When choosing a supply chain partner for your medical device, price must always be a consideration. A consideration that is nuanced and long-term.
In management practices (and dare we say in life), immediate gratification bias occurs when we choose an outcome based on the immediate positive reward. Price is one of the easiest culprits of this behavior, and can blind good manufacturing operations managers from seeing the long-term effects of a short term, price-driven decision.
If there is a materials provider that you would prefer to work with, but their prices are higher than you are currently able to provide, it’s time to have a transparent conversation with them. Will they give you tiered price breaks? It may mean higher cost up front, but in the long run, your costs could nearly match the lower quality partner you were originally considering.
If a potential partner’s tiered price breaks still don’t make up the cost differential, can they replace multiple components at one site? This could be a way to reduce their cost on one assembly and streamline your component assembly. Component consolidation also reduces risk as you have fewer suppliers to manage, reducing the likelihood of incomplete or late shipments.
Discuss with all potential suppliers, openly and candidly, their record of scalability. Are they aligned and able to meet your projections? Are they on the approved vendor list of major OEM’s? You might not plan to sell to a major OEM, but you increase your chances of viability and success by aligning yourself with the major players, and those who have shown repeatable success.
Ultimately, are you confident in the supplier’s ability to scale into commercial manufacturing without interrupting delivery to your customers and their patients?
