Consolidating, in More Ways than One
While trends toward cost cutting are nothing new in the medical device packaging industry, prolonged economic recovery may be prompting more aggressive approaches. Traditionally, MDMs have sought to reduce costs through downgauging the materials used for thermoforming trays. But given performance requirements and remaining inventory volumes, downgauging may only get MDMs part of the way.
Instead, consolidating multiple SKUs in universal packaging could give MDMs “the biggest bang for their buck,” explains Jason Crosby, medical business manager for Plastic Ingenuity Inc. (Cross Plains, WI; www.plasticingenuity.com). “There are limited opportunities in downgauging. But if companies can move from 20 different trays into just five, the savings can be substantial. More companies should look at consolidation.”
Crosby reports that last year his company helped one customer consolidate some of its products into universal packaging, realizing a savings of at least 30%.
Downgauging may be slightly “easier,” admits Crosby, because MDMs typically “do not need to retool unless the downgauging is significant.”
In addition, depending on the changes made to the sterile barrier system, the revalidation requirements associated with a new design could be perceived as “burdensome,” Crosby says.
Nonetheless, nearly every consolidation project that Crosby has been involved with has had a “positive outcome,” he states. “Not only were there cost savings and fewer items to inventory, but the MDMs have improved operational efficiencies and throughput.”
DO THE MATH
Over the years, the number of medical devices a given company may market multiplies through product line extensions and company acquisitions. “These MDMs could have 20 SKUs, each requiring unique trays,” says Crosby. Many of these could be in small volumes, he has observed, so these companies could be paying for a series of short thermoforming runs as well as spending internal resources to manage all that inventory. “If companies change their ordering volumes from five separate runs of 20,000 to one universal run of 100,000 parts, for instance, they could see some savings,” he reports.
And these MDMs could be inventorying much more than different-sized thermoformed trays. “They have multiple sizes of Tyvek lids, different-sized cartons, and even different sealing nests to inventory,” he adds. “MDMs could streamline inventory throughout their packaging systems, and they may even be able to consolidate some suppliers.”
In addition, MDMs may be spending significant resources on frequent heat-sealer changeover. “If MDMs were to consolidate product lines into the same tray design, they would have fewer parameter changes and therefore have faster set ups. They could batch their orders together and gain efficiencies.”
DO THE HISTORY
When consolidating several SKUs into a new universal design, MDMs will need to ensure that the new design meets the design requirements of each SKU. “Revalidation can be painful,” says Crosby. “And some companies simply just don’t have the resources. Some companies do not have engineers working on existing designs because they are charged with new projects.”
Crosby says that thermoformers “can help in some ways, but MDMs still need to run the new tray designs on their own equipment so they can validate their own processes on their own lines.”
To determine whether consolidation makes sense, MDMs should weigh the costs of revalidation versus the potential cost savings, Crosby explains. When asked whether there is a “magic number in savings” at which a revalidation makes sense, Crosby says that it depends on the company.
“In some cases, you can leverage existing historical data, utilize that data for new designs and processes, and even cross reference from one product line to another,” he says. “But MDMs need to make those decisions based on the level of risk.”
DO THE NETWORKING
Crosby advises MDMS to consult their suppliers for cost-cutting ideas. “Many times MDMs don’t utilize their suppliers enough. Internally, they may just go after the low-hanging fruit, but they should engage their suppliers. Utilize your suppliers’ design expertise to assist with the design consolidation. There is value that the supplier base can add, if MDMs are willing to be transparent about their product requirements.”