Life sciences OEMs can power innovation and achieve competitive advantage by selecting a strategic supplier of precision fluidics pumps and integrated fluidics platforms. Norgren’s Rob Howard explains how to implement a process for selecting the right supplier for productive co-development.
The dynamic market forces and relative uncertainty across today’s global business environment have placed ever-greater demands upon procurement and product development managers and engineers in diagnostic instrumentation OEMs when selecting strategic suppliers. The initial and impressive cost savings from overall productivity gains through the Lean enterprise have now become incremental.
Global competitiveness demands accelerating innovation while sustaining cost reductions. It is the primary challenge facing global diagnostic instrumentation OEMs as decisions are made in developing and launching next-generation molecular diagnostics, clinical chemistry and flow cytometry instrumentation. For OEMs, the challenge is identifying and leveraging unique internal core competencies essential to intellectual property as opposed to misidentified competencies that drain resources, drive capital expenses and offset other productivity gains. This can mean the difference between success and failure, profit and loss.
Selecting the right strategic supplier allows these diagnostic instrumentation OEMs to concentrate resources on what they do well to differentiate themselves and gain competitive advantage while securing further differentiation by leveraging a strategic supply chain partner, particularly in precision fluidics. To do this, it is critical to select strategic suppliers of pumps and valves that can provide the fluidics portion of the instrumentation while participating from the early design phase through production, allowing OEMs to focus on their unique core competencies.
Is there an objective process incorporating value-based criteria or metrics allowing FDA-regulated diagnostic instrumentation OEMs to rate and select a strategic supplier? Unlike the many different pump and valve manufacturers that compete for market share and new business across the world today, manufacturers providing engineered, precision fluidic solutions can offer OEMs an objective selection method and process. This is most valuable to OEMs using application-specific miniature precision pumps, valves and components, and those that are competing to be the first to market in the rapidly growing areas of point-of-care, immunoassay, bio-marker diagnostics instruments and individual diagnostic-driven therapies. These instruments are increasingly installed in individual clinics, small hospitals and remote areas worldwide, increasing the demands for longer mean time between failure (MTBF), greater reliability and repeatability, and simplified preventative maintenance cycles. In response, market and customer-savvy suppliers are developing pumps and valves that are smaller and more robust while requiring much less operating power.
These demands often require OEM development engineers and procurement teams to more quickly assess current suppliers and the risks in changing to new suppliers, particularly those with innovative products who have little or no previous history with the OEM. On the other hand, the process of finding and qualifying the right precision fluidics pump or valve component can be daunting. This challenge is compounded when using multiple components to complete an OEM application-specific precision ‘plug and play’ fluidics subsystem. Testing and qualifying this system before use in a larger assembly can be costly and time-intensive.
OEMs that want to take advantage of the latest, most innovative pump and valve technology while reducing design cycle times and costs are turning to strategic suppliers to co-develop integrated fluidic platforms (IFPs). These are OEM application-specific subassemblies that include all the components needed to perform the fluid control function for a given device. When engineers work with a co-development supplier to design and qualify an IFP, three easily quantifiable value-based objectives are achieved. First, they get a precision fluidics module optimised for their application, combining multiple components under a single part number. Second, the IFP is fully tested, validated and qualified using the criteria provided by the OEM engineering team. Third, the OEM is liberated to refocus its technical and engineering resources on the system or instrument design objectives and science. This means improved performance in meeting the OEM development project milestones and stage-gates while delivering innovation to the market faster.
So when is an IFP the best decision, and when does it make more sense to search out discrete components? OEMs working with a stable fluidics design with high reliability in an existing instrument may not have a compelling need to start over with an IFP. On the other hand, OEMs faced with making more than an incremental performance change are increasingly challenged to greatly reduce size and total costs while upping reliability and instrument throughput and accuracy, or to incorporate additional capabilities and features. This often includes seemingly competing design objectives; for example, reduce overall instrument size by as much as 50%, improve instrument cycle times, enhance with ‘first in market’ features and improve instrument reliability, uptime and MTBF. These end-customer and market demands provide a business case for identifying strategic manufacturers and suppliers of innovative precision fluidics pumps, valves and integrated assemblies that enable the OEM to achieve its system design objectives and meet aggressive project schedules and deliverables.
When is an IFP a better solution? When a whole new precision fluidics system is required, serious consideration should be given to co-developing with a supplier that can design, test and manufacture this key subassembly. It could also be given when competitive pressures create demand for a significant technological advance. Or when there are internal pressures imposed to get to market faster, lower costs, reduce inventory and shorten delivery cycles.
Another factor in the choice between buying discrete components or an IFP is the OEM’s level of fluidics integration expertise. Even more pressing, does the OEM have the available engineering and technical resources to design, prototype, assemble and test the precision fluidics sub-system? Is there greater value in redeploying those resources directly to achieving the project milestones for innovation, new science or improved performance while managing an outside supplier to engineer the precision fluidics instrument requirements?
Fortunately, OEMs don’t need multiple suppliers for discrete components and IFPs. The best potential supplier is one that is a technology leader in pumps and valves, and has the experienced engineering team, core competencies and manufacturing capabilities to co-develop and supply IFPs, and meet the key design cycle deliverables.
A critical first step is articulating selection criteria to identify a supplier that offers a comprehensive range of precision fluidics. Here the measurable value proposition to the OEM becomes clear.
Having a single source supplier with common product development, engineering and manufacturing processes for the pumps, valves, components and multilayer manifold technologies for integrating fluidics assemblies reduces project design time, drives the smallest designs and controls costs. As a third-party integrator, they also reduce the total cost of ownership by eliminating the need to work with multiple suppliers.
Which other value-based and measurable criteria should be considered in assessing a precision fluidics co-development supplier? There are several characteristics OEMs should consider when making this selection. First are the most obvious: a company that is a financially strong; a proven supplier of engineered products to FDA-regulated instrumentation OEMs; a manufacturer with a robust product line and a track record of meeting customers’ development and manufacturing schedules.
The supplier should be able to demonstrate expertise and leadership in precision fluidics technology for FDA-regulated diagnostics instrumentation with formal and documented product development, quality, validation and qualification, and audit processes. They must have the established core competencies and unique engineering expertise, evidenced through proven products in service with existing customers, and measurable results in continuous improvement or innovation of record. They should have internal or third-party alliances to provide rapid prototyping manufacturing and testing of IFPs. And OEMs operating globally should work with a partner that can deliver consistent quality, and seamless supply and service worldwide.
The proposed approach for establishing an objective value-based process for selecting suppliers of precision fluidics pumps and valves or IFPs comprises a macro and a component-specific assessment. Even at the macro level a comprehensive assessment may be accomplished with a format incorporating a simple ranking or weighted scale approach.
For the OEM designing and completing a measurable value-based assessment, the key is to incorporate and link the assessment to the primary enterprise metrics for its own business and operations. It is important to expand the metrics beyond the conventional, operations-driven Lean metrics such as inventory levels (days’ sales in inventory – DSI), supply chain management and purchase price variance (PPV). They should also include strategic metrics for the total organisation or enterprise to achieve alignment across departments including time to market, lower product development costs and innovation.
For example, one global leader in diagnostics instrumentation with operations across the US established enterprise-based Lean metrics in 2006 by identifying and establishing a ‘stretch goal’ to achieve 5.1% in division-wide savings. This was a major change from the traditional procedure of assigning aggressive objectives to two or three departments, resulting in conflict and competition for resources between operations, engineering and procurement rather than aligning them to achieve sustainable results.
This creative enterprise-based approach to metrics improved the alignment across multiple departments and increased opportunities for sustainable continuous improvements, productivity and the associated savings. Metrics were directly tied to drive behaviours that would lower the total costs of ownership (TCO) for this OEM, including sourcing integrated assemblies with strategic suppliers.
Objective, value-based criteria for selecting precision fluidics components or OEM-specific IFPs should be straightforward, simple to measure and have the most significant impact on TCO. Start with the three primary phases of a product’s lifecycle: product design and development; production operations and logistics; and sustaining and continuous improvement.
A strategic supplier can continue to add value and reduce TCO beyond the design and development phase. Opportunities to drive down costs and increase value continue even after equipment is operating in the field. Using metrics based on information about time and resources allocation can help OEMs assign a value to decisions about discrete components and IFP solutions.
There is value in establishing a process for identifying and using value-based criteria and metrics for selecting a strategic supplier of pumps and valves or for co-developing IFPs or integrated fluidic subassemblies. Starting with a focus on aligning the OEM’s enterprise before formalising the criteria within the process helps OEMs achieve enterprise-based objectives rather than setting up conflict and competition for scarce resources. Using these metrics will lead to a supplier with the expertise to deliver precision fluidics, allowing the OEM to concentrate on core competencies, key differentiators and science. This is crucial in achieving first-to-market for next-generation diagnostic instrumentation while sustaining competitive advantage and long-term profitability. In a global marketplace more crowded and unforgiving than ever, OEMs must be more strategic than ever in making these critically important decisions of which suppliers to simply purchase from and which to co-develop with.