By Sean Fenske, Editor-in-Chief

For more than four years now, the topic of conversation has been around the supply chain. While you may not be discussing it anymore with your neighbors regarding shortages at the food store, for medtech professionals, it’s still a critical concern. In addition, the approach to managing a manufacturer’s supply chain is changing. Slimming down is not necessarily the flavor of the month for companies.

Instead, ensuring a system is in place to avoid interruption of supply has gained favor. This is especially true for critical components or those more challenging to source. Recent events have led to sourcing professionals to rethink their supply chain strategies. Regional sourcing, dual sourcing, and supply chain resiliency have all gained their attention.

Fortunately, ODT was joined by John Nino, CEO of Life Science Outsourcing (LSO), who addressed a number of questions around today’s medtech supply chain, how to ensure success, and what best practices will help avoid challenges. In the following Q&A, Nino speaks to the importance of diversification and what to do to help implement this solution successfully.

Sean Fenske: When someone mentions “a resilient supply chain,” what does that mean to you?

John Nino: A resilient supply chain can adapt and respond to disruptions without compromising the flow of materials or the quality of products. For our orthopedic medical device customers, this means having a reliable network of suppliers that can quickly address issues such as delays, shortages, or unexpected demands. It involves strategic planning, redundancy, and flexibility to ensure continuous production and supply of critical components, even in the face of unforeseen challenges.

A resilient supply chain in the orthopedic sector fundamentally relies on supplier diversification. By working with a variety of suppliers across different regions, we can reduce dependency on any single source and mitigate risks associated with local disruptions.

Supplier diversification ensures operations remain stable despite geopolitical shifts, natural disasters, or technological failures. With multiple suppliers, we can manage shortages and continue production without significant delays. Strong relationships with these suppliers are essential for effective communication and rapid response to any issues that arise.

Advanced technologies and data analytics enhance our ability to manage a diverse supplier network. Real-time tracking and monitoring systems provide better visibility, allowing us to identify and address potential bottlenecks promptly. This proactive approach helps maintain the smooth flow of materials and components necessary for orthopedic device manufacturing.

In the orthopedic device industry, maintaining product sterility and safety is paramount. Our diversified supply chain must adhere to stringent regulatory standards, involving regular audits and robust quality control processes. Ensuring compliance across a varied supplier base requires meticulous coordination and oversight.

Although supplier diversification might seem like a familiar topic, its importance remains critical. Recent supply chain issues in medtech, such as material shortages and logistical challenges, have underscored the vulnerabilities of relying on limited sources. Therefore, continuously reinforcing our supplier diversification strategies is essential.

Ultimately, a resilient supply chain built on diversified suppliers balances flexibility, reliability, and compliance. This approach ensures we consistently meet the needs of our clients and maintain the highest standards of quality and safety in our orthopedic products.

During the pandemic, we leveraged our vertical integration capabilities—specifically our pre-validated, off-the-shelf packaging trays and pouches—to protect our orthopedic OEM customers’ supply chains. This strategic move allowed us to maintain supply chain integrity and ensure continuous production and delivery of essential components, demonstrating the strength and resilience of our diversified supply chain.

Fenske: Why is it important to diversify your suppliers?

Nino: Diversifying suppliers is crucial for mitigating risks and ensuring continuity. Relying on a single supplier for key components can create a bottleneck, where any disruption—whether due to natural disasters, geopolitical events, or other crises—can halt production. By having multiple suppliers, companies can spread risk, negotiate better terms, and foster innovation through competition. This strategy ensures a steady supply of high-quality components, which is essential for maintaining the stringent standards required in the orthopedic medical device industry.

Fenske: Is it necessary to diversify suppliers for every component/sub-assembly in a device?

Nino: While it might not be practical to diversify every single component, it is essential to focus on critical and high-risk items. Components that are complex, have long lead times, or are sourced from regions prone to disruptions should have multiple suppliers. For less critical items, a thorough assessment should be conducted to determine the potential impact of supply chain disruptions and the feasibility of diversification. Strategic prioritization ensures resources are effectively allocated to where they can have the most significant impact on supply chain resilience.

Fenske: What do you do if a component comes from a specialized supplier for which finding a second source is challenging?

Nino: In cases where a component comes from a highly specialized supplier, collaboration and partnership become key. We work closely with such suppliers to ensure they have robust contingency plans and risk management strategies. Additionally, we invest in qualifying alternative materials or technologies that can serve as substitutes. Building strong relationships and investing in joint development efforts can also help in creating more flexibility and options over time.

Fenske: Pre-pandemic, many companies were seeking to reduce the number of suppliers with which they were dealing. Do you have suggestions or best practices as companies expand that number again?

Nino: As companies revisit their supplier strategies, it’s important to balance efficiency with resilience. One best practice is to categorize suppliers based on their criticality and risk profile. Establish clear criteria for selecting and evaluating new suppliers, focusing on their reliability, quality standards, and ability to scale. Leveraging technology for better supplier management and communication can streamline interactions and reduce the complexity of dealing with multiple suppliers. Additionally, fostering collaborative relationships and open communication with suppliers can help in achieving a resilient and responsive supply chain.

Fenske: Are companies seeking assistance with managing their supply chains to help when diversifying suppliers? Is this an outsourced service some suppliers are offering?

Nino: Yes, many companies are looking for external expertise to manage their supply chains, especially when it comes to diversifying suppliers. Outsourced supply chain management services can offer specialized knowledge, resources, and tools to identify and qualify new suppliers, manage risks, and ensure compliance with industry standards. These services can also provide advanced analytics and forecasting to optimize inventory and production schedules, ultimately enhancing the overall efficiency and resilience of the supply chain.

We are servicing more and more customers in a “turn-key” environment, which unburdens them from procurement by leveraging our advanced ERP systems and comprehensive services. This approach allows our clients to focus on their core competencies while we handle the complexities of supply chain management, ensuring a seamless and efficient process from procurement to delivery.

Fenske: Do you have any additional comments you’d like to share based on any of the topics we discussed or something you’d like to tell orthopedic device manufacturers?

Nino: At LSO, we pride ourselves on being a reliable partner that understands the unique challenges of the orthopedic medical device industry. Our comprehensive approach to supply chain management, coupled with our commitment to quality and innovation, ensures our clients can focus on what they do best—developing and delivering life-changing medical devices. We encourage orthopedic device manufacturers to think strategically about their supply chains and leverage our expertise to promote and enable resiliency, efficiency, and innovation.

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