Identifying Better Sources of Supply through Category Procurement Pioneers


By: SaiKrishna Garrepalli -- Senior Research Analyst, Diagnostics & Medical Devices

26 September, 2016

Identifying Better Sources of Supply through Category Procurement Pioneers


In today's highly competitive and rapidly changing markets, there are many outsourcing models available that can suit an OEM’s needs. Outsourcing services may range from end-to-end services to targeted functions. Examples include research and development, product design and development, production, engineering services and packaging.

This paper outlines the key parameters that need to be analysed in identifying and choosing the right-fit suppliers. Also listed down are the benefits of a procurement excellence team or service provider.

We also discuss how procurement intelligence helps manufacturers in lowering the total cost of goods produced without compromising on the quality and features.

Brief Background - Overview of current medical device industry:

As per the Food and Drug Administration (FDA or USFDA) standards, medical devices are classified into class I, Class II and Class III devices.  Class I devices have minimal risk parameters to be considered and involves less controls and regulations. Class II devices have a higher risk factor than Class I devices and involve greater regulatory controls. Class III devices are highly regulated and controlled involving premarket approval before the product is launched in the market.  

Outsourcing is gaining prominence given the increasing demand for innovation, advanced technologies and manufacturing efficient products at optimum cost. To be competitive, quality products should be offered at a lower price. Therefore the need arises to reduce the production cost by identifying the best-fit outsourcing service provider.

OEMs need to analyze the markets to meet these current needs. They can identify and partner with outstanding suppliers who meet industry standards, certifications (such as ISO 13485 and ISO 9001) and controls (such as design, purchasing and supplier controls). The suppliers must also be category experts (in IVD, cardiology, diagnostic imaging, etc.).


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