As sustenance engineering is becoming a necessity in the medical device industry to maintain profitability, Pratheep PS, Strategic Initiatives Leader – Healthcare, QuEST Global suggests that outsourcing this function to the right partner can drive down the cost while maintaining the same levels of quality
Medical devices have long lifecycles, and Original Equipment Manufacturers (OEM) in the medical device industry have to balance investment across products, ranging from New Product Introduction (NPI) to very mature products. While a medical device company’s growth and success may hang on innovation that transforms the marketplace, mature products of the company form the bedrock of the company’s financial future. Sustenance programmes can often claim the bandwidth of highly skilled resources – around 20 per cent of the Research and Development (R&D) team – at medtech companies. Let’s see how medtech companies can address this.
What is sustaining engineering?
Sustaining engineering is the technical support of products as they move into the latter or mature stages of their lifecycle. At a latter or mature stage, products do not need disruptive, transformational innovation, but rather incremental innovation and standard product maintenance. Activities like obsolescence management, limited software release support, and regulatory updates are common sustaining activities.
Sustaining engineering and the bottom line
To maintain profitability in the medical device industry, sustenance engineering is increasingly becoming a necessity. Larger organisations make choices based on a statistical analysis of both the safety and efficacy of procedures with cost-savings as a single largest focus. Decision-making on procurement is centralised due to hospital consolidation. Executives and purchasing organisations, rather than individual physicians, influence procurement. The shift to cost-centric buying decisions offers an advantage to existing devices over newly developed ones. A mature product can more readily accommodate the corporate pressure for the price reductions than a newer introduction, the cost of which must include the recovery of increasing research and development expenses. Sustaining engineering maximises the life of an existing device, hence serving to maximise the organisation’s profits.
Outsourcing and its advantages
Around 20 per cent of the R&D team is deployed in sustenance programmes, claiming the bandwidth of highly skilled resources. While they should ideally focus on the next product to drive growth, they are pulled into sustaining engineering tasks for mature products. Additionally, around 25 per cent of the engineering budget is also spent on the sustenance team. The better approach is to balance the overall R&D budget by driving down the cost of sustaining engineering. Doing so requires taking a close look at the R&D budget breakdown to precisely understand where the engineering staff and, therefore, cost are focused. Most sustaining work/projects do not require a company’s most highly skilled engineers. In fact, assigning those engineers to tasks they may deem unchallenging can often affect their job satisfaction and team morale, with the ripple effect continuing beyond the R&D organisation. Putting the best and brightest engineering talent in sustaining activities is often what drives up the cost of sustaining engineering for most manufacturers.
This problem could be addressed or avoided by manufacturers by looking outside their organisation. Look for a partner with the required engineering expertise for sustaining projects at a lower labour cost—while maintaining the same level of quality achieved with their in-house engineering talent. There are external teams available offering sustenance engineering solutions. Outsourcing to a qualified provider aids in keeping top talent focused on innovations. At the same time, it also maintains the levels of quality that are critical to preserving the product’s acceptance in restructured markets. The right partner also brings in enough experience to introduce other ways to decrease the cost of goods, resulting in better margins while maintaining customer commitment schedules.