This is the third in a three-part series on how to improve medical device on-time delivery performance.
Medical contract manufacturers: reduce cost and improve on-time delivery metrics by using production-planning tools with long-term forecasting and lean manufacturing methods.
So where do these long term forecasts come from? OEMs that have established product portfolios can rely on their sales and marketing teams to provide historical demand data adjusted for market conditions to create a long-term demand forecast. When new products are introduced, the market forecast taken from the business case analysis is the usual baseline. Forecasts to support the repair and maintenance of mature products in the field provide the opportunity to kit scheduled preventative maintenance materials as a single line item, minimizing the ordering and tracking efforts of the OEM field service group.
Some may argue that in today’s lean medical manufacturing environment, goods should only be delivered after a customer order: a pull system. However, keeping with the principles of lean to maximize customer value while minimizing waste, it is important to remain open-minded to the benefits of a hybrid system.
The one constant in life and in medical contract manufacturing is change. Obviously, the manufacture of a mature product with no feature or fabrication changes and a consistent order requirement month-over-month is utopia. But, it’s just that: utopia. So, it’s important to have the right mix of flexibility in a manufacturing system. This is where pairing supply chain production planning tools like Enterprise Resource Planning (ERP) and lean manufacturing kanban processes can lead to better control of material flow, which is key for improving on-time delivery.
From a high-level ERP systems standpoint, the ability to forecast a build rate for an extended period allows supply chain management to negotiate long-term agreements for the best pricing. Coupling a lean two-bin kanban direct-order system allows the manufacturing floor to pull the material as needed, eliminating unnecessary steps and lag times in the ordering process.
A long-term agreement with suppliers based on a forecast combined with kanban systems to trigger replenishment orders minimizes safety stock. This technique balances the risks of high inventory carrying costs vs. a material-stock-out stoppage.
Watch this short video to hear Ed English, KMC Systems Director of Supply Chain, describe the benefits of a kanban direct-order system.
When selecting a medical contract manufacturer, ask them to demonstrate the use of lean manufacturing systems needed to realize cost efficiencies and control product quality, as well as the production planning tools, processes and people used to manage change … all with the idea of creating more value for the customer with fewer resources.
Use production-planning tools with long-term forecasting and lean manufacturing methods to reduce medical instrument manufacturing cost and to improve on-time delivery metrics.