The 12 Questions To Ask When Outsourcing Medical Devices

By Amber Sherrick, ASI (Advanced Scientifics, Inc.)

The decision to outsource a medical device has serious consequences for your business and for your ultimate customer. This article will help you design a Q&A checklist for choosing the right outsourcing partner. In the article, you will learn the 12 questions that are most likely to elicit information critical to identifying a partner with the quality, experience, capacity (current and future), and financial stability to produce those products which are proudly labeled with your company name and logo.

1. Does the company have experience in your market?
 The first thing to check when selecting an outsourcing partner is that a contract manufacturer (CMO) has experience in your specific market. This experience will help the CMO to satisfy regulatory standards, complete all required filings, and select the right materials for the project at hand. An experienced partner will also know how to grow the production process as the product volume grows.

When vetting the potential CMO, request applicable examples relating to your specific requirements — to ensure the personnel assigned to your work have the right experience. Be sure the experience of the CMO and the key personnel is specific to this location (i.e., “apples to apples”). Ensure that the CMO is not using experience or personnel from other operations that have no role in the location under review.

2. Does the CMO have a strong quality management system (FDA registered, ISO 13485:2003 certified)?
Ultimately, your reputation is tied to the quality system of the CMO, so never underrate this factor in your selection procedure. Even small deviations from FDA regulations or ISO quality standards can cause a production lot to be discarded or the entire process to be scrutinized by regulatory bodies. More so, a strong quality assurance (QA) capability can be a positive marketing factor, as it provides your potential customer with confidence in the quality of your product.

Check to see if the CMO has received warning letters or violation letters from the FDA. Has the FDA ever withheld product approval for lack of compliance? What about the record of foreign suppliers in following FDA regulations? Are the ISO practices current and certified?

3. Does the CMO have supply chain expertise (and do they outsource offshore)?
Controlling all aspects of the supply chain is essential to the cost, delivery schedule, and quality of the product. Supply chain management (SCM) includes all the activities that must take place to get the right product into the right consumer’s hands, in the right quantity, and at the right time — from raw materials to customer acceptance. SCM focuses on planning and forecasting, purchasing, product assembly, quality control, packaging, storage, and distribution. This is particularly important when there are numerous vendors and suppliers necessary to supply the raw materials and equipment for your product.

In managing the supply chain, the CMO must consider if current customer suppliers can be changed without disrupting a successful process. It is imperative to understand how the CMO will accommodate customer-supplied materials. Also, be sure to determine how the CMO controls delivery of long lead items, which can be critical to completing the process train.

The conversation that will ensue when discussing supply chain syncs directly into a discussion about outsourcing and offshoring. In today’s global economy, there will undoubtedly be some process systems, equipment, and raw materials that may have to be imported. In addition, there may be some unit operations that need to be performed in other countries. Ideally, the offshore suppliers will have the same quality standards, equivalent raw material compliance requirements, and the same knowledge of FDA regulations as the U.S. CMO, but you will need to develop a level of confidence that the U.S. CMO can assure that these standards and regulations are being met.

Make sure that the CMO periodically visits these suppliers, and ask to see those records. Ask how long the suppliers have exported goods and materials into the U.S., and ask how the CMO feels about their quality record. Will the CMO stand behind any imports that become part of your product? Be straightforward in asking questions about who would bear responsibility if a reason for failure were determined to be the offshore materials or equipment. Written contracts are best structured when based on these types of discussions.

Additionally, be sure to discuss the CMO’s reasons for outsourcing equipment, materials, and unit operations. Is it less expensive, more reliable, or the only available source?  If it is the sole source situation, finding out how they made that determination will be important. Was this a global sourcing situation? Did it include possible sources in the U.S.? Is the CMO willing to use a supplier of your choice if that supplier can meet their selection criteria?

4. Does the CMO have sufficient capacity in production and engineering?
All CMOs strive to keep their production line utilization at a high level and balance their current business with new business expectations. It is vital to examine their ability to accommodate your production needs, either through a new dedicated line or by modifying an existing line.

Additional questions to ask when discussing production and engineering capacity include:

• Do they have space and manpower for a new line?
• When and where could a new customized line go into production?
• Are unit operations of the production process, such as sterilization, shared by other products in the plant?
• What is the capacity of the shared operation when other products are demanding processing time?
• Do the current capacity levels allow for rapid expansion if your sales forecast indicates the need to increase production quickly?

5. How will the CMO handle your production plan?
The CMO should provide a production plan which takes into account the questions above and explains precisely how they intend to meet your production schedule and needs. Will the CMO need to use multiple locations or go offshore for manufacturing?

Use the contract signing date as a linchpin to identify acceptable schedule milestones. For example, how long after the signing of a contract will your production line be installed, inspected, and ready for production?

6. Can the CMO provide staffing charts?
Another aspect of capacity is personnel availability and staffing. Does the CMO have sufficient manpower in engineering, production, maintenance, storage, and distribution to service your product? Take into account the level of automation in production, as this will reduce the manpower requirement. Ask for staffing charts by discipline to evaluate the current workload and the forecast for your product.

7. Does the CMO foster continuous improvement?
Most CMOs will provide some design support, but not complete product development. Can the CMO you choose drive down costs and improve efficiencies in any phase of the product’s life cycle by supplying automated solutions, fresh designs, or raw materials for production? If you are lucky enough to find a CMO that has an evaluation process to recommend quick process improvements, suggest long-term redesigns, and optimize the supply-chain as a matter of course, then you have found a strong partner for the entire product life cycle.

8. Is the CMO’s work culture compatible with yours?
The process of establishing cultural compatibility may seem unnecessary, but it will prove invaluable during the manufacturing term. A site visit and an interview of key personnel are essential to probing the CMO and establishing a positive “comfort-factor” with them. The process will force you to ask questions and become comfortable with the group that will manufacture your product. Are these the people that will be “hands-on” during manufacturing? Where are their priorities regarding cost, schedule, and quality? Do they view you as an important customer or just someone in the queue?

9. Is there potential for automated processes?
This is worth a specific discussion because automation can be the saving grace or the bane of your campaign. Experience is key. Automating a process or any unit operation can improve the quality, reduce product cost, and increase production throughput, but it must be documented and validated. Process controls in automated operations can be sophisticated and require a higher degree of engineering talent that all CMOs may not have. Inquire about the CMO’s automation experience for similar projects. This may be an instance when you should ask to speak with one of the CMO’s former clients who actually experienced the automation solution.

10. Is the CMO financially stable?
When non-payment to a supplier of a critical piece of production equipment or vital raw material causes a delay or shutdown of your production line, you may not have developed a strong enough due diligence process for verifying financial stability. Having the financial strength to manage procurement surprises can avoid cost overruns and delivery delays.

Not only should you do your financial due-diligence through the normal credit checks, but you should also talk to recognized suppliers about the CMO’s procurement policies. Do they pay their suppliers on time, thereby receiving the best pricing and on-time delivery? Alternatively, are suppliers delayed until invoices are paid?  If it is the latter, and you still choose to use this CMO, you may choose to write the contract differently, putting in language that requires the CMO to pay suppliers under terms more acceptable to you.

11. Are the CMO’s facilities a good fit for your product?
The CMO’s facility is another important and fairly obvious aspect of assuring that you receive a quality product with on-time delivery. It is the first thing you will probably see after a visit to the conference room during early discussions, but there are important questions to ask, beyond the look of their (most likely) modern, high-efficiency, and high-volume manufacturing center(s).

Ask the CMO to indicate the specifics of the physical location for your operation, and talk about their current utilization of that space. Request a preliminary layout of your operation in that space. Verify that the facility has state-of-the-art, environmentally controlled areas such as ISO Class 7 and ISO Class 8 manufacturing clean rooms and climate-controlled storage rooms.

Additionally, you should ask about plans for production disruptions. The following questions may be helpful in determining if their facility is a good fit for your product.

• Have emergency power generators been installed in the event of a power outage?

• If some operations are to be performed offshore, have they determined if the foreign supplier has taken the same precautions?

• Is the CMO in a flood zone?

• If so, have there been occurrences in the past, and what measures have they taken to mitigate future problems? 

Again, as a reminder, do not just take the verbal discussions as final proof. Always ask to see documentation.

12. Who is the contracting entity?
Are you contracting with the corporate entity, a subsidiary, or a division? This is particularly important when financial and performance guarantees are involved. If you are contracting with a division or subsidiary, ensure that your contract is written so that the highest level corporation behind the CMO will stand behind the guarantees made.

Be prepared to answer questions, too!
The dialogue between your company and a potential CMO will ideally be a two-way conversation. CMOs often do their own due-diligence by evaluating a new product before taking it on, because the manufacture of a new product uses engineering and production assets that might be dedicated to proven and mature products. Therefore, don’t be surprised if a CMO asks questions about your organization, which may include questions about your required time to market, your marketing strategy and potential, and your distribution channel.

Operator training speaks to quality
In the end, it is the manufacturing operators who have the greatest impact on quality. Ask to see training logs, and ask probing questions about how the CMO goes beyond standard operating procedure (SOP) training to get to the heart of how capably the organization trains individuals on your particular device process. Ask how often training is conducted and, if there are multiple shifts, how is that situation covered?  Perhaps they use video training or have required stand-up, 5-minute shift meetings. If the CMO asks for you to provide some materials that explain your product’s use in the market to use in training operations, that is a positive sign that the CMOs training goes above and beyond simple SOP training.

Allow your natural intuition to come into play for this and all of the other questions you ask, so that you may more fully understand the company’s culture. This will allow a final decision to be made on a CMO partner that includes facts and welcomes insights. Insights are just as important as facts, as it is often the insights and off-hand comments made during a coffee break with your CMO partner that will uncover the real heart of the company you want to work with, confirming or negating a 100 percent factual decision.

Conclusion
While some of the questions and answers offered here may seem self-explanatory, having a checklist can be invaluable when you are in the process of choosing a CMO partner. Such lists may be developed for emailing potential partners in the early rounds of interviews, and other, more comprehensive lists may be used during on-site interviews. These 12 questions will help your teams immensely. We suggest that you keep this data in a consistent format, so that you can begin to develop a searchable database on your outsourcing partners. This is a best practice situation for your procurement group that can grow in detail and specificity, which can fine tune your partnering process over time.

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About The Author
As the marketing manager of global marketing programs for ASI, Amber Sherrick oversees all marketing activities for the company and its life sciences and healthcare brands. She develops and executes the company’s strategic marketing plan to increase brand awareness and to communicate ASI’s unique benefits as a manufacturer of single-use systems and bioprocess equipment for the biotech market.