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What is the best way for medical device professionals, early-stage, and established companies to select and engage with contract manufacturers? One medtech expert has a winning formula that he wants to share with listeners of the show.
In this episode of the Global Medical Device Podcast Jon Speer and Etienne Nichols talk to Mark Rutkiewicz, VP of Quality at Innovize, founder of Consiliso LLC, and author of Medical Device Company In A Box.
As a contract manufacturer himself, Mark brings a wealth of knowledge and insight to his discussion with Jon and Etienne, helping listeners understand how to navigate the selection process for medical device contract manufacturers.
“You can outsource all these different aspects and that’s all part of contract manufacturing.”
“The price of the part and what your volume is going to be is directly related.”
“What you do is going to directly affect the patient experience. If you mess up, they might die.”
“Contract manufacturers - we just take a little cut. We’re not making huge profits.”
Announcer: Welcome to the Global Medical Device Podcast, where today's brightest minds in the medical device industry go to get their most useful and actionable insider knowledge direct from some of the world's leading medical device experts and companies.
Jon Speer: Hello and welcome to the Global Medical Device Podcast. This is your host and founder at Greenlight Guru, Jon Speer. Joining me, this has become a familiar face, is co- host, Etienne Nichols. Etienne, welcome back.
Etienne Nichols: Thanks Jon. Good to be back.
Jon Speer: All right. I dig your studio setup. I got to figure out how to mimic that some way.
Etienne Nichols: Oh, a hundred bucks and I'll get you there.
Jon Speer: The books, those aren't virtual books. Those are real books.
Etienne Nichols: That was my own design too. I'll have to tell you about the design of that shelf some time.
Jon Speer: We're going to talk about contract manufacturing here, in a moment, so maybe we can lace that into the conversation.
Etienne Nichols: Here we go.
Jon Speer: But also joining us is a repeat guest, Mark Rutkiewicz with Innovize and Consiliso. Mark, welcome back.
Mark Rutkiewicz: Thanks Jon. Thanks for having me.
Jon Speer: Well-
Mark Rutkiewicz: Etienne, nice to see you again.
Etienne Nichols: Good to be back.
Jon Speer: Well today, Etienne, what are we talking about?
Etienne Nichols: We're talking about how to select a contract manufacturer.
Jon Speer: This is a good one.
Etienne Nichols: There's lots of ways. Yeah. I'm excited about this one because this is something that... I've dealt with this some, but I know there are lots of aspects of this that I'm excited to learn about.
Jon Speer: One, a lot of our listeners, I know who are startups or smaller companies, probably say I've been in the industry for about 23 years. I remember, it was probably a good 15 or so years ago, there was a trend. The huge trend at that time was outsource everything for medical device companies. In fact, there was a huge outsourcing to places in China and that sort of thing, because it was cheap or fast or whatever. I think that pendulum's come back. There's still some outsourcing to China, but there's still a theme of outsourcing and especially for a startup company. I mean, they're probably not going to build a brick and mortar. Mark, you are a contract manufacturer. I know you have some specialization with your contract manufacturing, but you've been in the industry quite a bit longer than I have. I'm sure you've seen all these trends. What are your latest greatest? What's happening in the world of contract manufacturing?
Mark Rutkiewicz: Yeah. It's about 20 years ago, I really started seeing... I remember talking to a company about 20 years ago. I was like," How many people in your company?""Four." It's like," Four people?" It's like," Yeah." He's the head of design and he's working with a contract design house. I'm head of quality and this person's the head of operations and supply chain and so they're dealing with a contract manufacturer that's building the product.
Jon Speer: Right.
Mark Rutkiewicz: Four people basically run the company and everything's outsourced. I was like," What?" That's almost the model today because if you're a startup and you have so much dollars, where are you going to spend your money? I'm not going to spend my money building a manufacturing plant that's going to build a hundred parts for the clinical trial and then sit idle for two years while the clinical trial gets done.
Jon Speer: Yeah. This doesn't make sense.
Mark Rutkiewicz: Doesn't make sense. Yeah, that's why. So manufacturing's where it started, contract, but now you look at the FDA registrations things, you can register as a contract manufacturer for the design control. You can register as contract manufacturing for manufacturing, you can register as a contract manufacturing for post- market. You can outsource your complaint handling and there's companies that just do that. You can outsource all these different aspects and that's all part of contract manufacturing. I'll call it contract manufacturing, but it's contracting aspects of your business depending on the size you're doing. I mean accounting too. You don't necessarily need... If you don't have a lot of dollars going in and out, you don't need a full- time staff for that. But if you have the plant and then the plus here is on contract manufacturers can build out the equipment. This is actually interesting. I started working with contract manufacturers back in the'80s and early'90s. I was working at Cardiac Pacemakers at the time and we were making our own programmers. We were soldering circuit boards for the programmers for the pacemakers. It's like," We make pacemakers. We don't make programmers." We had to buy new technology, more equipment because it's like," Let's not do that. Let's outsource." I remember going to the first... Outsourcing our circuit board manufacturing. And so learning about that, it's like," Wow, you have all this new technology." Because they have to. Circuit board manufacturers, especially in the U.S. they're really not going to get the volume here. I mean, if you have high volume that's going to be done outside the U. S. typically because of labor costs, but more and more of this has been automated. As you automate the machines and a lot of the contract manufacturers do that, they try to save costs and with volume and then design their machines to be flexible so they can keep them running all the time. As us as a contract manufacturer here, we have a lot of customers that order once a quarter and we can run it in two days and that would be totally, non- value added for them to have a plant that runs for two days and stuff like that. We've had a lot of customers that used to order manufacturing for us and then if we don't have business, we just move those people to a different project, different equipment and stuff.
Jon Speer: Question for you because clearly we've talked before, the term medical device is so broad. It covers such a wide array of materials, technologies, et cetera, et cetera. Clearly not all manufacturing is the same and so let's imagine that I'm a startup or maybe even a small company that thought," Oh, I could do my manufacturing." But I'm at a point where I need to engage a contract manufacturer. How do I find the options? What should I be looking for? What sort of characteristics should there be in my backyard? Should I look overseas? What are some of your thoughts about that? How can we help folks develop a checklist as far as the evaluation.
Mark Rutkiewicz: Yeah, I actually wrote a white paper on this. That white paper's actually out on crosstalk.
Jon Speer: Well, wherever it is, send it over to us and we'll crosstalk.
Mark Rutkiewicz: Yeah. The concept is all of those things you want to look at. You're typically... Most people just look at cost. What's it going to cost? I'll go to the cheapest cost. That'll be great. Well, that's one of the things you should be looking for but look at where they're located to. Now today with COVID and stuff, everybody's leaning more digital, but still going to the plant and seeing the products and seeing as they're manufacturing, if they're making it right. Understanding it is important. You may not have to go there every day, but you're going to go there regularly.
Jon Speer: I-
Mark Rutkiewicz: So the farther away they get-
Jon Speer: I always said I wanted to be in strangling distance of my suppliers.
Mark Rutkiewicz: That's a good thing.
Jon Speer: And vice versa though. They could be... I was also in strangling distance with them.
Mark Rutkiewicz: Yeah, the farther away you get, the manufacturer, the more you're relying on them to do stuff. It's really simple. They're making tubing and cutting it to a certain length. Okay, that's easy. As they're making the device, as you're doing assembly, things to look at is how complex is your product? How many validations, process validations will be needed? You have to know that yourself going in. The contract manufacturer's only going to do what you tell them to do. They're going to quote you all these things. And so as Innovize here, we quote these things and say," Hey, some things you need validations for and some things you don't." If it can't be verified by a subsequent inspection or test, it needs to be validated. Typically, package seals, bonds and stuff like that, laser Wells and stuff like that, all have to be validated. But there's parts that don't have to be validated. If you can see that it's this dimension, you don't have to validate it. But if you do validate it, then you know the capability of the process and you know how good your parts are going to be.
Jon Speer: Right.
Mark Rutkiewicz: You really want to do more validation than what's really required depending on how much controls, inspections and tests you want to throw in. Now if you can say," Hey, I want you to do this functional test and it's a computer system." And you run the test and the software does it all. Great, that's good. But then you got to, the upfront work with that. But working with a-
Jon Speer: Allow me. Let me jump in on that too because you mentioned cost a moment ago. What you're describing is an element of cost, but if you're not educated, it's going to seem like the contract manufacturer that's going to validate more, might be more expense to get started, but is going to be less expensive after they've gone through that validation because it doesn't require the humans to do the actual inspections, right? These are somewhat complicated, but you have to think about the upfront cost versus the long term cost, right? Validation is a huge benefit.
Mark Rutkiewicz: Right? By validating, you can get more confidence and you don't have to worry about that down the road. Now how much money do you have? And then sterilization requires. So contract manufacturers, sterilizers are all contract manufacturers. inaudible products sterilize that has happening, that's actually very specific. There are standards, ISO standards for what the contract manufacturers do for sterilization and the costs are fairly fixed and you know what that is. But then if you get into injection molding and you get into catheter assembly and those types of things, those you really want to talk to the manufacturer about. Now when you're working with a contract manufacturer, cost is one key thing, location and availability of inaudible. What services can they provide? Can they do validation? Can they do this? How much can they do? Can they push things out to other ones? They can't do sterilization, but they can ship it to the sterilizer. Great. Versus no, we don't do any labeling. We can do the part, but then you have to send somebody else to package and label and then somebody else sterilizes it. You have to understand what your supply chain is. When you're working with the contact manufacturers it's like," Well, I want to make this." Well, how much information are you going to give them? If you want to get a good quote, you have to give them all the information you possibly have. It's like," Who are the suppliers you've used? What's the cost?" Then it's like,"What's the expectations like? Well, I want them to figure it out." Yeah, they can, but you're not going to get a good number or you're going to get somebody that's going to low ball you to get the business and then you're going to get nickle- and- dimed and it's going to cost you a ton more in the back end. And so it's really the service that they provide and the kind of questions they ask. Do they really know the medical device industry? And if they ask those questions, great. If you're not as experienced when you go out and look for... And so I did this, I've been on both sides. I mean, I'm manufacturer and trying to find contract manufacturers. Actually the job right before Innovize, I was in a company, we were moving from Canada to the United States, this company and we were looking at some contract manufacturers and we looked at like 10 different contract manufacturers for some catheter assembly and packaging and asked them questions. And it was interesting to see what each of them were asking and it's like, some of them asked things, it's like," Oh, okay." And some of them didn't. It's like," Well, how can you quote this?" You can quote it but-
Jon Speer: I've been through that too. There's tells, right? When you're in the process of trying to identify potential contract manufacturers, for all intents and purposes, there's an element of it that's like an interview. Essentially at the end of the day, you're going to be hiring this resource to represent your company in some form or fashion. So you should treat it as an interview and if some contract manufacturers don't ask or seem interested about attributes or whatever the case may be, they may not pass that stiff test. So that should raise your antenna or spidey senses just a little bit.
Mark Rutkiewicz: Right? Oh yeah. And it's like, I talked inaudible say,"You wanted to this? Is this? Why are you doing all of this? It's like, sometimes you're doing an overkill." It's like," Well, depending on the kind of device, I got to do a gauge R and R, I got to." It's like," Okay, I only need you to make 100 parts." So sometimes with the contract manufacturer, they're going to quote you based on the technology they have. So do they have the technology that..." I can make you 100, 000 parts every year." Well I need 100. Well, we don't want to touch you. Versus this company,"I can do 100 parts, but I can't do 100, 000." Okay. So do you want somebody that can scale? Yes or no? Or I'm going to qualify this contract manufacturer for upfront because they're cheaper and I don't need to scale yet. And then when I scale, I'm going to move over here. While if you're going to do that, understand what those requirements are and do you have the information to share there? Because you're going to have to revalidate then because you're switching manufacturers and you're switching the manufacturing process even there. Molds are key thing here. There's now companies that you can 3D print a mold and you get 1, 000 hits off it. You get the plastic part, your 1, 000, but then you got to re- qualify the mold down the road and that's great for your clinical trial. But if you want a mold that makes a million parts a year, it's going to have to be this really high- end expensive mold with heating elements and all these sensors in it and stuff like that.
Jon Speer: Absolutely.
Mark Rutkiewicz: It's volume is really key. I mean, that's really the key aspect of the price of the part and what your volumes' going to be is directly related. Because there's some fixed cost always and let your NRA.
Jon Speer: Well, I'm-
Etienne Nichols: One thing I was curious about... Well, sorry, go ahead, Jon.
Jon Speer: No, your mic sounds better than mine. Go for it.
Etienne Nichols: I was curious, so you mentioned about some contract manufacturers, do they have medical device experience or not? I'm curious what your thoughts are on the overlap of quality management systems. What is covered under their quality management system? What's covered under your quality management system? How do the two interact? What are your thoughts there?
Mark Rutkiewicz: Yeah, that's really key and that's really the latest thing. And that's what Europe is really pushing on the MDRs, is more supplier quality management. Today, we're seeing a lot more companies asking these kind of questions and this is what they should be doing because there's no central database. Here's all the companies because a lot of people play in different markets. Like Innovize, we're a contract manufacturing converting. We started getting into medical device only 15 years ago and we were the only converters at the MD& M shows. Now there's like 15 converters at the MD& M shows. More people are touching into it. Are you intermixing? I'm doing automotive, but I'm not going to do medical. Well, the automotive quality systems are different than medical device quality systems. There's a lot of overlap. At least you have a quality system so you have the controls. Aerospace too and those kind of things. But as a medical device manufacturer to a contract manufacturer, you really want to set up... If you have a partnership you do a survey just to understand the scope and you may do an audit. Now audits are... We'll talk about that a little bit later, but you really need to have a quality agreement with that contract manufacturer, a supplier quality agreement. And what I've seen, the best practices, it's a quality agreement and it lists all the sections over the standard. Like who's doing what and you have a box that says," Customer supplier" and who's doing what. Everybody can understand design controls. Okay. That's the customer. As a contract manufacturer, I'm not going to prove the design output spec. You're going to do that. You're going to do the design verification. I'm going to do the process validation. You're going to do the complaint handling and make sure you understand that now you're allowed to do complaints. And then the quality agreement you put in that they can audit us and you're supposed to change control, all this stuff that... Don't change anything unless you tell us and get a preapproval. Those kind of things are all in there. Record retention times. Those kind of things you want to have in your quality agreement.
Jon Speer: I'm so curious about the supplier quality agreement because I think this is where a lot of contract manufacture relationships break down because it was unclear on who is responsible for what. That should be a pretty thorough document that, to your point, it's breaking it down clause by clause. If it says you do this, I do this, you do this. And sometimes there's that shared responsibility. But I hear a lot of the companies that they're jumping the gun, they want to get into a relationship with the contract manufacturer without defining all of these things because they need to make 10 units or 100 units to support animal study or a clinical trial or what have it. That's a mess. That's just a recipe for disaster.
Etienne Nichols: Right.
Mark Rutkiewicz: Yeah. Unless you can verify that what they made, you're looking at 100% inspecting it before you use it. It depends, but typically you're going to say," Do this. I'm hiring you because you know how to make these things. You know how to make a catheter so make a catheter. This is a tubing, I want injection mold, this material around it." It's like," Okay, what's strength do you want?"" Well, what strengths have you used in the past?"" Okay. I don't know how you're going to use this on a patient. Are you going to put this up their nose? Are you going to put it into their heart?"
Jon Speer: Right.
Mark Rutkiewicz: Totally different requirements on what the forces are and how lubricious do you want these coatings to be? And it's like, if you ever bought a house or you work with a architect, you want to design a house with a builder. Okay. I want a house. It's like going to a builder and say," Build me a three bedroom house." It's like," Okay. I can tell you, it's all going to be$200 a square foot." And until you tell me what you want, I am not going to be able to quote you a house. The same thing, contract manufacturer, I'm not going to build this. I can tell you what the materials are going to cost. If you want... I want five foot long, single lumen, PET catheter with this much... I can tell you what the raw materials are going to cost, but that's not the price we're going to charge you for the material because of the labor and tooling and everything else to set it up.
Etienne Nichols: Right.
Jon Speer: I think the quality agreement though... We were going through some checklist items, it seems like that should be baked into your supplier quality agreement, right?
Mark Rutkiewicz: Yeah. A lot of that stuff should be in supplier quality agreement and then as Consiliso, I've done things where I've created a couple templates. Here is a simple supplier quality agreement. It's like three pages. Change control, audit and that kind of thing and then I have the more detailed one, which go through every section of the standard. And I've also set up so you can have multi- part parties so you have a three- way or something or four- way. It's like, you're doing this and you're going to give it to them. They're going to manufacture it. They're going to package it. They're going to sterilize it and we're going to sell it and it's like," Who owns which part?" And sometimes they're shared. It's like, both of us are going to do this. Well then if you share it then you have a note section saying for this aspect, supplier A is going to do this, supplier B's going to do this. And then you have like a three- way NDA or something so that y'all can talk depending on who you're working with. If you're a totally virtual company, that's what you're going to need to do.
Jon Speer: Yeah. Here's another thing I've heard and sadly still here today. Startup company... Obviously there's a lot of folks know of Greenlight Guru. We have software that helps companies with their quality management system and sometimes we get in these conversations with folks and they're like," Oh yeah. Your product seems cool but I don't need to do that. But you're a medical device company." I'm like," No, no, no."" My contract manufacturer's handling all that." I'm like," Oh my goodness." You saw my reaction to that. I'm curious, what is your reaction when companies... I'm going to outsource my quality?
Mark Rutkiewicz: You can't. It's like I said, if companies outsource their design, outsource their manufacturing, they really don't have it themselves, but you still have to have a quality system and then your quality system has to have really good supplier controls because you're outsourcing everything. They're expecting the regulators, expecting you to then be watching your contract manufacturers and auditing them because you've outsourced this key aspect. And there's... What I was talking about later here is as you pick your suppliers for contract manufacturers, what level of criticality? And so this is a whole concept and risk based quality systems. What risk is it? I typically say you have four different levels of risks for a supplier. Zero, no risk, office supplies and that kind of stuff. So three, what you do is going to directly affect the patient experience. If you mess up, they might die because of what you're doing. Okay. There's level three. Then there's intermediate levels. The raw material suppliers and stuff like that. So these contract manufacturers are your highest level and so with your highest level ones, you can scale on what kind of information control you want. On a level like one or zero, I don't really care if they have a quality system or not, because it doesn't matter. Level one and two and three, they all have to have quality systems. Keep your ISO cert, great. But level three, I'm going to audit you every year or every other year. There's a way of doing it. Now the latest thing in the industry is there's some contract manufacturers, they have dedicated audit people because everybody comes in and audits them all the time. So the industry came up with MedAccred. Don't know if we've talked about that on your podcast in the past, but MedAccred-
Jon Speer: No. Not yet.
Mark Rutkiewicz: Is this outsourced organization similar what automotive and aerospace did is, or like military, the old D cast they're actually at... The manufacturers pay for them and the suppliers pay for them and this person sits at the contract manufacturer's house and they then do deep dive audits when your product is ready. You're basically having control right there. A lot of houses like sterilizers and forgers that just make metal parts for medical device industry, they have dedicated people that sit there and then MedAccred is a process for doing these audits then, for contract manufacturers. That's a whole program and it's really more the bigger ones that do a lot of it and that's something saying, if you're a MedAccred approved supplier, there are controls in place that the big guys have really put in place. It really would help you that, if I say you're MedAccred approved suppliers, like I probably don't need to audit you as much. I might still want to audit you once in a while, but you have the controls in place because if you get done every day.
Etienne Nichols: Interesting.
Jon Speer: That's a good-
Etienne Nichols: A manufacturer that might manufacture auto parts, but they have this division for MedAccred or?
Mark Rutkiewicz: If you're a MedAccred supplier?
Etienne Nichols: Yeah.
Mark Rutkiewicz: All you're doing is medical.
Etienne Nichols: Got you.
Mark Rutkiewicz: And there's basically somebody in the plant that's MedAccred, that's the manufacturer's representative for the manufacturers that basically... The Medtronic's, the Boston Sci's, Abbott's and stuff like that, they pay for this and they have somebody sitting at those subcontract manufacturers. That's sort of new. That's been basically I think five years ago, there wasn't any then. I looked on their database and there's about 40 or 50 manufacturers around the world that are MedAccred certified that have different things that they're certified for. They're not certified for everything. They might do more, but they're certified for labeling or they're certified for plastic injection molding or they're certified for... Now FDA's sort of not directly linked with that. That doesn't matter. But it's really part of your supplier controls. And for Europe, I think that'll be... You put that into your process, into your supplier control process. You still probably need supplier quality agreements with them so you understand the scope of some stuff.
Jon Speer: Sure.
Etienne Nichols: There's something Jon said made me curious. This is still under the umbrella of the supplier quality agreement kind of. But he said," I like to be within strangling distance." Curious about, do you have any stories about times you wanted to strangle? What was it? The certain items that could make you want to strangle each other?
Mark Rutkiewicz: When I was at the external defibrillator company, we were based in Minnesota. We're having circuit boards made in South Dakota because the triangle's cheaper because its labor was cheaper, I can say even more all over the country and stuff. We switched to a Malaysian supplier, that's designed at a huge box. It's like," Okay, great. I got to go visit them." Okay. 20 hours later on a flight, you're there. You have to stay for a week. How do you do conference calls? They're 12 hours difference time zone. You want to talk to them. When are you going to have your calls?
Etienne Nichols: I'm sleeping crosstalk.
Mark Rutkiewicz: Assume you're going to have your call calls, seven to 10 o'clock at night, because that's their morning, when you go to inaudible there, your nights are gone. If you need to talk with them, that's when you're going to have it because that's when they're in the plant. They might bring three shifts, but when are their engineers there that you want to... Or project managers and stuff you want to deal with and once you get it fixed and get them going, it works great if you change nothing.
Jon Speer: But there will be changes.
Mark Rutkiewicz: Right.
Jon Speer: There will be changes.
Mark Rutkiewicz: I'm making introducers for Zain hasn't changed in 30 years. Fine. I'll outsource that. It's not going to change. Hasn't changed in 30 years. It's not going to change again. You're new company, I would not go there. At Innovize we're contract manufacturer. We've had some people that have taken products that have been outsourced to China and Mexico and moved them back to the US, to us because we automate the product. They were doing it manually. So we can provide better quality because it's more consistent because we've automated the processes. You're outsourcing it. It's cheaper, but they're doing it manually so there's more variability in the product and overall the quality's not as good.
Jon Speer: Yeah. You said something a moment ago that I want to dive into a little bit and it's really about scaling. Early on as a company, my volume may be, let's just say in the tens or in the hundreds. Sure, I've got a vision for down the road where I'll be selling tens of thousands, hundreds of thousands of units. But I guess my word of caution is, generally speaking, is if I have a contract manufacturer that says they can do the hundreds versus the hundreds of thousands, they can do all of it, that raises a flag for me that said," Mm." Because the scale is different. You know what I have to have from a manufacturing process is dramatically different. What are your thoughts about that?
Mark Rutkiewicz: You have to be able to go and have them show you what they're going to do differently. Now there's some contract manufacturers... I want to be able to go on your manufacturing plant and see what you're doing. Some won't let you. You're not allowed to go back and see what's behind the curtain.
Jon Speer: Secret inaudible.
Mark Rutkiewicz: You can talk us in the conference room. But you can't... Some manufacturers, was like," Come on in and we'll help you out and show you." Then that's the kind of thing Innovize does, is like," Come on, we'll show you the floors." We scale because to makes small volumes we're going to have to do it this way because it won't waste material and then high volumes and do it this way. And we might have to qualify it differently but we tell them that. That's the kind of thing you're looking for is how are you going to do this and ask them the questions. You have to know what they're doing. You can't be outsourcing... It's like," Well you do it." You still have to own... You're the owner. You own it. You're telling the FDA that you're the owner of the design. You have to own it and you have... If you're auditing, you're about there and saying," How are you doing this?" And look at their documentation and see what kind of records they're keeping. And you never know, once you have a history with them and you know that they have good records. That's good. I mean, but if you're brand new to this, well what does this mean? And if you do an audit of a supplier and they're teaching you stuff, that's one you want probably to use because they're going to help. It's like," Why am doing this?" It's because of this, this and this. It's like," Oh!" Versus it's like," We have to do this."" Why?"" Oh, that's what our processes." No, no. The standard says, and this is how we do it. If they help teach you about manufacturing and stuff, that's a good man, in contract manufacturing, because then you can make decisions based off of, if you've changed things in your design, this is what they're applying it to and then you can ask them questions. A good contract manufacturer will answer those questions for you.
Jon Speer: And you talked about like the rating scale or the criticality of suppliers, contract manufacturer, however you define it within your system, is definitely... The closer they are to the product that's going to be used in the patient, the more critical they are. That's sort of my I guess. Rule of thumb. But there has to be a partnership and this is a strategic relationship that you have with them and there needs to be enough transparency. You don't have to tell them all of your secrets and certainly they may not tell you all of theirs, but there has to be good communication. There has to be good information exchange and when it comes to scale, I see a lot of startups make mistake. They choose a supplier or a contract manufacturer and they communicate," We're going to be making hundreds of thousands of units." They're not going to do it right out the gate and they don't choose a contract manufacturer that can scale and grow with them. They choose the contract manufacturer that's like full automation. That's spitting product out, but they're not going to be ready for that and that's going to be a rough, rough relationship.
Mark Rutkiewicz: Yeah. Your expectations of what you, set them... What are your POs going to be? What's your timing? Manufacturers come in, it's like," Well, want you do all our manufacturing for us." It's like," Okay, you have to put the money in." It's like," You want a clean room like this? We don't have one. If you want us to do it, that we can, we'll build this and we'll charge you for it." Because you have to have some skin in the game and that's part of the agreement too. You want to do something that's unique that we don't do yet or so it's flexible. We can do that. It's going to cost. And contract manufacturers have to make the money. Contract manufacturers margins... Medical waste manufacturer, a lot of risk, but then there's a lot of reward. But then a lot of them fail. Contract manufacturers, we just take a little cut. We're not making huge profits here. We're here to be flexible and keep the work going, but we're not going to make the... When I was at some of the contract, the medical waste manufacturers, the margins they made on good products are amazing compared to what manufacturers would make, contract manufacturers would make.
Jon Speer: Etienne, I can talk all day about contract manufacturing. I don't want to hog the questions for Mark. Jump in please.
Etienne Nichols: Yeah, sure. Well, you covered several of the things that I was curious about. A little bit more, maybe about process validation and the presence of the manufacturer versus the contract manufacturer in that process. How involved should they be?
Mark Rutkiewicz: Right. If you're doing work in the good manufacturer, what you should probably do is, first step, you've selected a manufacturer and you think they're best based on location and expertise and stuff like that and you've set up a supplier quality agreement. You set that expectation. The first thing you should probably set up is a master validation plan. This is what the expectation of how we're going to validate this product and part of it is, here's the manufacturing process flow. You're going to need it for your regulatory submission so you might as well get it put in the document right away. Here's the manufacturing process flow. Now, depending on the criticality of what's going in manufacturing process flow, you're going to need a PFMEA or a risk assessment on the process. Best typical way is to process failure modes effects analysis and it's sort of a bottoms- up approach. Now there's other ways of doing it. You can do a top- down approach too, but you're really trying to determine the risk of the contract manufacturer making a product that's going to meet spec. You can build an FMEA right into your risk management document. You can do standalone separate depending on how complex the product is. And then in there, when you get your process flow, it's like, can the outputs of these processes be verified by the next step? No, yes, no. So then that process flow, you say," That one needs to be validated. That one needs to be validated. That one needs to be validated. These steps." And then you lay it all out in one document. Now put your sterilization in there. This is something that you use as a way of controlling everything. And then this is the plan and you release it and then you send copies to your contract manufacturer. You might revise this plan a few times through it, but then as reports... This validation's done. Oh, it failed, but I got to change this. And you do that then you modify the plan. But then you release reports that say this is what the output is and this is the report number from this... Get the reports defined. Then when your validation's done and the master validation report's done, all the information of your regulatory submissions' already defined. What happens is a lot of companies didn't do that. Right now, a ton of companies are doing remediation for the EU MDRs because class threes, we're always doing this.
Etienne Nichols: Right.
Mark Rutkiewicz: But class one and twos weren't. So it's like," Oh, we need to do this. We need to validate." Well, we never validated it because we asked you to and you said, no, you weren't going to pay for it so I'm just going to do... It meets spec, but I'm not doing Cpk analysis on all these things all the time. The big guys, they come in with the master validation plan," Here, this is what I want you to do." But the small guys don't and so if you're going in, talk to them about creating a master validation plan and if they can only do part of it, that's fine but then it's your document and you talk to your other contract manufacturers and add to it. So you have one document to find where everything for that product's going to be.
Jon Speer: I'm glad you mentioned PFMEA caveat. Some folks have labeled me as the anti FMEA guy and there's an asterisk to that. But I think too many people have used FMEA as the only tool that they're using from a risk management perspective during the design process. And there's a point in time where FMEA during design is helpful, but it is invaluable for manufacturing processes. It is a wonderful, wonderful tool. I'm glad you mentioned that because that's another one of those things that raises a flag or my spidey senses. When you ask a contract manufacturer about how they're assessing risk of the manufacturing process, and they're like," What do you mean?" It's like,"Oh!"
Mark Rutkiewicz: We're actually doing something interesting here. We're trying something new. It's almost... Manufacturing didn't ask it but if we had an issue, we know we have like higher scrap on a certain product. We'll actually... When it's running a quality engineer will sit there with the press operator and walk through and say," Okay, what can happen wrong here?"
Etienne Nichols: Nice.
Mark Rutkiewicz: "Whatcan happen wrong here?" It's just the engineer with the person, the operator running.
Jon Speer: Nice. It's cool.
Mark Rutkiewicz: Versus these engineers sitting in a room guessing what's going to happening.
Jon Speer: Yeah. That's-
Mark Rutkiewicz: And it's like," Okay, these are the things that happen. Okay. What do you think? This is high, medium, or low? Red, green, yellow for?"
Jon Speer: Absolutely.
Mark Rutkiewicz: This is like that. Okay, that's a risk assessment. It doesn't have to be this RPN numbers and all of those stuff. It's like, what can you do? And then can I fix that from ever happening again? Yeah, if we just move this over here and did this over here, then I-
Jon Speer: Wonderful.
Mark Rutkiewicz: That's what they want. You try to mitigate risk.
Jon Speer: Exactly.
Mark Rutkiewicz: That's all they want.
Jon Speer: They don't want engineers barricading themselves at a conference room for eight hours for three days straight to come up with some magic, whatever.
Mark Rutkiewicz: Well, that's a risk. Because like," Whatever happened."" No, what will happen?"" Well, they can mix the rolls up." It's like," Well, how about we label the rolls differently so they can't mix them up?" It's like," Oh, what can really happen?" And you ask people making the product.
Etienne Nichols: You're absolutely right. I can remember being on a manufacturing line where we had a failure. Everybody was gathered around the failure. And me and another guy just started walking upstream. I said," Hey, what if it failed at this operation? When would we detect it?" He's like," Well, not until there." I'm like," Okay, so we can go all the way up to here, the potential failure could be six machines upstream. So you've got to start looking up there." That's really interesting. Jon beat me to it when he was talking about the PFMEA. So when we're building out this PFMEA document, are you suggesting it would be a... The manufacturer's going to own this document, but working in conjunction or in partnership with the contract manufacturer to develop that.
Mark Rutkiewicz: Right. Yeah, because some of it is like," Well what's going to fail. This is going to fail." It's like," Do you care about that?" I was like," Oh, that radius on this corner, I can't hold three thou on that radius." That's like," I don't care what the radius is. As long as it doesn't cut the crosstalk".
Etienne Nichols: But maybe your spec's too tight. Loosen your spec crosstalk.
Mark Rutkiewicz: Yes, exactly. It's like change your spec and that's the kind of thing in PFMEA. Is like," The spec needs to change." And during the validation," Oh if this fails." Like," Well, do you need that or not? How's that going to affect the patient?" If it does, great. If it doesn't, is this tubing going to come out? Well, what's going to happen. Here, I can't pull it. It's like," Okay, that is strong enough. Okay. Now measure that and tell me what it is." And I can tell you that's the spec going to be because that's strong enough. Because nobody's going to be able to pull that off or something.
Jon Speer: Well, you just said something about the patient and I'm glad you brought that up too, because I think sometimes the OEM is not sharing information about the use of the product with the CM and you got to share that information because you don't need to expect your contract manufacturer to become an expert in how the product is going to be used, but they need to have enough knowledge so that they know if X, Y, and Z happens that, that's a critical component. That's the patient contacting or it's used for this type of procedure.
Mark Rutkiewicz: Right.
Jon Speer: I think that's really important.
Mark Rutkiewicz: Yeah and then if this patient contacting too, what's the biocompatibility? Anything you used to clean this machine, if it going to contaminate the product, I need to know about it. And that was a huge recall, I remember on, well, this is what reprocessor... Some company was reprocessing these dialysis filters and the company changed the solution that they were cleaning with and ended up killing some patients because they changed something and they thought," Well, cleans it better." It's like," Yeah, but it's not compatible." And the contract manufacturer didn't know how it's used. So you really need to communicate how it's used and what it's used for and understand scopes and process controls.
Etienne Nichols: That's really great and as Jon mentioned, I know he can go on for hours and I can probably ask you more questions for myself. I want to be respectful of your time and our listeners' time. Maybe we can have you back. I don't want to be too presumptuous here, but what do you think Jon? We close?
Jon Speer: Well, I think we've talked a lot about, I would say generalities when it comes to contract manufacturer today. Mark, let's put our thinking caps on and the next time we talk about contract manufacturing, maybe we could be a little bit more pointed and a little bit more specific.
Mark Rutkiewicz: Yeah.
Jon Speer: If you're willing, love to have you back and talk about this topic down the road sometime soon.
Mark Rutkiewicz: Sure. That'd be great. Details of sections and naming and numbering and configurations that you want to do in categorizations.
Jon Speer: Yeah. There's all kinds of fun you can have here. So let's go ahead and shut this one down today. Mark Rutkiewicz with Innovize and Consiliso, thank you for sharing your wisdom on contract manufacturing and Etienne Nichols, the co- host of the Global Medical Device Podcast joining me. So, that's been exciting. Folks, again, I want to remind you, of course, Greenlight Guru, we have a medical device success platform that's designed for you, the medical device professional by actual medical device professionals like Etienne and myself. So if you're struggling or need some assistance with streamlining your processes around design and development, document and record management, postpartum quality events, well go check it out www.greenlight.guru and learn a lot more about all the workflows that are in the Greenlight Guru software platform. And we'd love to chat with you and understand your needs and requirements and see if we have products and solutions that might help you. So, again check that out www. greenlight. guru. As always appreciate you, the listener of the Global Medical Device Podcast. Listeners are what continue to make the Global Medical Device Podcast the number one podcast in the medical device industry. So thank you for that. Continue to spread the word and until next time, this is your host and founder at Greenlight Guru, Jon Speer and you have been listening to the Global Medical Device Podcast.
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Nick Tippmann is the Chief Marketing Officer for Greenlight Guru, a MedTech Lifecycle Excellence Platform (MLE) that provides an industry-specific solution to help medical technology innovators around the world use quality as an accelerator to move beyond baseline compliance and achieve True Quality. Tippmann is...