+44 (0) 1293 543517 Email us HOME SERVICES MARKETS CASE STUDIES NEWS ABOUT CONTACT Going global: how international sourcing can improve the manufacturing process for electronic medical devices by Chemigraphic | Nov 7, 2019 | Blog How is the globalisation of the supply chain for components affecting the market for electronic medical devices? What opportunities does it offer? What effects will it have on the manufacturing process? What challenges can it solve? And what complications could it introduce? One thing is for sure, the global market is here – and will only become more important with time. It’s those who understand how to control and facilitate it that will gain the competitive edge. Let’s first take an overview of the global component market, before looking at the advantages it offers and risks that need managing for medical OEMs. The global component market In a recent report into the Electronic Components Market 2019, the on-going trends and future prospects were laid bare. It predicted that the global electronic components market is expected to continue growing up to 2023 with a CAGR of 5.9%. Driving this growth are: The rising demand for products with increased functionality An escalating need for smaller and thinner components The adoption of combined modules, such as system-on-chip and multichip It also focussed on factors such as the Internet of Things (IoT) and other new tech opportunities stimulating innovation and NPIs in sectors like satellite and space technology, military applications, and the medical market. Ominously, however, it noted that ‘the lack of suppliers of electronic components is hampering the growth of the market in recent years’. In terms of where this global market is concentrated it pinpointed Asia Pacific as dominating the market in 2018 – and suggested this is a trend that will strengthen over the next few years. Leading the way is China, home to the world’s largest chip designers, chipmakers and suppliers of critical components that are used in IoT applications. Components for medical OEMs It’s only fair that the company, entrepreneur, maverick or genius who invents a life-saving or life-enhancing medical product gets all the credit and attention. But the ultimate commercial success of any electronic medical device hinges just as much on having a developed and sustainable supply chain as it does that original flash of inspiration. As the report above indicates, the challenges of a highly stressed supply chain are beginning to force many medical device OEMs to rethink the way they work. With parts in chronic shortage, extended lead times for delivery, a highly competitive marketplace and the ever-present risk of obsolescence or counterfeiting, medical OEMs are increasingly using a supply chain partner they can trust. Traceability For the electronic medical device sector trust, traceability and accountability are absolutely essential. The components used must meet the exact specifications in the highly regulated medical world. The risk to reputation and revenue is too high for a product’s integrity to be compromised. This is why provenance and traceability of components is so critical: manufacturers want components that can be traced back to the original manufacturer. They must be able to get these parts on time and at the lowest possible price, without assuming additional risk. In the complicated global supply chain this can often be hard to do. The increasing volume of counterfeit electronic components is of particular concern to medical OEMs. The potential consequences of counterfeiting of electronic components are the flip-side to the benefits that a global supply chain brings. Increasingly complex global supply chains have enabled the proliferation of counterfeit components – and they can be incredibly hard to detect. This ever-lengthening of the supply chain provides an increasing number of process steps where counterfeit devices can be inserted. What’s needed is a partner who can open up access to the opportunities of the global supply chain, but who also vets and reviews their suppliers thoroughly. At Chemigraphic, we have found the best way to do this is through long-term relationships, thorough vetting of any new suppliers and rigorous checking of all components received. We have also recently made the first step in establishing a strong presence in China. And we are intending to strengthen this presence shortly. Our sourcing office in Shenzhen gives our customers a direct window into this critical market. It also provides us with a platform to assess and monitor new suppliers and significantly de-risk the sourcing of complex or high value parts from Asia. Globalising the bill of materials Many medical devices require tight control over approved component vendors, and often have only single sources. This makes it all the more important to work with a supplier who has global access to multiple alternatives – and to include these in the bill of material. Failing to do so effectively leaves the manufacturer hostage to a single supplier, which can add cost, time and may even derail manufacturing in the event of shortages. Technology considerations can affect your best geographical supply source. Particularly where IoT functionality is required, availability and quality dictate that components should be sourced within China (or a handful of other offshore locations). Obsolescence and global alternatives The issue of obsolescence is a very real threat in a component market often characterised by shortages. The investment required to redesign a product can be substantial and time-consuming. However, in several cases, the lack of components which may cost as little as a few pennies have led to multi-million-dollar revenue shortfalls and significant loss of market share. Having planned in, at an early stage, alternatives – or worked with a supply chain expert, who can advise on the risk of obsolescence – such problems can be intelligently avoided. This is especially true with NPIs, where scalability should be a key consideration very early in the manufacturing process. The lure of catalogue availability for the rapid-turn prototype stages can become a liability when production growth demands sustainable volume sourcing. Going global The opportunities to circumvent shortages, avoid delays, save costs and speed up the process of getting products off the ramp expand as the component market is globalised. But the complicated supply chain needs expert management to avoid risks – and these are especially pronounced in the electronic medical device market. Chemigraphic is working to provide the best opportunities for manufacturers from across the globe. And our office in China is just the beginning. ‘Our presence in China will further cement our ability to provide our customers with a seamless and cost-effective supply chain. We are committed to procuring the best parts at the best price for our customers, and the Chinese office will enable us to facilitate parts in even higher volumes and at lower costs, via direct access to regional pricing structures.’ John Johnston, Chemigraphic’s NPI Director Recent Posts Chemigraphic appoints new Chairman and Chief Financial Officer to support extensive growth 2020’s emerging electronic technologies set to revolutionise healthcare Going global: how international sourcing can improve the manufacturing process for electronic medical devices Safe and sound: how secure are IoT-enabled medical devices? 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