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Implementing the Three Cs for a More Efficient Supply Chain

In today’s dynamic and disrupted orthopedic market, the adage ‘time is money’ couldn’t ring truer. As the industry races to keep pace with demand, every second counts—in product launches and for ongoing production. It’s not just the clock, however, that poses a challenge; it’s also the compounded supply chain complexity that can strain both timelines and financial resources.

As a result, many orthopedic manufacturers have focused heavily on bolstering production capacity, but this approach can come up short. True supply chain success requires taking a strategic approach built on the Three C’s of Supply Chain Success: coordination, capacity, and clarity. This is true whether you are undertaking product launch or ensuring ongoing legacy production.

Evaluating suppliers and partners against the three C’s can ensure that you accelerate time to market, reduce lead times, and drive both profitability and growth. In this article, we illustrate how OEMs have overcome the challenges of coordination, capacity, and clarity. We conclude with suggestions on how to drill down in evaluation to reduce variability in supplier performance and service delivery.

What are the three C’s of supply chain success?

Many OEMs, especially mid-tier, high-growth orthopedic firms, struggle with coordination, capacity, and clarity. Long lead times and the inability of existing suppliers and vendors to truly deliver inbound materials or service capacity can imperil product launch times or further snarl ongoing production. And when time is money, missed product launches or timelines that stretch weeks and months longer than anticipated affect both topline revenue and profitability.

OEMs confronting long lead times may be reluctant to replace an existing supplier for fear of starting at square one. Or they may not have fully evaluated a potential partner’s ability to deliver on the three C’s of supply chain success, which are:

• Coordination, or simplifying the coordination of the inbound supply chain, including components, materials, and contract manufacturing
• Capacity: understanding the current and future capacity demands of your supplier network and vendor partners, and ensuring they are aligned with your needs
• Clarity: enabling enhanced visibility and control over every step in the supply chain, ensuring that your entire supply chain is an agile ecosystem

Evaluating specifically against the three C’s can help OEMs make an informed decision regarding existing suppliers or new partners. Going beyond simple production capacity to truly understand capacity around engineering, supply chain management, procurement, and a future ability to deliver on service commitments tracking to growth can help OEMs ensure they have the right partner in place—and take a robust approach to supply chain success.

Building stronger supply chain coordination

Successful supply chain coordination entails fully managing the inbound supply chain, including components, materials, and contract manufacturers. Emergent problems, including labor and material shortages or lack of communication among vendors, can cause wrinkles and increase lead times.

At Millstone, we see firsthand how essential it is to tightly manage the entire inbound ecosystem. As an example, we worked with a smaller manufacturer that was acquired by a larger orthopedic OEM. The existing supply chain was extremely complex, with a network of many smaller contract manufacturers. This constellation drives up risk, as contract manufacturers can struggle to meet the compliance and volume requirements of large OEMs—and this is what happened after acquisition.

Our team worked to identify the supply chain and supplier network risks that had surfaced post-acquisition. Where necessary, we remediated the inbound supply chain to best-in-class suppliers, consolidating where possible to reduce the complexity in coordination and communication. The outcome was a more stable supply chain with reduced risk, which ultimately allowed for greater continuity of supply.

Ensuring robust supply chain capacity

Ensuring you have capacity in your supply chain is essential to success—not only for today, or for next month, but also to accommodate anticipated and even best-case growth. Failure to do so will have your firm swimming upstream against ever-longer lead times.

We have also seen this situation firsthand. Recently, we worked with an OEM on the launch of a robotic assisted surgery product. Once the product was launched, the OEM saw a rapid increase in demand, which had the potential to increase backorders.

Our team moved quickly and efficiently to validate other assets to increase internal capacity. We then worked with the OEM’s preferred contract manufacturer to align on the ideal batch size to decrease lead times and accelerate production. Finally, we created dedicated workstreams to enable just-in-time delivery to ensure delivery to the market.

Gaining critical supply chain clarity

Like all sectors, the medtech industry is grappling with historically high turnover from both layoffs and voluntary separations. This turnover creates knowledge gaps and also strains capacity for internal teams. As a result, launch milestones can slip and institutional knowledge is lost.

Millstone has been working with mid-tier and larger OEMs to ensure continuity and provide clarity into every aspect of production. In these engagements, we evaluate the existing Tier 2 supplier network to create visibility into supplier performance—and reduce variability. To further protect continuity, we also hedge by identifying potential Tier 3 suppliers. Every existing and potential supplier is evaluated against quality standards to reduce the risk of non-conformance, changes, and interruptions to raw material supply.

We then monitor performance through on-time delivery metrics, lead times, cost, and historical data to ensure full clarity and to protect production. Having true clarity into each aspect of the supply chain helps us be proactive and get ahead of emergent supply chain challenges.

Evaluating existing suppliers

Tightening up coordination, capacity, and clarity can give you more control over your supply chain. A word on capacity, though: while many OEMs focus heavily on production capacity, they should also understand total capacity of their vendors around engineering, supply chain management, and procurement to stay ahead of hiccups and future needs.

Here are some questions to ask to assess whether an existing supplier can deliver on your holistic needs—and help you understand whether you are making the best strategic choice in a partner:

• What are your current launch timelines?
• Are you seeing delays in product launch?
• If so, how are you resolving and reducing them?
• How many people are in your engineering department?
• What is your capacity for current and increased production capacity?
• How do you plan for increased capacity?
• Can you provide a reference that can speak to your ability to deliver against your launch commitments?

With the industry seeing final clean and sterile packaging lead times around 18 weeks, it’s essential to understand how any potential partner compares. At Millstone, we are proud that our production lead times are currently six weeks, well below the industry average. In addition, we are constantly working to ensure future capacity through tight coordination for product launches and legacy production. As a result, we have been able to provide an accelerated path to product launch this year for several new OEM customers who had struggled for more than 12 months to get to market.

Millstone offers post-manufacturing and aftermarket services to more than 50 customers, including some of the top 10 orthopedic companies in the world. We are constantly evolving our processes and services to help OEMs achieve sustainable success. We offer clean room packaging, medical device specific warehousing, finished goods distribution, loaner kit management, advanced inspection and testing, and reverse logistics services—all with an unparalleled focus on quality.

What could we help you do better? Learn more at https://millstonemedical.com.