Partner Preference In Full-Service Medical Device Outsourcing
With this in mind, medical device companies (for the purpose of this article, referred to as OEMs) and their supply chains (for the purpose of this article, referred to as CMOs) must reflect on the successes and failures of the past four years. Moving forward, this assessment will help companies better address situations that arise from natural disasters, disease, logistics challenges, or other unforeseen events that occur and impact the smooth flow of supply.
To help facilitate this review, MPO spoke with over a dozen medical device manufacturing thought leaders to gain their insights on a variety of topics involving the outsourcing landscape for medtech production. These industry voices touch on everything from those aforementioned lessons learned, selecting a partner (and how to demonstrate you should be considered as one), just-in-time inventory, reshoring, M&A, labor concerns, and a host of other topics.
Interviewed for the following Q&A presentation were:
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Brian P. Helm, senior vice president at ABX Engineering Inc. -
John Kraus, chief operating officer at Cirtec Medical -
Dave Mabie, executive vice president at Flambeau Medical -
Bob Maley, business development executive at AVNA -
John Nino, chief executive officer at Life Science Outsourcing Inc. -
Greg Paulsen, director of applications engineering and marketing at Xometry -
Mike Perillo-Gentile, vice president of sales, Spectrum Medical Device, for Spectrum Plastics Group, a DuPont Business -
Bill Ruth, vice president of sales and marketing for North America at Roechling Medical -
Jennifer Samproni, chief technology officer of Health Solutions at Flex -
Gregory A. Stotts, president and general manager of Teleflex Medical OEM -
Sean Stowik, director of sales and marketing at AVNA -
Gregg Tobin, president and CEO at Aptyx -
Jonathan Wagner, group EHS/ESG manager at Spectrum Plastics Group, a DuPont Business -
Rich Warren, chief commercial officer at MMT Inc.
Sean Fenske: From your perspective, what is the outsourcing situation in medtech? Growing, shrinking, or about the same?
Brian Helm: Our production volume and percentage of builds of medical and life science products have been about the same for the last three or four years. During the pandemic, many of our medical and life science customers (and ABX) were considered critical suppliers of COVID-19 diagnostics and associated products. These needed to remain in production and, in some cases, be prioritized on the production lines where possible.
John Kraus: Outsourcing is continuing to grow and demand for a quality partner is at an all-time high. Once partnered with the right CMO, it allows the focus to be placed on design for manufacturing.
Dave Mabie: Medical device outsourcing has been robust for at least the past 15 years. If there is growth beyond what we have already been seeing, it may be incremental. Several of the majors and a few Tier 2 medical device manufacturers are still in the process of consolidating their global footprints; reducing their assets. Make versus buy decisions are happening on an ongoing basis.
Another example of what may appear as growth post-pandemic may be nothing more than a shift in regional manufacturing locations. Some companies are pulling work out of China and relocating it with CMOs located in the U.S. or other low-cost countries. Still, others are shifting manufacturing from their Chinese operations to a different, regional manufacturing site. Fact is, many medical device companies have come to rely on the benefits of operational excellence offered by CMOs versus the cost of keeping everything in-house.
John Nino: From our perspective, the outsourcing trend in medtech is clearly growing. The pressure to reduce costs while simultaneously accelerating innovation and commercialization is immense. Forward-thinking CMOs can provide specialized manufacturing expertise and resources that complement OEM teams and fill the gaps. This allows OEMs to focus their resources on core R&D activities. Additionally, navigating global supply chains and the complex medical device regulatory landscape is challenging. Partnering with CMOs, who have regulatory affairs expertise and alliances in place, provides a critical advantage. Market research reflects this trend, and we see it directly in the expansion of CMOs themselves. While outsourcing requires careful consideration, OEM/CMO partnerships are facilitating growth in the medtech sector.
Bottom line, the medtech outsourcing trend is a strategic response to market conditions. It enables agility, cost reduction, and access to specialized resources that are hard to replicate in-house. We believe the growth of outsourcing in the medtech space will continue, enabling companies to bring innovative medical devices to market faster and more efficiently.
Greg Paulsen: We’ve seen growth in medtech outsourcing activity. In addition to traditional manufacturing processes such as injection molding and CNC machining, medical device OEMs are exploring advancements in other areas, such as 3D printing. This interest, combined with other factors such as reshoring and supply chain management efforts, has resulted in an uptick in outsourcing activities as OEMs search for capable suppliers.
Mike Perillo-Gentile: The outsourcing situation in medtech is undoubtedly growing. The market’s growth is outpacing most industries, driven by an aging population and new medical technologies that make it possible to treat more complex disease states. With increasing complexity in medical devices and regulatory requirements, many companies are looking to outsource manufacturing to gain access to specialized capabilities and to focus on their core competencies.
There’s also been a noticeable increase in the outsourcing of research and development activities by medical device companies. This shift is driven by the need to accelerate product development cycles and leverage external expertise, particularly in areas like digital health technologies, where rapid innovation is crucial.
Bill Ruth: From my perspective, the outsourcing landscape in the medtech industry is expanding. The overall growth of the industry has led to increased demand for specialized services and products. However, this growth has also created a challenge; there is insufficient bandwidth among our OEM partners to meet all the demand needs.
As the medtech sector continues to evolve, companies are increasingly relying on external partners to handle various aspects of their operations. Outsourcing allows organizations to tap into specialized expertise with cutting-edge technologies, streamlined processes, and a focus on core competencies.
Jennifer Samproni: From the rapid increase of chronic diseases to shifting healthcare delivery models to exciting technological advancements and a new era of digital health, the healthcare industry is experiencing a significant transformation. This is driving more medical device companies to embrace new business models, including the transition to more decentralized ecosystems to deliver patient care that better reflects when, where, and how consumers want and need care. At Flex, we are seeing our customers look for new capabilities—and partners—to capitalize on innovation cycles and help execute their technology roadmaps more reliably with greater speed and reduced risk.
Many are looking to redesign their insourced operating models to tap into deep domain expertise, scale innovations more quickly, and/or shift business to larger, more trusted partners to optimize operations across the product lifecycle, from design and manufacturing to supply chain and sustainable after-market services.
Gregory Stotts: We are truly excited about the future for CDMOs. OEMs are aggressively seeking reliable manufacturing and development partners—driven in part by the supply chain disruptions of the past three years. While they may be insourcing some of their core critical franchise products, they are actively looking for partners with space and capabilities to accommodate complementary products being displaced. We have expansion projects underway at all of our worldwide facilities to accommodate this activity. We are also expanding technologies and capabilities through vertical integration to facilitate customer-driven initiatives.
Gregg Tobin: Overall, the outsourcing market is growing, and I expect that will continue for the foreseeable future for several reasons. Outsourcing affords medtech OEMs the opportunity to grow faster and use their investment dollars more efficiently. When OEMs rely on a contract manufacturer like Aptyx to handle manufacturing, they can invest in other areas like regulatory, commercial strategy, and R&D.
Contract manufacturers can also provide the more complex manufacturing technologies required to support the growth of OEMs. As devices become more advanced and more miniaturized, OEMs are not necessarily funding these advanced technologies internally. So we see a greater reliance on contract manufacturers who are investing heavily in those manufacturing technologies.
Finally, outsourcing partners can be instrumental in helping to ensure continuity of supply with nearshoring and offshoring.
Rich Warren: The outsourcing trend remains consistent with OEMs continuing to leverage CMOs so they can focus on their core product development and marketing activities. Where there is a cost, technology, or risk mitigation advantage, OEMs continue to lean on the CMOs. At the same time, the OEMs maintain in-house capabilities, in particular for proprietary processes and to manage their production scale and flexibility.
Fenske: Did lessons learned/reactions from the pandemic affect this direction/change? How/Why?
Helm: The pandemic did not have much effect or influence on our future business plans; more so, it just rearranged some of our short-term priorities to best support our customer base. Again, for example, many medical customers were asking to bring in schedules. In contrast, some customers that had products not in the medical sector would ask for production reschedules because their business was impacted and they did not need additional inventory. We worked hard to be flexible in this area.
Kraus: The pandemic brought chaos into the supply chain resulting in shortages and stoppage in raw materials. This led to deeper partnerships with CMOs who had healthy connections with their supply base and the ability to meet near-term demands.
Nino: The pandemic highlighted the risks associated with overreliance on single-source suppliers or long, geographically dispersed supply chains. CMOs with established supplier networks and the ability to build regional redundancies offered a lifeline, helping OEMs avoid disruptions and secure essential components during the pandemic.
OEMs who already had partnerships with established CMOs had greater flexibility to quickly scale production and adjust output to meet urgent needs.
Restrictions on travel and in-person meetings forced a shift to virtual collaboration tools. This further validated the ability of CMOs to work remotely and effectively with their OEM partners, opening up outsourcing possibilities that might have been previously dismissed due to geographic considerations.
The pandemic revealed that agility, adaptability, and strong partnerships are crucial in the medical device landscape. Outsourcing to CMOs became not just a cost-saving measure, but an essential risk mitigation and business continuity strategy. CMOs with both U.S. and nearshore operations became especially valuable when overseas production was disrupted, and supply chains were broken. Lessons learned will cement outsourcing as a key component for many medical device companies, leading to even greater future adoption.
CMOs with established networks, excess capacity, a geographic footprint across the Americas, and regulatory experience have become invaluable partners for OEMs, enabling them to navigate market volatility more effectively.
Paulsen: We believe the pandemic influenced OEMs’ outsourcing efforts. When the pandemic was in full swing, it pressured existing supply chains, and many OEMs were forced to find alternative solutions quickly. For many, it highlighted the importance of having a resilient supply chain that can adapt to external factors. Xometry’s digital manufacturing marketplace provided uninterrupted service due to geographic dispersion and high redundancy of suppliers.
Perillo-Gentile: The pandemic has accelerated this growth. The COVID-19 pandemic highlighted the need for resilient supply chains and highlighted the vulnerabilities in the supply chain. Medtech companies are increasingly relying on outsourcing to diversify their supplier base and mitigate the risk of supply chain disruptions. This approach not only enhances supply chain resilience but also can lead to cost efficiencies and improved time to market for new products. I believe the post-COVID era presents unique opportunities for contract manufacturers who are positioning themselves to bring value through a broader offering of capabilities and a global footprint, providing local-for-local supply.
Ruth: The pandemic has significantly impacted the medtech industry, including its approach to outsourcing. Supply chain disruptions during the pandemic highlighted the vulnerability of global supply chains. Organizations faced delays, shortages, and logistical challenges.
By sourcing locally, companies can reduce dependence on distant suppliers and mitigate risks associated with geopolitical tensions, natural disasters, or other unforeseen events. Local market sourcing reflects a desire for resilience, control, and adaptability. While cost considerations remain important, organizations recognize the long-term benefits of a robust and agile supply chain.
Samproni: The pandemic proved the healthcare sector can become more agile in response to the critical needs of a global population and governments globally. It underscored that healthcare companies must reset their playbooks to become more resilient in the face of unforeseen challenges and to be prepared for a more connected and digital world. Now more than ever, healthcare product companies benefit from partnering with global manufacturers like Flex that can draw from a broader range of capabilities and perspectives across very different industries. The ability to apply learnings from faster-turn industries—like consumer electronics or home appliances—and to apply best practices, technologies, and processes to address healthcare sector needs, is a key enabler to advancing innovations that improve the quality of life for citizens. One example is how Flex is helping wearable medical device customers adopt best practices, technologies, and processes from consumer electronics to deliver innovations to market faster and at scale amid explosive demand.
Sean Stowik: With the focus of many OEMs on reducing costs and improving margins, the pressure to look wherever possible for immediate results may be too inviting and subject them to additional future supply chain risks from raw material to finished product.
Tobin: Yes. Since the pandemic, OEMs have been analyzing their supply chains more closely, rethinking what is insourced and what is outsourced, and identifying critical paths. There’s been a shift, with less reliance on Asia outsourcing and more nearshoring to ensure supply chain continuity.
Before the pandemic, many OEMs were working on tightening up their supplier base. Then their supplier base expanded during the pandemic, and now they’re working to rein it back in. It doesn’t necessarily mean less outsourcing; it just means more focused outsourcing. It’s all about having the right partners.
Warren: Pre-pandemic, we saw the push for offshoring and a focus on cost reduction through outsourcing. Conversely, the post-pandemic environment has been more focused on supply chain resilience and risk mitigation. Part of that shift saw a concentration on working with trusted partners.
Fenske: Overall, has the industry moved beyond the supply chain challenges that originated from the pandemic or are we not yet fully recovered?
Helm: Our supply chain has recovered to at least 95%. We still see some problems with certain components but, for the most part, it has almost recovered to where it was before the pandemic.
Kraus: We are fully recovered and seeing strength in all supply bases.
Bob Maley: We are still recovering as OEMs work to “normalize” inventories that didn’t move during the pandemic or post-pandemic based on new demand adjustments or other new market pressures. This lag has strained some supply chain channels and is requiring a higher level of communication and agreement over flexibility moving forward. Having an effective supply chain management team has proven to be critical to these discussions to ensure positive results.
Nino: While the medical device industry has made significant progress, OEMs are still facing pandemic-era driven supply chain challenges. Lingering disruptions tied to inflation, chip shortages, geopolitical instability, and labor shortages still pose challenges. However, forward-thinking CMOs have developed strategies such as nearshoring production, pre-validating packaging, supply chain redundancy, and predictive analytics, which are all signs of progress.
It’s fair to say the medical device industry has made impressive strides toward overcoming extreme pandemic-era disruptions. However, the landscape has shifted to require a new level of vigilance in supply chain management. Full recovery will take time and will be contingent on macroeconomic stabilization and geopolitical factors.
Perillo-Gentile: The industry is moving beyond the supply chain challenges but has not fully recovered yet. Many companies are re-evaluating and strengthening their supply chains to be more resilient against future disruptions. One of the biggest challenges now facing many of our customers is how they balance their inventory more strategically.
Although there’s an increased focus on maintaining safety stock for critical components, balancing inventory costs with the risk of shortages remains a challenge that requires ongoing attention. To fully overcome the challenges highlighted by the pandemic, the medtech industry must continue to innovate in supply chain management, embrace digital transformation for greater agility and resilience, and foster closer collaborations with suppliers and partners. The balance between managing costs and investing in supply chain resilience will remain a critical focus for the industry.
Ruth: I think the industry has made significant strides in overcoming the supply chain challenges that arose during the pandemic. Many companies are weaning off excess inventories accumulated during the height of the pandemic. The initial stockpiling was a response to uncertainties, but now organizations are optimizing inventory levels. Organizations have become more comfortable with the robustness of their supply chains.
Warren: Supply chain stability continues to improve, and shortages are no longer the topic of the day. There are still pockets of the supply chain that are impacted, but these are smaller. The conversations with customers have moved beyond, “What shortages are impacting you?” to “How are you building robust continuity of supply?”
Fenske: Has your relationship with your suppliers changed as a direct result of challenges encountered during the pandemic? If so, how?
Helm: Certainly. We did not forget the suppliers that went the extra mile to support us during the pandemic when our customers requested expedites. In addition to our existing suppliers, the pandemic opened the door to some new suppliers that post-pandemic have become an important part of our supply chain.
Kraus: Suppliers are as crucial as your customers; you must treat both well to be successful. The previous years have shown that choosing the right supplier will yield continued performance during tough times.
Maley: As I mentioned in response to the previous question, the lag to full “steady state” recovery has strained some supply chain channels and is requiring a higher level of communication and agreement over flexibility requirements moving forward. We are fortunate to have long-term relationships with a global supply base, making these sometimes difficult discussions easier to navigate.
Nino: Our relationships with suppliers have evolved significantly since the pandemic. We now emphasize closer collaboration on forecasting, inventory management, and risk mitigation. To reduce risk, we’ve diversified our supplier base and implemented more frequent communication channels. Contracts are being revised to address future disruptions, and new supplier qualification standards prioritize reliability and contingency planning alongside cost. These changes transform our suppliers into strategic partners, enhancing our resilience and ability to serve OEM clients during uncertain times.
Paulsen: While the pandemic was stressful for many, it also brought us closer to our suppliers. As we worked on projects directly related to the COVID-19 response, everyone aligned on goals and knew the importance and urgency of the work. It allowed us to build a stronger human-to-human level relationship as we united to work together toward a common goal.
Perillo-Gentile: Yes, our relationship with suppliers has changed significantly. We have developed closer, more collaborative relationships to ensure supply chain resilience, focusing on transparency and regular communication. Our suppliers appreciate deeper visibility into our short- and long-term demand outlook, which helps them to plan their business to more effectively support our demand.
Warren: Shortages coming from the pandemic forced some changes in suppliers. Businesses naturally pivoted toward those who maintained better performance during the pandemic and continue to demonstrate consistency in supply.
Fenske: On the other hand, has your relationship with customers/OEMs changed since the pandemic? If so, how?
Kraus: The pandemic caused peaks and valleys of demand resulting in unstable forward-looking demand pictures. A true CMO partner will help analyze and stabilize demand, resulting in the ability to continue to avoid surplus or deficit of on-hand inventory.
Mabie: With the increased popularity and ease of virtual meetings since the pandemic, I am having a lot more face-to-face [F2F] meetings with customers on a weekly basis. I can have F2F meetings coast to coast all within the same day. This allows both parties to make quicker decisions and move on. I do not discount the value of in-person meetings, but the convenience of virtual meetings has become hard to ignore.
Nino: The pandemic reshaped our relationships with OEMs in several ways. It allowed us to demonstrate our ability to pivot under pressure and navigate supply chain challenges, building greater trust with clients who recognize our commitment to delivering quality products, even under difficult circumstances.
We’ve adopted a more proactive approach to communication that provides early warning of potential delays and facilitates collaborative problem-solving. Clients expect our participation in their risk analysis and contingency planning, which solidifies our role as a true partner. The success of virtual meetings has expanded our ability to connect with OEMs regardless of location, while our adaptability—flexible manufacturing and overall agility—has become increasingly valued. Additionally, OEMs appreciate our in-house services such as medical package testing, small lot steam and EtO sterilization, and cleanroom space rental.
The pandemic strengthened our customer relationships by highlighting our focus on open communication and shared risk mitigation strategies. OEMs see us as more than just a contract manufacturer. We’ve become a critical extension of their team, enabling them to navigate market volatility more effectively.
Paulsen: Likewise, our relationships with our customers became stronger through the pandemic. We worked more closely than ever before on resilient solutions and avoiding pitfalls. Our customers saw the effects the pandemic brought on across the board, and as such, they were notably more understanding when a challenge arose.
We also adapted to our customer’s needs, including reclaiming the square footage of our facility that was office space to accommodate assembly services. This allowed Xometry to take on vertical services for our customers who had their supply chain disrupted. We would custom manufacture parts using our network, procure COTS, assemble, and package at our Maryland location.
Perillo-Gentile: Similarly, our relationship with customers and OEMs has evolved to be more collaborative. The pandemic highlighted the importance of flexibility, communication, and partnership to overcome challenges together. As the pandemic and subsequent inflation had a profound impact on overall industry COGS, our customers expect us to manage our costs effectively and partner with them on cost improvement programs. There seems to be more transparency than ever before because both sides have recognized that the only way for either of us to be successful is through collaboratively tackling the challenges we face.
Ruth: The pandemic prompted a shift in how companies interact with OEMs. Today, there is a lot more communication and transparency. Organizations are collaborating more closely with suppliers, sharing forecasts, lead times, stock levels, and aligning production schedules. Transparency helps with managing expectations and avoiding surprises. The relationships have shifted from a transactional one to a partner mindset. The focus is on transparency, risk mitigation, and strategic collaboration.
Stowik: Relationship building has changed; face-to-face meetings are more difficult to organize. There is more focus on discussing business continuity and risk mitigation for both the OEM and CMO. Increased visibility on forecasting and securing long lead-time materials in support of forecasts has become increasingly difficult to predict and manage. We always prefer in-person meetings and, for the most part, request all critical discussions involving engineering, quality, or commercial be done on-site either at the OEM or one of our facilities.
Warren: During the pandemic, MMT successfully integrated several equipment and technology providers. Our customers have looked to us to help de-risk their operations because of our continuity of supply, deep manufacturing expertise, supply chain proficiency, and TotalCare aftermarket support. The ability to stock and support components has built deeper levels of trust and partnership with our customers.
Fenske: Is M&A activity within the industry affecting the OEM/CMO relationship? If so, what is the impact?
Kraus: We have seen major shifts in the M&A space resulting in a higher interest in these activities. This space will continue to see high investment and interest in M&As.
Mabie: Generally speaking, with each OEM acquisition comes the addition of new manufacturing plants and the inheritance of the acquired OEM’s supplier base onto the acquirer’s approved supplier list [ASL]. For the acquiring OEM, this can become an integration challenge for the next several years. Which plants do we keep? Which do we close down and consolidate into our existing footprint?
For CMOs, the impact on business can depend on which side of the ASL fence you sit. If you are a CMO to the acquired company, your value as a continued supplier to the acquiring company will be scrutinized (e.g., quality, cost, delivery). Given the majority of medical device companies are routinely consolidating their supply base, acquisitions bring the risk of losing your business to one of the acquirer’s strategic partners, or a potential windfall of new business as outsourced supply is consolidated within a smaller group of suppliers. It just depends on the situation and where you fit within the manufacturing strategy.
Nino: M&A activity within the medtech industry can directly impact the OEM/CMO relationship. Consolidation of CMOs can give OEMs greater negotiating leverage but potentially limits options for supply chain diversification. M&A activity may also push CMOs to specialize or broaden service offerings, expanding the types of OEMs they can service. It’s a dynamic landscape where OEMs must stay informed about CMO changes and continuously evaluate their supplier portfolio, while CMOs need to communicate shifts in capabilities to maintain strong partnerships.
Our M&A activity is focused on increasing value for our OEM clients by continuing to prioritize fast time-to-market and quality, while transparently communicating our expanding capabilities and maintaining our client success culture.
Perillo-Gentile: M&A activity is indeed impacting the OEM/CMO relationship, leading to consolidation in the industry. This can streamline operations and enhance efficiencies, but it also requires careful management to ensure continuity and alignment of goals. For a company like Spectrum, which has acquired and integrated about one new company a year (on average) for the last five years, M&A is an important part of our ability to bring complementary capabilities to our customers. We pride ourselves on our history of integrating newly acquired companies in a way that maximizes synergies while not losing the expertise, experience, and competencies that exist within the legacy company. However, OEMs should ensure their suppliers have experience in and are well-equipped to manage integrations because if they are not done properly, it can cause serious disruptions.
Stotts: M&A in the customer base as well as within outsourcing partners is creating more intimate and larger portfolio relationships. Vertical integration is transitioning suppliers from isolated component sources to fully packaged and sterilized supply partners. Rationalization of similar products driven by mergers can dramatically increase or decrease customer demand. The ability to scale quickly has never been more important.
Stowik: Some OEMs may have concerns over the risk of working with investor-owned companies as opposed to other structured companies. The “one contact to hold accountable” may be appealing to certain OEMs versus managing multiple “smaller” companies. M&As can certainly make it more challenging for private companies to have a bigger piece of the pie, but I think there are opportunities to secure new relationships and grow with existing customers regardless based on each OEM’s specific needs and strategic alignment with smaller CMOs.
Tobin: For us, M&A is a strategic tool that allows us to bring deeply specialized capabilities into one network to provide a complete source for all the technology and capabilities our OEM customers need to produce a product. I view it as a very strong positive to support our customers globally.
On the OEM side, they’re making acquisitions to add capabilities to better support their providers and bring clinical solutions to better address outcomes. They often need to strengthen the supply chain of these acquisitions, and they may not have the solutions or capacity readily available in-house. Companies like ours can step in immediately to add capacity quickly to support their growth and ensure business continuity.
Warren: In the equipment technologies space, there continues to be consolidation. The OEMs need trusted partners who will last beyond the original owner. They look to companies like MMT to bring systematic approaches and to invest in developments like AI and advanced integration.
Fenske: What recommendations do you have for OEMs currently seeking new CMO suppliers? How can they best evaluate a prospective partner and what traits should be considered most important?
Helm: In selecting a contract manufacturer, we suggest focusing on five key attributes that will be the basis for a long-term successful engagement with your manufacturing partner.
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Price—Are the CMO’s quotations competitive? Competitive does not always mean the lowest sell price, which could also be an indication the CMO is missing something in the quote, or perhaps is desperate for business and will “buy the first business” to attract the customer. Of course, price is always very important, but no long-term successful supply chain sourcing strategy should be based on price alone. -
Management Team, Materials Management, and Procedures—Does the CMO have a solid team with established procedures in place to ensure consistent quality and on-time delivery? -
Production Technology—Does the CMO have the production technology and equipment in place to efficiently build and test the product? -
Quality and References—Every CMO will claim they have excellent quality, but experience says there will be problems. Talk with the CMO’s references, especially ones that have been with the CMO for many years. Ask about quality including when there were problems, how they were addressed, and corrective actions and continuous improvement procedures followed to promote a zero-defect production strategy. -
Customer Service and Commitment to Customer Satisfaction—Get to know the team that will be working for you. It is important to have a good feeling about the CMO’s team beyond simply the front-line relationship with the salesperson or product manager. In qualifying and ramping up a long-term relationship with the CMO, invest the time in visiting the facility, meeting key management personnel, and walking the production floor.
The most successful relationships build on teamwork. Treat the CMO like it is your factory, not a third-party supplier. Select a CMO committed to the top-down philosophy of teamwork and treat them like they were your in-house, owned factory. Teamwork is paramount in successful, long-term relationships. There will always be challenges, aggressive production schedules, component-led time obsolescence issues, price pressures from the market, and things that will go wrong. Teamwork and mutual respect resolve problems faster, saving time and lost revenue from production delays.
Kraus: We believe in customer obsession; we want to know your products or processes as well as you do. We operate as an extension of our customers and measure our performance heavily on customer satisfaction.
Mabie: Evaluate the overall strength and experience of the CMO’s team. Focus on engineering talent and capabilities; anyone can buy the right piece of equipment for the job. Whether looking for U.S. or nearshore manufacturing, make sure the CMO(s) you are speaking with have a deep understanding of the engineering requirements to do the job. Challenge their past experiences. Ask for examples of prior work. Don’t always base decisions on the lowest landed cost. Develop a scoring metric to assist with supplier selection.
Maley: Some key traits an OEM should expect from a CMO are high-quality standards, a collaborative culture, flexibility, innovation that improves DFM/DFR, integrated capabilities, opportunities for dual-sourcing, best cost manufacturing location, business continuity plans, strong supply chain relationships, ongoing investments in talent, innovative technologies, and advanced automation. Finally, a proven track record of launching patient-critical programs flawlessly and maintaining the highest quality standards through product lifecycles are also important.
Nino: First, clearly define your requirements. Before seeking partners, thoroughly outline your specific product requirements, including type, needed specialization, desired volume, regulatory path, and timeline. While a standard request for proposals is helpful, take your evaluation deeper. Schedule on-site visits to see the CMO’s capabilities firsthand and meet key personnel you’d likely be working with directly.
Don’t overlook cultural alignment. Technical expertise is important, but a CMO’s culture matters too. Consider if their core values align with yours and how they approach communication and conflict resolution. A good cultural fit is crucial for a successful partnership. Regulatory expertise is key; navigating agencies like the FDA is complex. Look for a CMO demonstrating a strong track record within your device’s market segment and a dedicated regulatory affairs team. Finally, evaluate supply chain resilience to ensure they are prepared for market disruptions.
An unwavering commitment to quality is non-negotiable. Prioritize partners with robust quality management systems, proven process control, and a successful audit history.
Choose a CMO focused on open communication, proactive problem-solving, and a willingness to become a true extension of your team. The medtech market demands adaptability, so look for a CMO that can flex production volumes, handle design adjustments, and pivot quickly when needed. A CMO that can get your product to market quickly is crucial, so thoroughly assess their track record, capacity, and new product introduction processes.
Look for an established CMO with good financial health to ensure they have the resources to effectively support your project and weather potential market fluctuations. If you anticipate growth trajectories, choose a CMO that can grow alongside your business.
Choosing the right CMO is a strategic decision for any OEM. A thorough evaluation process that prioritizes quality, communication, and agility will build a partnership that drives your success in the medtech market.
Paulsen: We recommend OEMs speak with potential new CMOs in detail about their capabilities to understand what they are most experienced in. For example, does the CMO have existing experience with medical device production, and are they familiar with the materials, processes, and quality control standards they entail? Looking for related certifications, such as ISO 13485:2016, can also be a positive indicator. Finally, CMOs with excellent communication skills are essential to look for, as communication is critical to the success of any project.
Perillo-Gentile: For OEMs seeking new CMO suppliers, my recommendation is to look beyond part cost to evaluate factors like quality systems, regulatory expertise, and the ability to innovate together. Cost is an important consideration, but OEMs should consider the “total cost of ownership,” and poor quality or an unreliable supply chain can prove to be much more expensive in the end. I would also recommend OEMs challenge their potential suppliers and go deeper into their competencies than just what’s on their website. Ask them to demonstrate proof points on similar products or similar customers; data on their on-time and in-full delivery; and put their technical, operational, commercial, and leadership team to the test. A strong cultural fit and shared values are also crucial for a successful partnership.
Stotts: OEMs want speed, dependability, and scalability. Working with a well-financed vertically integrated partner, with exceptional engineering talent, can allow the OEM to focus on their end market needs. But equally important, choosing a CDMO with a focus on DFM will allow for unrestrained market growth. The leading CDMOs will be well positioned to scale in pace with the OEM.
Tobin: I’d say the OEM needs to make sure they’ve identified a partner that aligns with their values and strategic priorities. For us at Aptyx, quality is number one and engineering is the heartbeat of the company, so those are the two most critical elements.
The baseline is identifying partners whose capabilities are a good fit with the OEM’s product needs to ensure they can focus on finding solutions, not just checking boxes or taking orders. The ability to be nimble and flexible in identifying solutions is another really important attribute for us.
Finding a supplier partner who has a global vision and strategy to support worldwide growth is also important. That’s where financial strength and stability come in. At Aptyx, we’re investing in our infrastructure, facilities, people, and processes like global quality systems as well as strategic M&A to acquire those assets and capabilities that make us a stronger manufacturing partner for our customers. If I were an OEM, I’d be looking at a CMO to understand their philosophy on investing. Do they have the financial strength and experience to invest and grow? That’s critically important.
Warren: Evaluations in this space start with quality performance; this is the table stakes element for supplier selection. While the OEM may have a specific focus for bringing in a new CMO, additional areas for assessment would include depth of business systems and application in approach, ability to leverage unique competencies and processes, potential to scale and grow with the OEM, and robustness of the supporting supply chain.
Fenske: What steps must an OEM take to evolve from dealing with a CMO purely as a supplier to establishing a true collaborative partnership with that CMO?
Helm: Perhaps the best strategy (or example) is to determine if the OEM can treat the CMO like they are the same company. Is there an established level of mutual respect, good communication, collaborative planning, and problem-solving? Even though the CMO is a different company, the OEM should treat the CMO like it is their factory; this extends to expectations, communications, follow-up, etc. Don’t expect the CMO to be able to meet unrealistic schedules or price points when the OEM knows it could not do it themselves if they were vertically integrated with their factory. Maintain realistic expectations.
Kraus: It is critical to partner as early as possible in the design phase as that is where your supplier should be supporting Dfx activity to provide the best path to sustained production. The data created in the manufacturing processes should be shared and assessed to drive higher quality or capability into the devices produced.
Stowik: It sounds simple but transparency, mutual respect, fairness, and trust create the foundation for a successful partnership. Our innovation pipeline investments must be ahead of our customers to support their product launches and scaling requirements. To accomplish this, there must be collaborative discussions and commitments from both sides.
Nino: The first step in transforming the CMO relationship is a mindset shift. It’s essential to move from viewing the CMO as a purely transactional supplier to seeing them as a strategic extension of your team. This paves the way for open communication and a focus on shared goals. Recognize that your success and the CMO’s success are intertwined, motivating you both to strive for long-term wins.
To foster collaboration, involve the CMO in the early stages of product development to leverage their aid in design and manufacturing expertise. This creates joint ownership of the project. Implement regular communication channels that go beyond basic status updates, encouraging open discussion of challenges, potential risks, and strategies for optimization. Proactively develop contingency plans with the CMO to address supply chain disruptions, regulatory changes, or other potential obstacles.
For us, building trust is crucial. We encourage our clients to openly share forecasts, market insights, and potential challenges, allowing us to anticipate their needs better.
Hold regular performance reviews, focusing on improvement and strengthening the partnership. When possible, facilitate site visits and interactions between your team and our staff to build relationships and a deeper understanding of each other’s operations.
Finally, consider contract revisions that align incentives. Explore structures that share risks and rewards, motivating the CMO to innovate, reduce costs, and meet targets as a true partner. Include clauses allowing flexibility for design changes, regulatory shifts, or market fluctuations, minimizing the potential for conflict if situations change.
Evolving the CMO relationship requires commitment from both the OEM and the CMO. Open communication, trust, and a mindset focused on mutual success are the foundations of a partnership that will navigate the complexities of the medtech industry.
Paulsen: Building a more personal relationship via a dedicated point of contact at the CMO is a great step toward achieving a greater partnership. Having a representative on each end who can communicate project details can help reduce friction between parties. Xometry offers the best of both worlds with dedicated points of contact and our 24/7 online platform for quote and order tracking.
Perillo-Gentile: To evolve from a transactional to a collaborative relationship, an OEM must be willing to share long-term visions, involve the CMO in the planning stages, and work together on innovation. Also, rather than engaging with CMOs on a project-by-project basis, OEMs should look at the full book of business with their supplier now and in the future. We see many of our customers appointing strategic supplier managers to align with our strategic account managers, which is a great way of taking larger stock of the overall business relationship.
Tobin: Involving your partner early on is key—engaging at the earliest stage to collaborate as partners throughout the project. It’s also important to be clear on what you’re trying to achieve so together, you can find the best solution. And of course, honesty, transparency, and good communication are vital.
Warren: Information sharing is a hallmark of a strong partnership. Transparency regarding forecasted volumes, potential variability, cost, and pricing is needed both from the OEM to the CMO and vice versa to allow for deeper and more productive relationships.
Fenske: Conversely, what does a CMO need to do to illustrate to an OEM it is capable of being a collaborative partner in a medical device project?
Helm: Since ABX Engineering’s founding 39 years ago, we have always emphasized to our employees a philosophy we call “Team Work Works!” We promote this in our training, manufacturing floor signage, uniforms, etc. We stress to our team that collaboration and teamwork with our employees and customers is almost always the shortest path to a successful outcome.
Allow me to explain further. We are not a Tier I CMO; rather, we are a smaller organization. As a result, our structure allows us to be more approachable at the department level, where our department leaders (e.g., supervisors, managers, engineers) can, when needed, collaborate directly with customers. As another example, our sales program managers and other team members are available to work on challenges, solve problems, etc. This promotes a collaborative, teamwork environment where the customer feels more directly connected to the factory than just a service provider connected mostly only via a sales or product management person.
Kraus: You must put the needs of the patient first. We believe deeply in connecting our employees to the devices we produce. Quality is at the forefront of all decisions.
Mabie: A true supply partner should be willing to have some skin in the game—take financial risk, demonstrate a clear differentiator. Oddly enough, it is not uncommon these days to find large OEMs who have limited budgets to invest in capex. They don’t even have the funds available to validate a new mold or manufacturing process. Be willing to make the upfront investment in exchange for an extended, long-term supply agreement. This takes a lot of pressure off the OEM and, of course, there will always be performance clauses built into any agreement that protect the OEM from poor CMO performance. The CMO must still perform (e.g., quality, delivery) or risk losing the business.
Maley: In addition to mutual respect, fairness, and trust, a CMO must provide innovative manufacturing processes and solutions that optimize efficiencies, cost savings, and product performance throughout the product lifecycle. They must consistently deliver high-quality, reliable products and invest in continuous improvements and innovative technologies that mitigate risk, improve outcomes, and keep pace with the demands and technical advances of the medtech industry.
Nino: CMOs need to demonstrate proactive communication to illustrate their ability to act as collaborative partners. This means initiating discussions to facilitate optimization or assess risks, OEMs must also provide regular updates and be transparent about delays or regulatory shifts. Early communication builds trust and facilitates collaborative problem-solving.
CMOs need to offer expertise beyond manufacturing. They should provide design input for manufacturability and assembly, offer regulatory guidance (especially within the device’s specific market segment), and share market insights that could impact the OEM. This positions the CMO as a knowledgeable contributor to the product’s success.
A CMO must build a culture of true partnership. This means demonstrating responsiveness to OEM inquiries, assigning dedicated project teams for consistency, and embracing the OEM’s goals as their own. CMOs need to emphasize risk mitigation and flexibility by proactively addressing potential risks with mitigation strategies. CMOs must demonstrate their willingness to adapt schedules or processes and offer a robust supply chain capable of handling disruptions.
From our experience, when we successfully demonstrate these qualities, we transform ourselves from manufacturers to strategic extensions of our OEM clients’ teams. Proactive communication, expertise, risk mitigation, and a partnership mindset contribute to the product’s success throughout its lifecycle.
Paulsen: CMOs can showcase their capabilities with challenging demonstration parts such as multi-axis (e.g., five-axis) machined or micromachined parts representative of those in the medtech field. It is also recommended to emphasize the aspects of their quality management system, including medical certifications. Ultimately, OEMs want to know how the manufacturer will respond to a crisis, or if their capabilities and capacity could keep up with surge requirements.
Perillo-Gentile: At the core of a strategic partnership is the alignment of both parties’ goals and objectives. This means working together not just on an individual project, but also in planning future directions, market expansions, and technological advancements. The partnership is structured around achieving shared success, with both parties invested in each other’s growth and success. The CMO should demonstrate its capability for collaboration by being proactive in identifying potential improvements, being transparent about capabilities and limitations, and investing in technology and processes that align with the OEM’s needs. They should also ask questions that give them a clearer insight into an OEM’s strategic objectives. Further, it’s paramount that CMOs have an ingrained culture of customer centricity. This means every aspect of the business is led by our customers’ needs.
Tobin: It’s all about listening to understand, not just trying to sell services. The mindset is, “What is the right solution we can provide, and how do we win together?”
Fenske: Have you continued with any virtual practices such as virtual tours with your customers and/or suppliers since the pandemic or are you fully back to in-person activities?
Helm: We have done a lot more virtual factory tours since the pandemic. Perhaps the pandemic illustrated to some companies that travel, off-site meetings could be minimized. In addition, no doubt inflation and the increasing cost of travel influence companies to be more frugal. A good example is a factory audit. In the past, a company may have sent a team of five or more people to perform the audit. In contrast, we now often see only one person on-site, and others are participating via video conference, FaceTime, etc.
Kraus: The preference is always to be in person but the pandemic taught us that not all travel was needed to be successful.
Stowik: We still support virtual requests when appropriate. Although a large portion of meetings can still be conducted effectively virtually, engaging with our talented people on the floor is what drives a successful visit. We always prefer in-person meetings and tours but remain adaptable post-pandemic to suit our customers’ and employees’ needs.
Nino: In our experience, in-person interactions are invaluable, and we’re continuing to increase them. However, we’ve discovered significant benefits to maintaining certain virtual practices established during the pandemic. We continue to offer virtual tours for initial client and supplier meetings when time and travel costs are a concern. In some cases, we utilize a hybrid approach where an initial virtual tour is followed by an in-person visit for deeper evaluation.
We’ve also maintained virtual communication and collaboration practices. Frequent video calls have proven efficient for project updates and quick troubleshooting, often replacing purely written status reports. Document sharing and real-time collaborative platforms have streamlined workflows, particularly in the early design and regulatory phases. We prioritize in-person meetings for relationship building, complex problem-solving, and situations where handling physical samples or on-site assessments are essential.
The pandemic highlighted the need for flexible ways to accelerate projects. That’s why we offer our Quality Incubator Services. This unique service allows our OEM clients to utilize in-person workspaces on-site to accelerate time to market, providing facility utilization options like cleanroom space rental and regulatory consulting support.
The key takeaway is that the pandemic forced us to innovate how we interact, and we discovered lasting value in some virtual practices. We now utilize a hybrid approach, leveraging both virtual and in-person tools strategically. This allows for greater efficiency while maintaining the strong relationships that are crucial to our business.
Paulsen: Although in-person customer audits have picked up to about the same rate as before the pandemic, we have certainly become accustomed to virtual audits and showcasing. Our digital platform proves to be a valuable asset in both circumstances, with incredible detail and transparency of order status and quality documentation.
Perillo-Gentile: Virtual practices allow us to connect with our customers more often, and we continue to use them to manage our collaboration. However, nothing can beat the face-to-face connection and our commercial team is traveling to our customers and sites as much as before the pandemic.
Ruth: The blend of virtual and in-person activities has become our new normal. While we have resumed many in-person activities, virtual interactions remain a cornerstone of our business operations, allowing us to maintain regular communication with customers and suppliers.
Tradeshows have made a comeback and are critical activities for customer interaction. These events provide a great opportunity for networking, product showcases, and industry insights.
We’ve demonstrated we can sustain business virtually. Remote work, digital collaboration tools, and virtual meetings have proven effective. However, we also recognize the value of in-person interactions. Combining virtual and in-person activities allows us to adapt, sustain, and augment our business effectively.
Stotts: Yes, we evaluate the needs of our customers and accommodate them. We invested in virtual technologies during the pandemic and for many customers, this allows for more frequent and cost-effective interaction. We designed a virtual EPIC Medtec Center for when in-person experiences are not feasible and speed-to-market is of the essence.
Tobin: During the pandemic, we all learned how effective virtual collaboration can be, and we’re building on the strength of virtual tools. Of course, in-person communication is still important, so it’s a balance.
We’re standing up virtual engineering tools to drive productivity and deliver expertise when and where it’s needed—tools that allow an engineer to lend expertise at a location halfway around the world. For example, we’re adding virtual reality for process validation and optimization.
Warren: Connection with partners is critical and the virtual/in-person visit is not an “either/or.” In-person visits remain important to seeing and solving problems firsthand while building relationships and trust. At the same time, the ease of virtual meetings means between the in-person meetings, customers and suppliers can work effectively through their projects.
Fenske: As just-in-time inventory practices have seemingly fallen out of favor, have OEMs approached you about offering warehousing or logistics services? If you already offered these types of services, are OEMs seeking to increase their usage of them?
Helm: Yes, more of our customers are taking advantage of warehousing/stocking agreements including direct fulfillment—ABX shipping directly to their customers and distributors.
Kraus: I believe we will see a resurgence in just-in-time inventory practices and we are seeing OEMs adjust levels down.
Maley: Although we hear it, we have not seen a significant number of requests in support of these strategies. This is partly due to our strategic proximity to key customers’ facilities and partly due to redundant capabilities, as well as our ability and track record of being nimble enough to react to demand fluctuations and urgent needs.
Nino: Yes, we’ve definitely seen a shift away from just-in-time inventory practices and an increase in demand for our warehousing and logistics capabilities. OEMs are now requesting we hold larger safety stocks of critical components to mitigate supply chain disruptions. This reverses the just-in-time trend of minimizing on-hand inventory.
Additionally, some clients want us to warehouse finished goods for market flexibility, allowing them to rapidly fulfill orders and minimize time to market.
Fortunately, we already offered Fulfillment and Distribution Services prior to the pandemic. This ensured timely and cost-effective logistics and supply chain management services, from warehousing and inventory to packaging and delivery, were available to our clients during that crucial time. The demand for those services continues to increase, fueling an expansion of our logistics role with our OEM clients. Clients are increasingly seeking our assistance with freight management, seeking our expertise in securing reliable carriers and navigating logistics complexities.
Vulnerabilities exposed during recent supply chain disruptions have made OEMs acutely aware of the need for greater resilience. Warehousing and expanded logistics services by CMOs offer a critical buffer. While the long-term trajectory of just-in-time remains uncertain, we believe this demand from OEMs will continue to grow.
Perillo-Gentile: Yes, there’s been an increased interest in warehousing and logistics services as companies move away from just-in-time inventory practices. We’ve seen OEMs seeking to enhance their supply chain resilience through these services, such as vendor-managed inventory. Part of leveraging our global footprint means offering it for logistical services that enhance our customers’ supply chain.
Warren: As borrowing costs have risen, customers are ever more interested in programs like MMTs TotalCare, where we provide service-level inventories to support JIT delivery, reduce the holding costs, and aggregate the demand.
Fenske: Have you been impacted or participated in the nearshoring/reshoring trend? Have OEM customers inquired about you moving to/opening a facility closer to them?
Helm: ABX is already onshore with our manufacturing facility in California. Some of our customers are seeking to reshore their production and, for new product launches, remain onshore until they are more certain of the value of going offshore.
Let me explain further. In our business, PCBA, for example, is a highly automated production process. Since it utilizes very little touch labor, we can offer an equally cost-effective solution to offshoring for mid- to lower-production volumes. In these cases, benefits can include faster time to market, reduced complexity in logistics, less expensive travel, and real-time communications.
Kraus: This conversation is always ongoing and we continue to see interest. U.S. manufacturing remains a strong and reliable option.
Nino: We’ve seen the nearshoring/reshoring trend firsthand. OEMs are increasingly interested in exploring nearshoring options to mitigate supply chain risks and gain time-to-market advantages. This has led to a surge in inquiries about our capabilities. Fortunately, we’re well-positioned with our existing operations in Costa Rica, providing a nearshore solution with reduced shipping times, simplified logistics, and greater supply chain resilience compared to sourcing from Asia. Our Costa Rica facility is ready to meet this growing demand, featuring the latest equipment, skilled operators, and robust training programs. Several existing OEM customers have expressed interest in transitioning certain product lines to our Costa Rica facility, while others are exploring it as a new manufacturing location.
The nearshoring/reshoring trend highlights the evolving strategies of medical device companies seeking proximity, agility, and reduced risk. Our established Costa Rica facility offers OEMs a cost-effective alternative to fully domestic reshoring, as well as shorter lead times and faster responsiveness to market changes. A nearshore location also mitigates the risks associated with long global supply chains and disruptions. We’re committed to partnering with OEMs to help them successfully navigate this shift and leverage the strategic benefits of our nearshoring capabilities.
Paulsen: Xometry is connected to thousands of manufacturers in North America. Although the majority are in the United States, we also have nearshoring offerings in Canada and Mexico. We give pricing and lead times for each of these options, allowing the customer to make an informed decision, all on one platform.
Perillo-Gentile: The nearshoring/reshoring trend has impacted us, with many customers inquiring about us moving or opening facilities closer to them. This aligns with efforts to build more resilient supply chains. While shifting manufacturing locations takes time and resources, we find we’re uniquely positioned to implement a local-for-local strategy given our global presence.
Ruth: We have actively participated in the nearshoring/reshoring trend. Recently, we invested in a new warehouse, adding additional square footage at our Rochester, New York, facility. Since we are a global contract manufacturer in multiple markets, we recognize the value of investing in our sites to support the growing contract manufacturing space.
Stowik: AVNA opened a facility in Costa Rica in 2012 to support our strategic customer base and our business has seen tremendous growth. So much so, we are building a new and larger facility in the new Evolution Free Zone that will open this summer. The advantages for OEMs and CMOs extend beyond logistics. Our expansion in Costa Rica supports business continuity planning, dual-sourcing opportunities, cross-training of skilled talent, and optimized cost efficiencies.
Tobin: We absolutely embrace nearshoring and reshoring and are actively working with our customers to address these opportunities. We’re a partner with a diverse global network, and it’s part of our business model to invest and grow to support our customers. We’re extremely flexible, and because we’re well-capitalized, we’re able to make investments to partner with customers to support nearshoring.
For example, we’ve invested proactively in a team that specializes in the transfer of tools from overseas facilities to domestic production, and we have in-house tooling expertise to expedite and solve complex transfers.
Warren: As the leading supplier of equipment, we have felt first-hand the strategic shifting of supplier locations with both reshoring in the U.S., nearshoring to locations like Costa Rica, and shifts to strategic manufacturing locations like Ireland.
Fenske: Have you put effort toward retooling your material/component sourcing to source closer to your facilities and avoid long supply chains?
Kraus: A good CMO is always building capabilities in their supply chain. I believe localization is important but certain industries have centers of excellence in a particular area and will continue to be key partners.
Nino: We’re actively retooling our material and component sourcing to enhance supply chain resilience. We’ve mapped our suppliers and their sub-suppliers to identify potential bottlenecks. To diversify our supply base, we’re regionalizing our sourcing, exploring alternative materials/designs when feasible, and seeking suppliers closer to our U.S. and Costa Rica facilities. We’re emphasizing partnerships with suppliers for early warning systems and participating in industry forums for information sharing.
Our approach has shifted, prioritizing supply chain robustness even as we consider costs. We strategically maintain buffers of critical components to mitigate short-term disruptions. The goal is a robust supply chain that ensures reliable product delivery for our OEM clients, even in uncertain times.
Warren: Location is one factor to consider for sourcing, as well as the importance of capabilities both in technical and supply chain management terms. Maintaining a balanced portfolio of partners helps mitigate risk while leveraging needed expertise.
Fenske: What impact, if any, have international conflicts (e.g., Ukraine/Russia, Israel/Gaza) had on your company and/or sourcing materials/components?
Maley: Fortunately, we have not experienced significant issues from the current international conflicts, other than increases in freight costs in certain channel areas.
Nino: While we haven’t experienced direct material or component sourcing issues stemming from the specific conflicts mentioned, international conflicts like the war in Ukraine have indirectly impacted our company and supply chain. Surging energy prices have increased transportation and manufacturing costs for some of our suppliers, leading to price increases and extended lead times for certain components. We’ve also seen disruptions in the supply of key raw materials, some linked to the Ukraine conflict, creating component bottlenecks and delaying production timelines. Additionally, increased congestion at ports, airspace restrictions, and shipping delays resulting from the conflicts impact our ability to reliably source materials and components from certain regions. International conflicts contribute to a climate of market uncertainty, making it harder to forecast demand accurately and affecting both our production planning and that of our OEM clients.
To mitigate these impacts, we’ve increased our focus on detailed supply chain mapping, aiming to uncover potential risks linked to international events. We’re also accelerating our efforts to diversify sourcing in regions less likely to be impacted by geopolitical conflicts. Staying informed about current and potential conflicts is another key element of our strategy; we actively monitor news and risk analytics to anticipate potential disruptions.
Ultimately, international conflicts highlight the interconnectedness and potential fragility of global supply chains. While we can’t eliminate all risk, proactive mapping, diversification, and ongoing risk analysis help us minimize disruptions, ensuring we can continue to serve our OEM clients effectively.
Stotts: First and foremost, we have experienced a sense of concern for the many customers who are directly involved in these unfortunate events. Customers and suppliers become friends—even if the interactions are predominantly virtual. Knowing that people you care about are involved is heartwrenching.
From a business standpoint, we have certainly experienced the inability to attend events in those areas, and have missed seeing the customers from those locations at trade events.
While we haven’t experienced this yet, shipping reliability is always a concern as well.
Finally, evolving trade embargos can be challenging; however, Teleflex complies with all applicable laws, rules, and regulations, including those concerning export controls, economic restrictions, and sanctions.
Fenske: Since the pandemic, have you revisited/revised disaster plans to address future crises? Has this become a more important question for your customers/prospective clients?
Helm: Yes, we continue to review and implement programs in this area. For example, we continue to refine our programs for employees not directly on the production floor to work from home when that might be required. As a factory, the actual production floor employees need to be on-site. In this area, we continue to refine hygiene plans and work with our employees to stress the importance of not coming in when they are ill.
As far as our clients, those discussions include production security when they choose ABX as a factory. In addition, many clients also protect their supply chain security by using multiple factories. We have clients for which we are their “West Coast” factory; other factories they use will be in a different region.
Kraus: We believe this practice must be tested annually and updated as needed. You must have the ability to keep operations running and should design contingency plans for all situations.
Stowik: Disaster plans are definitely a priority question for our customers. Our plan is reviewed and updated regularly, and it was expanded post-pandemic based on industry feedback and lessons learned. Sections addressing health issues and technology were revised to add increased robustness to business continuity and the safety of our facilities and people.
Nino: The pandemic exposed vulnerabilities and prompted a thorough revision and expansion of our disaster plans. We now focus on building greater supply chain redundancy to mitigate the impact of widespread disruptions. We’ve also revised our safety stock levels for critical components and enhanced our pre-validated packaging options to increase our buffer against sudden shortages. Additionally, we’ve invested in technology and infrastructure upgrades to ensure we can reliably serve our clients, including becoming NIST-800 171 compliant. NIST-800 171 is a cybersecurity framework that ensures the protection of sensitive information and cyberattacks—a crucial step in protecting our OEM clients’ IP. Our technology upgrades also enable a greater percentage of our staff to work remotely if on-site operations are disrupted. Finally, we regularly conduct contingency planning simulations, addressing a broader range of potential crises, such as supply chain breakdowns, cyberattacks, or natural disasters, to test and refine our responses.
Disaster preparedness has become a more important issue for both existing and prospective clients. The pandemic highlighted the far-reaching consequences of unforeseen events. Our focus on robust disaster planning demonstrates our commitment to resilience for our company and our OEM clients. We view this enhanced preparedness as a key competitive advantage in an increasingly uncertain world.
Perillo-Gentile: Post-pandemic, we have revisited and revised our disaster plans, making this a more important discussion point with customers, who are now more conscious of supply chain vulnerabilities. Since we have redundant capabilities at many of our sites across the globe, we can qualify products at different sites for business continuity purposes.
Warren: MMT was formed during the pandemic and our approach to business continuity reflected this shift in the practices needed to manage such disruptions. The ability to navigate these disruptions has become an important factor our customers value.
Fenske: As a result of the concerns around EtO (ethylene oxide) sterilization, are you exploring alternatives more often than before?
Nino: Yes, concerns surrounding EtO sterilization have significantly increased our exploration and implementation of alternative sterilization methods. We are seeing a surge in requests from OEMs looking to move away from EtO or wanting flexibility in sterilization methods for new product development. We are proactively evaluating and validating a range of sterilization options, including radiation (e.g., gamma, E-beam), vaporized hydrogen peroxide, and other emerging technologies like nitrogen dioxide or low-temperature plasma. Careful consideration is given to product compatibility, potential material degradation effects, complex device geometries, and any residue concerns.
Our small-batch EtO sterilization service, using small EtO canisters, provides a safe, reliable, and eco-friendly alternative for certain products. Extensive studies and industry experience substantiate small-batch EtO as a highly effective sterilization method with reduced emissions compared to traditional large-chamber EtO processes. We have ample capacity to meet the growing demand for this service.
Decision-making about alternatives is driven by product-specific requirements, including material compatibility, device geometry, packaging, and regulatory considerations. We also evaluate the availability and capacity of alternative sterilization service providers to ensure a seamless transition. We encourage OEMs to involve us early in the design process to consider sterilization needs upfront. We take a partnership approach, working closely with OEMs and sterilization specialists to identify and implement the most suitable solution.
The evolving landscape around EtO has created both challenges and opportunities for our company. We are committed to providing our OEM clients with the expertise and solutions needed to navigate this shift, including our small-batch EtO capabilities, to ensure the safe and effective sterilization of their medical devices.
Fenske: Social awareness programs have faced backlash recently and many companies are refocusing their efforts. Has your company altered its direction regarding DEI (diversity, equity, and inclusion) or ESG (environmental, social, and corporate governance) campaigns?
Kraus: We have not. We believe in being good stewards in all of the communities where we operate.
Maley: In the last few years, AVNA has remained committed to providing a safe, collaborative, and inclusive work environment. We continue to implement mentorship and leadership training programs that address unconscious bias and guide our team in achieving a culture of mutual respect. Additionally, we provide opportunities for our employees to engage in employee resource groups that foster spirit, build camaraderie, and celebrate each other’s successes and cultural differences. We are also deeply committed to empowering our employees to make a meaningful impact on the lives of the underserved within our communities. We poll our employees annually about our culture for suggestions and feedback that allow us to continuously improve and pivot as needed. Many OEMs look for synergies and mutual commitment to improving social awareness from their manufacturing partners, and it will always be AVNA’s priority as a globally responsible corporation.
Nino: While recent social debates have caused some to shift approaches, our commitment to fostering a diverse and inclusive workplace and operating sustainably remains strong. We focus on actively recruiting from varied backgrounds and cultivating a culture of respect. We prioritize measurable progress on key initiatives rather than external promotion. These initiatives integrate environmental and social responsibility principles into our daily operations. Staying informed on industry trends and actively listening to employee and client feedback allows us to refine our efforts.
Our core values are deeply intertwined with building a successful, sustainable business. We continuously evolve our methods, but our commitment to a diverse, inclusive, and responsible future is unwavering.
Tobin: We’re a new company and have integrated more than a dozen business units in the past year into the new Aptyx brand. We’re just starting our ESG efforts. These areas are important for building a thriving culture that people want to be part of, and to be a responsible member of our local communities.
These activities are core to our values. We’re building out the leadership to drive them within our organization as we continue to grow.
Fenske: Do your product development protocols address sustainability or recyclability? Is this something customers request?
Kraus: Our companies must be cognizant of the impact we have on the environment. It is imperative we continue to partner and provide our expertise to minimize waste creation.
Nino: We do place a focus on sustainability and recyclability within our operations, recognizing the importance of these principles to our OEM clients. However, our role is primarily supportive. We evaluate the sustainability practices of our suppliers and work with them to identify eco-friendly options, ensuring components align with our clients’ goals. Additionally, we can aid in designing packaging that minimizes waste and utilizes recyclable materials wherever possible.
Paulsen: Sustainability in manufacturing is becoming a more common concern among OEMs. Xometry offsets the carbon emissions of every customer shipment. Our “Go Green Initiative” allows our customers to easily take steps toward sustainability by offsetting carbon emissions related to their orders by up to 100%. Making such sustainability programs simple and easy to access is crucial. Our OEMs appreciate having the option built into our Xometry Instant Quoting Engine.
Perillo-Gentile: Sustainability and recyclability are increasingly incorporated into our product development protocols, often in response to customer requests, reflecting a broader industry trend toward environmentally responsible practices. One of the best ways we aim to be more sustainable is through scrap reduction programs, which also benefit our customers through improved costs.
Ruth: Our commitment to sustainability and recyclability is a fundamental aspect of our business. As an organization, we recognize the critical role we play in shaping a more sustainable future. We have a global sustainability officer as well as a sustainability board with local representatives at each site. We engage with Ecovadis as well as other assessment services to assess and manage sustainability practices within our supply chain.
Stotts: We have robust sustainability programs that support various ESG goals. We believe focusing on yield improvement optimization is one of the best ways to promote sustainability through waste reduction and resource drain. Less raw material, less energy used to manufacture, and less scrap equals better value. This is the key ingredient in our sustainability goals.
Jonathan Wagner: Spectrum works very closely with our customers during the product development process to align on design and product quality specifications.
Sustainability and recyclability of both raw materials and products are at the forefront of these discussions because both Spectrum and our customers understand creation of excess scrap materials and waste is not only environmentally irresponsible, but also costly in time, resources, and money. Spectrum has many options for recycling scrap materials but the most efficient and productive way to reduce scrap material is to generate less. This is a vitally important part of our product development processes.
Fenske: When faced with an OEM customer who presents consistent requests for a percentage cost reduction year over year, does it cause a rift in the relationship or a reevaluation of whether the customer’s business is worth it? (or, have you experienced this at all?)
Helm: On average, ABX customers have been working with us for several years; however, a fair number for more than 20 years, and still others for over 35 years. Our pricing formulas are consistent and variables in pricing are mostly volume driven. We work closely with these clients to identify ways we can jointly lower product costs. We have very few clients that simply request cost reductions without working closely with us to achieve a mutually acceptable production plan/cost. Further, we find ways to work with the client to provide them with what we call “a lower cost of ownership” by offering more value add in areas like testing, higher-level builds, stocking agreements, fulfillment, and other services.
Nino: Yes, we’ve encountered OEM customers who consistently demand year-over-year percentage cost reductions. We recognize OEMs often operate in highly competitive markets and might be facing their own cost reduction pressures. It’s also possible there’s a misalignment between expectations for cost reduction and the value we consistently provide.
We approach these requests with open communication, seeking to understand the OEM’s specific cost-reduction goals and the underlying reasons behind them. We emphasize the total value we offer beyond the direct manufacturing cost—focusing on quality, reliability, innovation, risk mitigation, and our commitment to being a true extension of their team. We view these discussions as opportunities to strengthen our partnerships by exploring creative cost-saving opportunities throughout the value chain, including design optimization, material alternatives, or process efficiency improvements.
Our goal is to build long-term, sustainable partnerships with OEMs. We strive to find a balance between meeting cost expectations while ensuring we can continue providing the high-quality products and services that contribute to our OEMs’ successes.
Perillo-Gentile: Requests for annual cost reductions can strain relationships but also drive innovation and efficiency improvements. We recognize the cost pressures our customers face and believe addressing these challenges requires open dialogue to ensure mutual benefits and sustainable partnerships. We certainly appreciate it when customers not only ask for cost reductions but are willing to partner with us on specific cost improvement programs.
Stowik: We have experienced all of it. We take pride in building long-term, mutually beneficial partnerships, and that requires give and take on both sides. We are fully committed to pivoting, adapting, and being flexible when our customer needs us to, but in turn, we need OEMs to respect, trust, and understand the value of our investments, not only in technology and materials but the human resources that go into co-collaboration and advanced innovation. Setting clear expectations and ensuring both parties understand and agree to the intent of the initiative is essential. Is it a cost reduction initiative that requires a collaborative review of all aspects of the project to support it, or is it merely a price reduction request that is one-sided? Clearly, they have very different implications long-term for a relationship.
Tobin: I view this as a positive and welcome these opportunities to work in collaboration with our customers. We understand our customers are looking for cost productivity—that’s business. We embrace this and do the best we can through innovation and re-engineering to drive productivity.
As part of our culture supporting Lean, Six Sigma, and kaizen, we’re always looking to boost efficiency so we can be more cost-effective for our customers. As a growing company, we’re able to create specialty solutions for our customers’ needs that optimize the cost of manufacturing.
Warren: While there is a desire from the OEMs to see year-over-year cost reductions, this needs to be balanced with the reality of supply chain and labor costs as well as inflationary pressures. Partnership with OEMs means managing cost conversation with a long-term view of sustainability.
Fenske: The industry is experiencing a shortage of skilled labor for many positions. How is your company addressing this and what are you doing to attract/retain/develop talent?
Helm: We are working with the local universities to offer programs like internships and pathways to job openings at ABX. Our focus is not only on the electrical engineer, mechanical engineer, and higher levels, but we are also recruiting for production positions, factory automation (such as a surface mount technology operator), testing jobs, and other factory employment opportunities that do not require a four-year degree. ABX collaborates with the university to offer training and other incentives to attract workers.
Kraus: This is a key area, especially in the U.S., that requires focus. Apprenticeship programs and other avenues into trade schools, high schools, and other community forums must be focused on to create the next generations of engineers, skilled laborers, etc. We are focused on this area and will continue to invest.
Mabie: We are fortunate that our manufacturing operations are located in Phoenix, Ariz., which has a lower cost of labor than surrounding states and tends to be business-friendly. We intentionally pay above-average wages to hire and keep the right talent.
Maley: As the candidate pool of skilled labor continues to shrink, AVNA has taken a multi-strategy approach to find, attract, and retain. Attracting talent is just a small piece; retaining the talent is equally as important.
We’ve partnered with several programs that provide opportunities to individuals with physical impairments, individuals who have been recently rehabilitated, and individuals from Europe who have been displaced by the war in Ukraine.
We’ve also increased our engagement with trade schools to attract talent. These are students who may not necessarily want to take the “four-year degree” route. We also partner with local high schools and colleges to establish and support manufacturing technology education centers, and we offer paid internships and co-ops.
We are engaging with middle schools to introduce manufacturing as a path for students interested in STEM careers. We find it is important to not only educate students, but guidance counselors and parents about the benefits and rewards of a career in manufacturing.
Additionally, we partner with state agencies to promote manufacturing career opportunities and attract talent not only within AVNA but within our state. We have also been fortunate to benefit from training grants when available. One example is our Toolmaker Apprenticeship program. This program allows us to provide a path for individuals who want to pursue a career in the trade of toolmaking.
Nino: The skilled labor shortage is a significant challenge, and we’re actively addressing it with a multi-faceted approach. We have expanded our recruiting efforts beyond traditional channels to reach a wider pool of potential candidates. This includes partnering with colleges, trade schools, and workforce development programs. We’re also focused on building diverse talent pipelines. To attract top candidates in a competitive market, we highlight our strong company culture, focus on innovation, and opportunities for professional growth.
Once on board, we invest heavily in our employees! We pair experienced employees with new team members and invest in leadership training to build our internal talent pipeline. Competitive compensation packages and benefits that align with market trends and employee needs are also essential.
We prioritize creating a positive and inclusive work environment where employees feel valued, respected, and have a clear path for growth. Where possible, we explore flexible work arrangements to accommodate individual needs. Employee contributions are valued, and we seek ways to express our appreciation.
We recognize our employees are our most valuable asset. We’re not just filling roles; we’re investing in our team’s long-term growth and well-being because a happy, fulfilled workforce translates to consistent, high-quality products and services for our OEM clients.
Perillo-Gentile: Addressing the skilled labor shortage involves enhancing our value proposition to employees, focusing on career development, creating a positive workplace culture, and leveraging technology to make roles more appealing. Today’s workforce, rightfully so, expects employers to invest in them and their futures. They are looking not just for jobs, but for careers, and we make it a priority to provide a growth path for them along with the support, training, and mentorship needed to acquire the skills and experience needed to advance. There are more options than ever for job-seekers, and we recognize that to attract and retain the highest level of talent, we need to be competitive on compensation and be a best-in-class place to work and grow.
Ruth: We recognize the challenges posed by the industry-wide shortage of skilled labor. To address this, we’ve implemented several strategies to attract, retain, and develop talent. We actively engage in apprenticeship programs for our tool room and mold shop. These apprenticeship programs allow us to train and mentor individuals who are new to the industry. Apprenticeships provide hands-on experience, practical skills, and exposure to real-world scenarios.
We offer employer-of-choice programs and incentives to attract top talent. We create an environment where skilled professionals want to work and grow. We also invest in training and development, prioritizing continuous learning and fostering a positive corporate culture.
Stotts: We believe in paying an appropriate wage, and while this may not be the only action, it has the most impact. We also promote community engagement at the plant locations. Our teams have JOIN programs with charities, local school systems, and various NGOs. We actively promote local job fairs, create internships, and support community events. We want to be an asset to the communities in which we exist.
Tobin: As a new brand that comprises more than a dozen companies, we’re focusing on building a culture around our vision, mission, and values and establishing Aptyx as a great place to work. A key part of our mission is to positively impact people’s lives, including the lives of our team members. We live our value of “Growth Mindset” through a culture of learning that enables us to develop a robust workforce. Some examples include our successful apprenticeship programs, partnering with local trade schools, and Aptyx University, which offers a range of classes from Lean/Six Sigma to communications and capabilities training.
Fenske: What trend(s) in medtech will you be following in the near- and/or long-term you expect to become more important or could have a significant impact on the industry? Explain.
Nino: Several key medtech trends have my focus in both the near and long term. In the near term, the rise of connected devices and remote monitoring is particularly important. The use of wearable sensors, connected medical devices, and telehealth platforms will empower patients and streamline care delivery. This transformation will increase data availability for providers, enhance chronic disease management, and potentially lower healthcare costs. Additionally, personalized medicine and precision diagnostics are advancing rapidly, enabling treatments to be tailored to individual patients rather than applying a one-size-fits-all approach. This shift toward precision medicine could lead to more effective therapies, faster diagnoses, and improved patient outcomes.
Looking further out, artificial intelligence and machine learning hold the potential to revolutionize medical devices and the healthcare industry. Applications include improving diagnostics and imaging analysis, advancing surgical robotics, accelerating drug development, and enabling personalized treatment recommendations. Additionally, the continued drive for minimally invasive procedures and the expansion of wearable sensors and devices will further expand options for non-invasive health monitoring, diagnostics, and even treatment.
These trends could significantly impact the industry by improving patient outcomes, increasing healthcare efficiency, and transforming the patient-provider relationship. As a leading CMO, we’ll closely monitor these trends to proactively adapt our manufacturing processes for new technologies, collaborate with innovative OEMs in these areas, and invest in upskilling our workforce to meet evolving demands.
Perillo-Gentile: There are several I’ll be following.
Digital Health and Connected Devices: The rise of digital health technologies, including wearable devices, remote monitoring tools, and health apps, is transforming patient care. These technologies facilitate real-time health data tracking, enabling personalized medicine and more proactive healthcare management. For medical device companies, this trend emphasizes the need for expertise in software development, data security, and regulatory compliance for digital health solutions.
Artificial Intelligence (AI) and Machine Learning (ML): AI and ML are being increasingly integrated into medical devices to enhance their functionality, improve diagnostic accuracy, and personalize patient care. From image analysis in radiology to predictive analytics in patient monitoring systems, AI and ML are opening new frontiers in medical device innovation. Companies in the industry must focus on developing AI competencies and understanding the regulatory landscape for AI-integrated devices. We also see AI being integrated to better manage supply chains and optimize manufacturing.
Increased Use of Additive Manufacturing: Additive manufacturing, or 3D printing, is being used more widely for prototyping as well as for the production of medical devices. While additive manufacturing is not a new phenomenon, several technological advancements recently have allowed it to be used more broadly. This technology allows for rapid prototyping, customization of devices, and even production of complex device structures that are not possible with traditional manufacturing methods.
Samproni: One trend I am passionate about is the integral role of human-machine interfaces [HMI] as the medical technology industry transforms and delivers innovations that are smarter and more connected to improve healthcare and patient lives. HMI gives humans the ability not just to control machines, but to become partners with them.
HMI must be taken into consideration during the design phase to create more resilient and innovative products that deliver patients easier, faster, and reliable access to quality care. Consider a soft robotic wearable that a team of researchers from the Harvard John A. Paulson School of Engineering and Applied Sciences developed to assist upper arm and shoulder movement in people with ALS. Though the product is not yet available commercially, it speaks to the power of HMI to improve patient lives in the future. Through intuitive HMI, study participants learned how to operate the device in under 15 minutes, which will allow it to integrate into a patient’s everyday life with ease. By focusing on the needs and experience of the full spectrum of end users and making HMI a priority in device design, we can improve patient care, enhance user experience, and ultimately save lives.
Stotts: We believe miniaturization and continued expansion in minimally invasive procedures are exciting, as are robotics and automation. In some areas, a shrinking workforce demographic will require a rethinking of the work allocation between machines and human resources. We also believe AI will allow for the optimization of machine settings and data analysis. It’s a compelling time to be involved in the medtech manufacturing space.
Stowik: One trend we continue to follow closely is the impact of new pharmaceutical therapies for some segments of the industry that could impact or even replace “standard” surgical procedures or other traditional treatments in the future.
Tobin: We’re following trends that are impacting manufacturing as well as clinical and therapeutic markets. On the manufacturing side, we’ve embarked on Industry 4.0 and are strengthening our road map to leverage technology like virtual reality for our integrated companies and suite of capabilities.
Some of the medtech trends we’re following include “smart devices,” growth in robotic-assisted applications, connected care, and the move from hospital to home or point-of-care that’s driving diagnostics and so many other markets.
We’re proactively planning to ensure we have the capacity to accommodate our customers’ needs in these high-growth areas. For example, the gears and actuators we manufacture are integral to robotic-assisted surgery systems, wearables, home care infusion pumps, and more.
Warren: Looking forward, I expect we will continue to see an emphasis on process automation, both in the production line and more broadly in the digital support processes. I would expect this to be augmented by businesses leveraging AI tools, especially as they become more commonplace. Both automation and AI integrations will drive continued advances in end-product quality. Not forgetting the impacts of the pandemic, supply chain excellence, the deployment of SIOP tools, and continued programs to build resilience will remain a focus.
Fenske: Do you have any additional comments you’d like to share regarding the OEM/CMO relationship within the medical device development and manufacturing community?
Nino: Decades of experience as a leading CMO have shown us that the most successful OEM/CMO relationships extend beyond the transactional and into the realm of true partnerships. These partnerships are built on open communication, trust, and a shared commitment to delivering innovative, high-quality medical devices that improve patients’ lives. A strong partnership empowers both the OEM and CMO to navigate the industry’s complexities. Whether facing regulatory changes, supply chain disruptions, or market pressures, they can leverage their combined strengths and expertise to find solutions.
OEMs and CMOs with a shared focus on innovation create a powerful force in the industry. By actively participating in design for manufacturability, sharing material expertise, and exploring new technologies, CMOs become extensions of their OEM clients’ teams. This collaboration accelerates the path from concept to commercialization, bringing life-changing medical devices to patients.
The OEM/CMO relationship is crucial for the medical device industry. Building strong, collaborative partnerships based on trust, communication, and a shared vision isn’t just good for business; it’s essential for fulfilling the ultimate goal of improving patients’ lives.
Ruth: We are fortunate to contribute to an industry that transforms lives; whether it’s a life-saving device, a diagnostic tool, or an implant, our work matters. It’s not just about the products; it’s about patient well-being. Our loved ones deserve nothing but the best quality of care.
Stotts: We believe the relationships between OEMs and outsourcing partners have never been more important. Aligning with the CDMO that provides the greatest capabilities, the highest value, and the most reliability will allow the OEM to focus on what they do best—creating and marketing the most advanced patient-saving devices.
We are fully committed to being that partner and working with OEMs to deliver cost-effective, high-efficiency products.
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