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An inline fully automated cassette assembly machine for a cholesterol test. (Photo courtesy Cholestech)
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Manufacturing excellence is all about having the right people performing the right tasks while using the right equipment. Several important factors should be considered by anyone procuring equipment for use in a medical manufacturing facility, before the selection is made. So many different options usually are available that making the right decision can be a daunting task. The buyer may encounter more pitfalls than at first anticipated.
Funding and Costs
How a company proposes paying for its manufacturing equipment might play a part in its supplier selection process, and perhaps influence the selection of particular equipment also.
Often, the project is financed from an approved capital budget. The path forward in that case is relatively simple and streamlined. The process may vary slightly from one organization to another, but it probably begins with a financial justification based upon cost estimates balanced against expected benefits. Once the criteria for return on investment and depreciation impact are satisfied, the road is clear to create a request for quotation or a user-requirements specification document. Potential suppliers are solicited for bids, and the selection process continues. Decision makers within the management team are soon presented with a proposal. All going well, the required signatures are obtained, and the project kicks off.
An equipment purchase that is funded from an expense budget will usually involve less money. That is because many organizations begin to capitalize once the cost of an item exceeds as little as $1000. A purchase may also be expensed when the item’s useful life is known to be short or when it has been previously owned.
Or, the project could possibly be funded through a hybrid arrangement of capital and expense funds.
If funding is obtained through borrowing or a leasing arrangement, then there will probably be an associated package of requirements and considerations that must be satisfied by both purchaser and supplier. These may have a considerable impact on the decision-making process. Manufacturers should anticipate that adding layers of complexity to the approval process will almost certainly result in delays.
There are creative ways to save money on equipment. For example, some original equipment manufacturers offer their products at a greatly discounted price, perhaps even for free, as long as the purchaser fulfills the associated requirement that a large quantity of consumables be purchased in the months or years that follow. A plastics molding factory might supply an injection mold tool free of charge in return for an agreed-upon shipping schedule for its injection-molded parts. This is often equated with the razor-and–razor blade business model.
Once the bids are in, the company compares offers and draws conclusions. Important at this time is to differentiate between the quoted price of a piece of equipment and the actual cost of owning and operating it. This is the total cost of ownership.
Total cost of ownership includes depreciation charges first of all. Then there are utility, consumables, labor, and insurance costs to consider. Maintenance and calibration also have to be factored in.
Even floor space has a measurable cost, particularly if the production facility is leased. Space for manufacturing can be so expensive that the area of an equipment footprint is important enough to be a serious consideration. Sometimes it may be necessary to favor a machine that has a vertical as opposed to horizontal layout.
Regulations and Requirements
An equipment supplier may be required to meet guidelines in FDA, ISO, UL, CE, CSA or other standards and regulations. It may have to undergo a supplier quality audit to be a candidate for a major purchase order, or may need to maintain a quality system. These considerations can eliminate some potential suppliers up front, avoiding wasted time and the issuance of embarrassing apologies later on. In the IVD industry, validation and safety are also always key considerations.
Validation often takes the form of installation, operational, and performance qualification(IQ/OQ/PQ). Often, the supplier can provide a prebuilt validation package that will cover the IQ and OQ portions. The PQ test plan and all related documents will have to be prepared in-house. Once the validation requirements are defined, then it is important that the equipment be built in a way that will allow for smooth sailing through validation. If temperature readings will be required, for example, then test points that will give accurate and repeatable results should be accessible.
If no validation package is available for purchase, then the manufacturer will have to prepare the entire package using in-house resources or else by enlisting the assistance of an outside consultant.
Calibration requirements also need to be defined, along with the devices that require calibration. How easily the devices can be calibrated and how often they should be ought to be known. Sometimes it will be necessary to carry a complete set of spare devices that can be calibrated in advance, stored, and then rotated into the system when calibration becomes due. The devices that are removed can in turn be calibrated and stored. This system prevents downtime and production loss.
Special safety considerations may have to be taken into account in specifying an equipment purchase. In addition to the national, state, and local health and safety laws, such as those of OSHA, the enterprise may have established particular rules of its own. A light-curtain safety barrier, for example, may be all right to use at one company but not at another that had the experience of an object being thrown from a production machine and through the safety device light barrier.
Fundamental Choices
New Design or Repeat. As sales increase, manufacturing output has to follow. The need for additional equipment invites this question: More of the same, or something completely different?
One solution is to buy additional copies of the same machines and staff up accordingly. There are certainly advantages to this approach: the relationship between the supplier and customer already exists, spare parts are probably already on hand, training needs should be minimal, and validation should be able to follow previously run protocols. The risk is low and the probability of success inversely high. This approach enlarges capacity but does not address efficiency improvements.
Another approach is to specify incremental improvements to the design of an existing machine before placing the order. This will bring some minor efficiency gains to the manufacturing floor. In return, some change management tasks will have to be handled. While existing equipment may be upgraded by adding improvements, that may involve too much work for the expected return.
A third scheme, of course, is to disregard what exists and devise a radical new production concept that brings a quantum leap in efficiency. This can be very exciting and rewarding, but it will involve creating, managing, and implementing a completely new set of documents and procedures. Also, some risk is associated with anything new.
New Equipment or Used. Not all used equipment is scrap. Much equipment offered as used may never actually have been operated. In some cases, it will still be in its original wrapping. In the medical product manufacturing industry, it is not uncommon for development programs to change radically before any product is launched—or even to be abandoned. Competitors may enter the market so soon that projects being aggressively pursued by another organization are curtailed. End-user behavioral patterns may change, causing a market to suddenly dry up. Circumstances like these often result in great equipment suddenly becoming available for pennies on the dollar.
But buyer beware! Marvelous used-equipment bargains can end up costing the purchaser a lot more than expected. Sometimes, even a machine that can be picked up for nothing is better avoided.
Standard or Custom. Manufacturers may be in the market for equipment that already exists or is designed or configured specifically for its application.
Selecting standard, or off-the-shelf, equipment can often be relatively simple, although not quite as easy as choosing a make, model, and color of automobile. Reaching the optimum decision is largely a matter of careful comparison of the features and benefits offered by each supplier against the buyer’s defined manufacturing requirements and then selecting the best match.
Testimonials from users often help in the decision-making process. However, a supplier is unlikely to recommend a bad reference for itself, so it is best for the would-be purchaser to find its own sources of feedback.
Custom equipment offers many more challenges. The equipment by definition will be produced in low volume, perhaps just a single unit. There will be fewer suppliers to choose from. Testimonials, too, will be more difficult to obtain, and even more difficult to assess.
Modular or Integral. How much flexibility is required in the equipment and proposed layout depends on whether the manufacturing process requires frequent changeovers or setups. If various products are being made, it will help to have modular equipment that can be organized in a variety of different setups on a common frame arrangement.
Another good reason for going the modular route is scale-up potential. The minimum number of modules of only the type required can be ordered initially, and more can be added later as needed.
A modular approach is also useful in an environment where frequent process changes occur. It is much easier to reconfigure and revalidate equipment that is built modularly rather than as an integral unit.
Semi- or Fully Automated. Some manufacturers faced with an equipment procurement project may want to walk before they run. Others are ready for a turnkey automated solution.
It is important to select a supplier that can support future as well as current needs. A project may be simple to begin with but become more complex over time as upgrades and improvements are introduced. Not only should the supplier be available to support later growth efforts after the initial phase has been delivered, but the manufacturing company should also obtain estimates for possible future work at the outset of the relationship. This way, quotes for the phases that follow will not come as a surprise or appear unreasonably expensive.
A turnkey system brings with it challenges of an opposite sort. The support that comes with the equipment during installation will soon dwindle away, and the manufacturer will have to take ownership. The company should be prepared to do that.
Local or Remote Supplier. With regard to the equipment support required from the supplier, a proposed supplier’s geographical location, or that of its agent, is not as critical as once was the case. Technological advances involving Internet connections allow suppliers and customers to interact remotely with unprecedented ease. Troubleshooting of equipment and monitoring of its performance can be carried out from anywhere. Web seminars enable engineers at different locations to review drawings and models as a team.
On the other hand, the nature of the manufacturing enterprise may preclude deciding on a supplier in a distant location. Before any purchase, the company should define its specific support requirements and expectations.
Manufacturing Requirements
The equipment purchaser should fully comprehend what the manufacturing organization expects from the machinery or devices bought. Medical product manufacturers use many different measures to define manufacturing efficiency. These include uptime, downtime, throughput, scrap, and utilization. But regardless of the parameter, what is important is that the selected equipment deliver what the manufacturing department has been promised. Usually, this is a certain expected throughput with no more than a specified small amount of scrap.
Another expectation might be ease of use. A machine that does not require an engineer to run it and demands light skills and training can be used very productively.
The equipment must run when it is expected to—and that is usually always. Uptime requirements should be defined and updated. Even though new machinery might seem to represent excess capacity, that could change in a heartbeat. One large customer order could take away that luxury. More likely, the equipment will be asked to perform right out of the box and never fail.
How much downtime the manufacturing department can truly tolerate, the cost implications of downtime, and the ramifications of production stoppage for material expiration and late product delivery are all questions that can have an enormous impact on spare parts requirements and the true cost of ownership of the equipment. The manufacturer may have to carry at least one spare of every component on the machine. Those dollars add up. The choice of parts that will be inventoried as spares should be based on the tolerable duration of downtime, mean-time-between-failures data, market availability of the part, and the cost of spares. Even if a part costs little, if it is available just next door, there is no need to inventory it as a spare. On the other hand, a part that costs many thousands of dollars but has a 10-week lead time for delivery will certainly have to be on hand.
Into the Future
If there is a possibility that equipment is going to be relocated after the initial installation owing to a changing business strategy, then it becomes necessary to take a look at requirements for its use at the potential new location. These may be more stringent than the current requirements. Also, the spoken language may be different, in which case the proposed equipment’s controls should come with multiple language options.
A final consideration: The manufacturing equipment purchasing process is not a contest with a winner and a loser. The supplier and the purchaser can benefit mutually.
When custom equipment is being purchased, the relationship between customer and supplier usually takes on far greater significance than would be the case with a standard piece of equipment. There will invariably be many more interactions, and a partnership typically develops. However, even with simple purchases of standard equipment, it is important that parties work well together.
In the end, establishing a strong relationship is always the best way to ensure that business transactions are win-win for everyone concerned.
