficiency is the result. An electronic, integrated database-control methodology for implementing product updates is not only more efficient than the old-school paper method, but it can also result in higher first pass yields.

“Scheduled/Automated data extractions from ERP/MES/QES provide intelligent and integrated snapshots of production, and help the buyer/planners assure we have the right quantity of parts on order and scheduled for delivery when they're needed,” Finner said.

The built-in QMS helps KMC manage product quality. 

“This is where we can look for problem trends and head off problems before they shut down the production floor,” Finner continues, “Also, using an electronic Device History Record makes the documentation packet review process prior to shipping quicker, less cumbersome and less error prone.”

Communicate and collaborate with suppliers

Without proper communication and collaboration, nothing gets done; or worse, the wrong stuff gets done.

DFM: Speak the same language as your suppliers

Avoid confusion over parts, materials, processes, cost and more when you come to the table prepared with the same knowledge that your suppliers have.

KMC’s design-for-manufacturability (DFM) software, which reduces cost as well as speeds on-time delivery, helps facilitate discussion with suppliers.

As stated in our DFM post, “Our manufactured parts suppliers are open-minded about this new approach to controlling COGS [Cost of Goods Sold]. They understand that open and honest discussion to collaboratively find the best solution for our customers benefits all. It does require effort, but investing in relationships to establish a strong supply chain is key to maintaining control and reducing COGS.”

You have to share to get the lion’s share of medical business

Keep customers and suppliers informed.

KMC’s MES safely and securely facilitates communication with customer when we’re in the supplier role:

KMC Customer Portal

  • Production and Quality Databases are replicated to a server.
  • Replication frequency can be set so internal and external data are never more than a few minutes out of sync.
  • Access to the server dbs is via an authenticated https.

Communication is two-way. You can send a message, but if that message is not received and confirmed, communication has not occurred.

Make sure your supply chain does all of this, too!

In the last OTD post, KMC’s Senior Supplier Quality Engineer Christine Long shared her method for ensuring that our suppliers have control processes in place.

Include shortened supply chain, supply tracking and communication in the requirements during the supplier screening process, which is detailed in our post on maintaining quality in your supply chain.

Your suppliers should be open to these improvements to optimize their own medical device on-time delivery performance and yours.

BOTTOM LINE: On-time delivery delights customers!

Achieve happy customers, who even help generate new business, through outstanding OTD performance when you align proper control processes, supply chain management and customer forecasting.

You now know how to shorten the supply chain, track supplies and communicate with suppliers to deliver medical products on time – without compromising quality or breaking the budget.

Stay tuned for the third in our series on how customer forecasting improves medical device on-time delivery performance.

Get the big picture: Download the total product lifecycle management chart. 

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Topics: medical device lean manufacturing, medical device manufacturing, medical device supply chain management, medical device on-time delivery performance, OTD, medical supply chain