What is reshoring?
Quite simply, it’s the process of moving your production from an out-of-country supplier back to the country where your main operations are based.
Reshoring of production has become more popular since the Covid-19 pandemic, due to the difficulties that arose from travel restrictions, the complete lockdowns in China and the new European Medical Device Regulation (MDR), which came into force in 2020.
It may be that having your device made offshore is very suitable to your project and you don’t have any reason to need to bring it back. Or perhaps the supplier you use is the global expert in that type of production and there would be nowhere to re-shore it to. However, it may be that having your production offshore is causing some problems and you are investigating other methods of production or suppliers. In this blog, we will discuss some of the advantages and disadvantages of reshoring the production of your medical devices.
What are the disadvantages of reshoring your outsourced medical device production?
Every project is different, but some typical problems we see are as follows:
Tooling: Your supplier may own the tooling for your production, or it is designed specifically to run in their equipment, meaning it cannot be exported. Alternatively, you may have to pay to export the tooling to move it to your new supplier and, potentially, when it arrives you can see that your previous supplier had not been maintaining the tools sufficiently, requiring you to spend more money.
Validation: It’s very likely that you will need to revalidate all the production at your new supplier, which adds time and cost to the project.
Cost: Your offshore supplier is or was the most cost-effective option when you originally started the project. You may have to pay more to have it produced locally.
Loss of knowledge: Assuming that the offshore supplier did a good job and your reshoring is not for quality reasons, you will have lost the production knowledge of that supplier. There may be intricate processes the operators undertook as they learnt to produce your device, which may have to then be learned by your new supplier.
What are the advantages to reshoring your outsourced medical equipment production?
Quality and regulatory compliance: Over the past few years, unannounced notified body audits have become quite common and there is an expectation that you will carry out regular onsite audits of your supplier’s premises. Having your supplier onshore makes this process faster, cheaper and requires less traveling. If your supplier calls to say your notified body has just arrived at the front door, and you’re so inclined, you could join the meeting a couple of hours later.
Payments: It’s likely you will get credit terms with your new onshore supplier. This will help your cashflow and reduce cash gaps and stock days. You could be in a position where you go from paying upfront, with 30-60 days’ transit time, to having 30 days’ credit from the day your goods are dispatched. Local transit times tend to be 1-2 days, making it possible to sell your parts before you’ve even paid for them.
Shutdowns: Unlike Europe, the UK does not have a full summer shutdown, only a week or so at Christmas (when, hopefully, you’re also off work). You do not need to plan for additional stock holdings and you can continue business as usual during the summer. This also applies to Chinese New Year, as procuring from China during this time has additional challenges.
Time zones: Your normal business hours will be the same as your suppliers’, meaning you won’t need to have late night meetings or very early starts in order to be in the office at the same time.
Same currencies: This can have both positive and negative effects, however, you will not have to buy your goods in a foreign currency and you will be less affected by currency fluctuations.
How can you judge if reshoring your outsourced medical device manufacturing is right for you?
Reshoring your production might be right for you and by doing so you may be able to reduce some of the problems in your supply chain. At the very least you should benchmark your supply chain periodically to ensure that the original benefits of offshoring still exist. If you decide that reshoring your production is right for you, your local supplier should be able to advise and support your move to make the transition smoother.
Meridian Medical is an established and experienced contract medical equipment manufacturer specialising in a wide range of medical device design, development and supply services.
To find out more about how Meridian Medical can help you with your medical product design and manufacture, get in touch today by filling out our online form or contacting us on 01903 732344 or email@example.com.