By Sean Fenske, Editor-in-Chief

Manufacturing orthopedic devices is no easy task. As such, finding ways to ease the burden involved is something every company wants to do. One method that’s grown over the last twenty years is involving a manufacturing partner. This trend has continued to evolve with more portions of the development and manufacturing lifecycle being outsourced to these partners.

More recently, the orthopedic OEMs collaborating with these service providers are seeking to work with fewer of them. As a result, they are identifying organizations that can do more of the supply chain in-house. Vertically integrated firms provide an array of benefits that orthopedic device OEMs find attractive while also addressing their interest in consolidating partners.

In the following Q&A with Greg Neher, Director of Business Development at Precision Medical Technologies, we look at why vertical integration is a valuable asset to find in a supply partner. Neher also highlights the forces driving the industry to seek out this attribute, the differences a full-service partner presents, and the advantages that may be realized from working with such a contract manufacturer.

Sean Fenske: What is a vertically integrated supply partner?

Greg Neher: A vertically integrated supply partner is a manufacturing organization that controls all stages of the product lifecycle from one purchase order rather than relying on a network of disconnected subcontractors to complete a project. In the medical device and orthopedic space, this typically includes capabilities such as upfront design collaboration, engineering support, machining, finishing, coating, assembly, cleaning, and packaging.

The defining characteristic is not simply having multiple processes under one roof; it is the ability to manage product realization from concept through finished, packaged product while maintaining unified quality systems, traceability, and program ownership. The OEM interfaces with one contract manufacturing partner rather than managing multiple vendors.

Fenske: What forces are driving medical device OEMs to seek out vertically integrated partners?

Neher: Several industry dynamics are accelerating this shift; the first is supply chain risk and resiliency. OEMs experienced significant disruption during recent global supply chain instability. Managing five or six separate suppliers increases the possibility of timeline delays, communication issues, and variability in quality and pricing.

Another is compressed development timelines. Orthopedic innovation cycles continue to shorten. OEMs are under pressure to bring new products to market faster while maintaining regulatory compliance. Having one contract manufacturer who can perform all operations in-house reduces transit and queue times to get these products to the field quicker.

I also have to mention cost and operational efficiency. Vendor consolidation reduces administrative overhead, logistics costs, and redundant quality audits.

In addition, there is regulatory and quality expectations. Traceability and documentation requirements continue to increase. A single integrated quality system simplifies validation, change control, and documentation management.

Finally, the last driver I’d include would be engineering collaboration. OEMs increasingly value manufacturing input earlier in the design process to avoid downstream manufacturability issues, which often require print changes, forcing more work on already constrained OEM product development resources.

Fenske: Many companies refer to themselves as vertically integrated but lack key steps like design or packaging. What’s the difference with a full-service vertically integrated company like Precision Medical Technologies?

Neher: Many suppliers describe themselves as vertically integrated because they perform multiple manufacturing processes. However, true vertical integration extends beyond machining and finishing. We have learned from experience that bringing these added capabilities to our Precision Medical portfolio has greatly improved our key performance indicators of quality, cost, and on-time delivery.

A full-service partner like Precision Medical integrates:

• Early-stage engineering and design-for-manufacturability input
• Precision machining and complex manufacturing
• Surface treatments and coatings (such as DLC [diamond-like carbon] and TiN [titanium nitride] coating, where applicable)
• Secondary operations and assembly
• Cleaning, packaging, and preparation for sterilization
• Custom and off-the-shelf silicon handles
• Unified quality and regulatory documentation across all processes

The difference is continuity of ownership. The project does not transition between independent companies with separate quality systems, timelines, and priorities. Instead, the product moves through a controlled internal workflow where engineering, operations, and quality teams operate within a single system. This reduces handoff risk and improves consistency from prototype through production scale. When relying on outside vendors or suppliers, our lead time is dependent on their performance and capacity. Our goal is to control our lead times internally and ensure there are no disruptions to our promised timelines.

Fenske: Speaking of those timelines, how does working with a vertically integrated partner improve them? How and why is time to market optimized?

Neher: Time to market improves primarily through the elimination of process handoffs, concurrent engineering process, improved visibility to production timelines, and reduced communication delays. In a fragmented supply chain, each supplier operates sequentially. Parts move from machining to finishing to coating to packaging, often waiting in queues between vendors.

A vertically integrated partner can:

• Conduct concurrent engineering across departments
• Identify manufacturability risks early
• Reduce transportation and vendor queue times
• Streamline validation and documentation
• Implement design changes quickly without restarting external workflows

Since engineering, manufacturing, and quality teams operate together, decisions occur faster and corrective actions are implemented immediately. This shortens both engineering cycles and production timelines.

Fenske: Does a vertically integrated manufacturer handle a project’s supply chain as well? Is this typical or based on the specific partner?

Neher: This depends on the OEM partner, but in our ideal vertically integrated model, supply chain management becomes part of the value proposition provided by Precision Medical.

At Precision Medical, supply chain involvement often includes:

• Raw material sourcing and qualification
• Supplier management for specialized processes or materials
• Coordination and validation of outside services when required
• Risk mitigation through dual sourcing or stocking strategies

OEMs benefit because supplier management is consolidated under a single accountable entity. However, the level of supply chain ownership is typically defined collaboratively based on the OEM’s internal capabilities and preferences. Our goal is to always make the job of the OEM’s Supply Chain team as easy as possible.

Fenske: More medical device OEMs are moving risk to their supply chain. How is this handled by a vertically integrated partner? What benefits can be realized?

Neher: OEMs are increasingly asking suppliers to assume responsibility for schedule adherence, manufacturability, and quality performance. A vertically integrated partner is better positioned to absorb this responsibility because the critical processes are internally controlled.

Risk is managed through:

• Early engineering engagement and DFM analysis
• Integrated quality systems across all manufacturing stages
• Process validation and controlled change management
• Real-time communication between departments
• Reduced dependency on external suppliers

The benefits to OEMs include improved predictability, fewer supply disruptions, reduced internal project management burden, and clearer accountability. Instead of managing multiple points of failure, the OEM works with one partner responsible for the project’s performance.

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?

Neher: Orthopedic device manufacturers are operating in an environment where speed, innovation, and supply chain reliability must coexist. The traditional model of managing multiple specialized vendors is increasingly difficult to sustain as regulatory and pricing pressures increase.

A vertically integrated contract manufacturing partner should not simply be viewed as a vendor consolidation strategy, but as an extension of the OEM’s engineering and operations team. The most successful partnerships occur when manufacturing expertise is incorporated early, allowing design intent, manufacturability, and cost objectives to align before production begins.

From the perspective of Precision Medical Technologies, the goal is not just to manufacture components, but to help OEMs reduce complexity, improve scalability, and bring products to market quicker with greater confidence and consistency.

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