July 11, 2023

8 Tips for Managing Costs in Medical Device Contract Manufacturing

In medical device contract manufacturing, keeping a keen eye on cost management is paramount. It's an intricate landscape that blends technological innovation with regulatory complexities. This dynamic sector often necessitates strategic approaches to keep manufacturing costs under control without compromising the quality of the medical devices.

Whether you're an established entity or an emerging player in the medical device field, you need cost-effective, efficient methodologies that also uphold stringent regulatory standards. Read on for expert tips on how to navigate the cost-intensive maze of medical device contract manufacturing.

1. Establish Clear Cost Objectives

You should establish clear cost objectives before engaging in a contract manufacturing partnership. Start by determining the desired budget and identifying the key cost drivers for your medical device production. Also, conduct a comprehensive analysis of the production process and identify the critical areas for improvement in your device.

Setting realistic and distinct cost objectives can communicate your expectations to the contract manufacturer and help them work towards achieving them. These goals and objectives should be specific, achievable, measurable, relevant, and time-bound.

2. Choose the Right Contract Manufacturer

Choosing a reliable medical device contract manufacturer (CM) is crucial for cost management. The procedure can be intricate, given the numerous facets that demand consideration. Medical device contract producers are indispensable for original equipment manufacturers (OEMs).

You should choose a manufacturer specializing in medical device production. This manufacturer should also have a track record of delivering quality products on time, at a competitive price. 

In addition, it is essential to conduct thorough research, request references, and evaluate their capabilities and cost structure. A suitable contract manufacturer can manage and control overall production cost-effectively.

Here are some qualities to consider when choosing a medical device contract manufacturer:

  • High-quality medical manufacturing credentials, such as ISO 13485
  • The company's geographical location and ability to manufacture in a low-cost country
  • An experienced medical contract manufacturer that can be a trusted partner

3. Create a Product Requirement Document for the Manufacturer

A product requirements document (PRD) provides detailed specifications and operational features of your device. By crafting this document meticulously, you can significantly enhance your medical contract manufacturer's comprehension of the required device.

Some of the information to include in a PRD are as follows:

  • Product specification
  • Bill of materials
  • Production timeline
  • Packaging design
  • Labeling and instructions for use
  • Suppliers for the parts
  • Manufacturing procedures
  • Inspection Procedures
  • Testing Procedures

4. Monitor and Evaluate the Performance

It's prudent to monitor and evaluate the performance of a CM throughout the project. You should also maintain clear and frequent communication with the contract manufacturer. It's also essential to ensure you regularly enquire about cost objectives and other concerns from the manufacturer.

Moreover, frequent audits, inspections, and feedback reviews are necessary for contract manufacturers to meet your specified standards and expectations. Establishing a collaborative partnership with these manufacturers can help pinpoint strategies that reduce costs. This dual approach fosters an atmosphere of cooperation and aids in swiftly identifying and resolving any emerging issues or challenges.

Regularly conducting design evaluations assists in diligently identifying and rectifying any neglect of human factors throughout the development stage. It's crucial to underscore that modifications to the device's design at an advanced project stage could potentially affect your budget.

5. Implementing Design for Manufacture (DFM) Principles

Involving a contract manufacturer in the early medical device product design stages can significantly reduce costs. Their active engagement can refine the design blueprints, entry points, and material flow, streamlining the process and making it more cost-efficient.

A partnership with a contract manufacturer bolsters precision and reduces the occurrence of defects and waste, directly reducing production costs. Establishing a design that is inherently easy to manufacture is a long-term strategy for lowering costs.

Equally, adhering to design manufacturing principles can elevate efficiency and cut costs. You can also enhance and automate quality control measures to improve the quality of the medical device.

Maintaining a culture of continuous improvement and regular review processes is prudent. These activities can pinpoint areas where cost-saving measures can be implemented in medical device contract manufacturing. By following these guidelines, a balance between high-quality production and cost-effective strategies can be achieved.

6. Engage in the Material Selection

Substandard components and elements have the potential to result in inferior devices. Such deficient medical devices could, in turn, jeopardize a patient's life. Regulatory measures have instituted a quality management system (QMS) to ensure safety and quality, necessitating supplier management. 

This element guarantees the device's success and profoundly influences its cost-effectiveness and functional utility. Specific resources may serve as eco-friendly substitutes, given the extensive array of engineering-grade substances readily accessible in the marketplace. 

Active management of suppliers is essential for averting product malfunction. It also contributes to excellent components that align with your precise requirements.

7. Manage the Supply Chain

Effective manufacturing in the medical device industry heavily relies on sound supply chain management. It is vital to scrutinize any potential supply chain risks before collaborating with a contract manufacturer.

The best way to do this is by establishing clear communication with manufacturers to merge suppliers. Consequently, working with the contract manufacturer can optimize the supply chain and reduce lead times.

When selecting a prospective supply chain, it's essential to consider a balance of components. There may be instances where expensive engineering-grade components, used exclusively in low-life cycle scenarios, can be replaced with more economical alternatives. 

A case in point includes components with clips discarded after a single use. It is worth contemplating using lower-cost materials in these specific scenarios. This strategy can reduce overall costs without compromising the end product's functionality or quality.

Some of the ways you can manage the supply chain are:

  • Pre-planning and inventory management
  • Containing status classification of components
  • Ensuring transparency in the supply chain
  • Ensuring strict compliance with process and product regulatory norms

8. Conduct Regular Cost Analysis

A regular cost analysis can establish an estimate on budget management of the medical device components. It also helps evaluate the cost of manufacturing medical device parts and components.

You also should monitor the expenditure of specific cost drivers such as materials, labor, and overhead expenses. Also, compare them against the established cost objectives. This will help in tracking the performance and identify cost-saving opportunities.

Final Thought

Ensuring the efficient handling of medical device contract manufacturing costs necessitates meticulous strategizing, mutual collaboration, and continuous reassessment. You can also harness control over these costs by incorporating design principles for manufacture, defining precise cost goals, and choosing a suitable contract manufacturer.

Managing the supply chain, participating in material selection, and consistently tracking and evaluating performance are essential strategies. These steps can significantly enhance your medical device production operations.

Cost management is a continuous process that requires partnership to achieve optimal results. Therefore, working with a competent medical device contract manufacturer can help you achieve those goals at your optimal budget.

At Sanbor Medical, we've been in the medical contract manufacturing business for more than 30 years. We aim to help medical device OEMs advance their inventions by providing quality devices at a competitive cost. Connect with a team member at Sanbor Medical today and access our manufacturing and cost-reduction services.

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