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Globalization and outsourcing issues that worry medtech executives

Arundhati Parmar

Taking advantage of global opportunities while keeping costs low are the dual targets of many companies.

Yet, globalization and outsourcing contain inherent perils. So when a group of global medical technology executives were asked what globalization and outsourcing issue concerns them the most, a solid 60 percent responded that it was the “quality of the product, raw material or service that is provided.”

Another 59 percent responded that they had sleepless nights worrying about “maintaining consistent quality standards across internal and external sites.”

The survey also found that despite the threat of regulatory risk, an overwhelming majority of medtech executives were surprisingly bullish about their company’s growth prospects over the next three years.

These were the results of a new survey of 125 medtech executives representing 89 companies in 16 countries. Sponsored by technology services and manufacturing services companies like iGate, Camstar Systems Inc. and PricewaterhouseCoopers, the survey seeks to get a pulse on the rewards and risks of globalization. It also seeks to provide recommendations that would help executives manage the perils — such as quality issues — better.

In fact, 75 percent of survey respondents cited that the regulatory concern that they would deem to be of moderate to significant risk is maintaining a quality system through the supply chain.

“Right now, this is a black box,” said Daniel Matlis, president of Axendia, a life sciences analysis and consulting firm that conducted the survey. “We go select the supplier, audit them and make sure that they can manufacture the product and then the next time that they get any visibility or data is primarily when they receive their first shipment from them.”

This is all the more problematic because only 13 percent of respondents said that they had real-time visibility into their suppliers, with 43 percent wanting real-time data and almost half of respondents seeking on-demand data.

That in effect is the “fog of outsourcing,” Matlis said, and recommends that companies perform a holistic analysis to know what they need from especially critical suppliers. Achieving that is difficult given that a majority — 63 percent — are using paper-based systems to get data, the research found.

“What we are recommending is that companies need to identify up front what are those critical to quality parameters that we need from our suppliers and then they need to set up portals, systems to enable them to have on-demand, real-time visibility into their suppliers in the same fashion that they had it when they were manufacturing internally,” Matlis said.

To request a copy of the report, go here.

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