The 2024 Medical Device Supply Chain Survey

Supply chain disruptions are one of the most prevalent challenges in the medical device industry. They can occur due to a myriad of factors, including natural disasters, political instability, or economic downturns.

These can lead to delays in the delivery process, causing delays in patient care. Supply chain disruptions also result in cost overruns due to the high cost of raw materials and the associated production costs.

Ensuring supply chain stability requires medical device companies to optimize their supply chain and enact stringent risk mitigation measures. Optimizing the medical device supply chain includes both strategic planning and tactical implementation.

To address the continued interest in medtech supply chain trends and issues, MPO conducted a survey to get an idea of what’s happening in the trenches of the medical device supply base.

Nearly half of the survey respondents expressed they had no plans to adjust the number of suppliers they work with. That alone speaks volumes—it implies that manufacturers believe the suppliers they partner with are fulfilling their needs.

But for those who are seeking to alter that number, a number of rationales emerged. Some wish to reduce the ongoing work of managing suppliers and have fewer points of contact, some look to increase sales distribution, some seek lower prices or better lead times, and some require better core competency experience.

“Having more suppliers enhances our ability to compare costs,” one respondent noted. “Different suppliers may offer varying pricing structures due to differences in their production processes, sourcing strategies, and economies of scale. This comparison enables us to identify the most cost-effective options, ultimately leading to better financial management and increased profitability.”

Quality is also paramount when selecting an optimal supplier. One respondent wished to have “better quality control, better control in case of non-availability of components” to achieve “better product quality and more efficient production.”

“Working with a greater number of suppliers provides a wider array of quality standards,” one respondent explained. “Each supplier may have different approaches to quality control and assurance, and by evaluating these, we can select the suppliers that best align with our quality requirements. This diversity also allows us to mitigate risks related to quality inconsistencies and ensure a more reliable supply chain.”

The types of manufacturing and ancillary services that are sourced to third-parties runs the gamut of medical device manufacturing. Most common were manufacturing services like extrusion, EDM, laser processing, injection molding, assembly, packaging, forging, castings, anodizing, passivation coatings, and heat treating.

Electronic components and related services ranked fairly high as well. Most common among the survey respondents were cable assemblies, flexible circuits, and PCBs.

It appears that raw materials are also subject to sourcing, given the frequency of this among the survey subjects. Among these included biomaterials, polymers and composites, textiles, stainless steel, titanium, PEEK, Nitinol, aluminum and zinc alloys, and silicone/rubber.

When polled about the most substantial pain points concerning their supply chain, one response was most poignant—lead times. Nearly half of the respondents cited this issue as the one that’s keeping them up at night.

One respondent pointed to “prototyping lead times and cost” as their major challenge. “And it now seems the same issue for production quantities,” they went on. However, this person admitted that “my company is very hard to work with.”

Delivery times also made a decent showing among the survey respondents, along with shipping costs. Many of the pain points revolved around cost, actually. A number of survey respondents called out price increases and transport costs as a main source of frustration.

Sometimes the cost of a supplier in a less expensive region of the world can be overshadowed by the cost of transport. One respondent noted an issue with overseas suppliers: “they have the best price, but logistic pricing sometimes spikes up and destroys that advantage.”

Issues with quality systems as well as international rules and regulations are also challenging medical device firms, per the several survey participants that commented about these problems.

When polled about broader concerns impacting the medical device industry, the impact of the ever-prevalent merger and acquisition landscape seemed to worry respondents the most.

One respondent said outright that “the prevalence of mergers and acquisitions and their impact to operations of the acquired companies that are my suppliers” was of the most concern.

Yet another said the “total number of medical device contract organizations is reducing, leaving fewer and fewer options to OEMs.”

Another said there is “too much focus on driving down cost vs. keeping focus on value delivered (quality, service, and surety of supply) with true partners. Movement away from relationships toward transactional is very concerning, and will not work in this industry.”

Despite this, “many of the Top 30 OEMs are pushing in this direction. At [the] end of [the] day, patient care will suffer. Relationships are key to work with and develop trust with a true partner, which comes at a cost, and you get what you pay for, in almost every aspect in life!”