The reshoring of medical device production to the UK is on the rise. Covid-19 is accelerating the trend as original equipment manufacturers (OEMs) are rethinking offshoring strategies with ensuring supply chain resilience and market service in mind.
Why offshoring is losing its appeal and the impact of Covid-19
There has been a steady growth in the reshoring of manufacturing over the last decade as offshore production has lost some of its appeal. While international sourcing was once considered as a sure-fire way of optimising manufacturing (production was cheaper and shipping was easy) and ensuring the combination of competitively priced products and healthy profit margins, a number of factors has gradually eroded the benefits of this strategy.
A rise in labour costs in major manufacturing hubs, such as China and India, and persistent issues surrounding product quality, labour rights and intellectual property, in combination with significant growth in the advanced manufacturing base in the UK, have led OEMs to reconsider the scale of their offshoring production strategies. The coronavirus pandemic, and its economic and human impact, has quickened the pace of change.
How Covid-19 is reducing the benefits of offshore production
The impact of Covid-19 on industry has been extraordinary. One of the sectors hardest hit by the pandemic is the airline industry, with the number of flights criss-crossing the world now dramatically reduced. For medical OEMs with significant offshore-production footprints, this has meant an increase in shipping costs and lead times, which in turn is having a knock-on effect on profit margins and market presence.
Another consequence of air-travel restrictions is the impact on the ability of key personnel to travel to offshore manufacturers and effectively manage tooling and device production and related developments. The people responsible for production management either can’t or, understandably, don’t want to travel.
The benefits of reshoring production for medical industry OEMs
As a result of these factors, medical industry OEMs are increasingly bringing production back to the UK. This relocation of manufacturing activity is allowing companies to benefit from a reduction in shipping costs and times, more flexibility in terms of batch sizes and order volumes, greater visibility and control of supplier processes, better quality control oversight, and the greater possibility of onsite and in-person management.
Companies are taking this step because, at a time when Covid-19 is having a seismic effect on global industry and the role of globalization, reshoring is a strategy that can deliver supply chain security and ensure the continuation of an effective market presence.
By selecting the right UK medical device manufacturing partner – one that can offer the appropriate domestic infrastructure, good industry coverage, a wide range of services and capabilities, and experience and expertise – OEMs in the medical device industry are successfully redrawing their contract manufacturing strategies and securing the supply chain resilience that they need.
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 firstname.lastname@example.org.