Medical Device Link.

Originally Published MDDI August 2005

Guide To Outsourcing

Outsourcing Electronics: Special Considerations

When searching for an EMS partner, there are a few special considerations manufacturers should keep in mind. Listed below are several factors that are unique to outsourcing electronics.

Product Failures. “There are a lot of similarities associated with outsourcing the manufacturing of electronics and other products, but the one area that seems to be the most difficult to address in electronics manufacturing is determining who is responsible for product failures,” says Michael Curran, president of Micro Industries. “Typically, failures are categorized as related to either design, process, or components, and the responsibility for the failure of a product can be determined and assigned to one of these categories much like you can if you are producing metal or plastic assemblies.”

The problem with electronic assemblies, he says, is that it is technically possible to meet all of the design, process, and component specifications for a product, and the product may still not function properly because of an interaction between one or more of those specifications. “At that point, the contract manufacturer can’t ship product, the OEM is shut down, and the component manufacturer is demonstrating that his parts meet data sheet specifications, so who is responsible for the problem?” Curran notes that this type of problem is expensive and time-consuming to solve. If none of the parties can be specifically identified as creating the problem, the resolution typically is to move the business to another vendor. “Whether you are a contract manufacturer or an original equipment manufacturer, this is probably the most difficult issue to resolve,” he says.

Completed Assemblies. For electronics outsourcing, it is both difficult to address and to assess “the strength and capability of the various disciplines within the outsourcing organization,” says Paul Hanson, vice president of operations for Frantz Medical Development Ltd. “Our sourcing and outsourcing for electronics is for completed board assemblies with both proprietary and nonproprietary components,” he says. “If it were just for components, our needs wouldn’t be much different from those for other components such as plastics.” He explains that because the company is sourcing electronic assemblies, it is key that the EMS partner support engineering, quality systems, floor control systems, purchasing skills, knowledge of components, and alternatives.

“It is essential that they know what is changing in the industry. The financial strength and general management moxie of the supplier-partner must be strong and lasting,” he says. “This is necessary since we need long-term stability with these assemblies, error-free manufacturing, and quick, knowledgeable support when changes are necessary. Our electronic assemblies are used in medical devices, so we must have confidence that they are made the same way each and every time and will perform for years in a robust environment.”

Multiple Components. Depending on the complexity of the device being built, there can be literally hundreds of various components on one printed circuit board (PCB) alone. “We build a product for a customer that has six different PCBs in the device, one of which has more than 350 individual components,“ says Robert Thatcher, senior vice president of sales and marketing for TriVirix. “Combine the number of components with the various types of manual and electronic inspections, along with in-circuit testing that needs to be carried out, and it is clear that manufacturing of electronic medical devices becomes very complex.”

Thatcher explains that managing the supply chain for a multitude of components, obsolescence issues, and regulatory changes (e.g., RoHS in Europe) that may require further changes in components adds even more complexity. “All of these steps happen before the final assembly and test of the finished device, if it is being shipped to customers in a user-ready format,” he says. Finally, he stresses that it is important to be aware of the regulatory requirement that critical components be traceable.

“That is part of the responsibility of working in the medical device industry,” he says. He is careful to note that manufacturers cannot minimize the complexity of outsourcing simple components. “We have all been in a line-down situation because a mold has broken at an inopportune time. However, it is far from the overall complexity of an electronic medical device.”

Technical Complexities. Outsourcing electronics is often more difficult than outsourcing other types of products because of increased technical complexities, says Gerry Waldron, director of sales and marketing for Libra Industries. “While any outsourcing decision must consider the ability of a potential partner to perform the assembly operations, one must also consider the partner’s technical knowledge base to understand how self-sufficient the contract manufacturer can be in handling the testing and troubleshooting of failed electronic products.”

When a product is developed in-house, he explains, the engineering team that designed the product is easily consulted to help understand any test failures. However, when a product is developed using an outside resource, this is not the case. “Libra specifically addresses this challenge by employing a team of experienced electrical engineers with specialized skills in electrical test and troubleshooting.”

“One of the areas that is the most difficult to outsource correctly is complex medical cables and connectors,” says Hal Kent, vice president of engineering at Medconx Inc. (Santa Clara, CA). He says that outsourcing PCBs and plastic cases is fairly well understood, but that complex medical cables have subtle challenges, especially when outsourcing abroad. “Basic material specifications need to be better understood than when you are sourcing in the United States. Copper is often recycled; plastics are often reground, incorrectly substituted, or misused; and plating specifications are often not well controlled.”

Supply-Chain Management. Another issue to consider when outsourcing electronics manufacturing is found in supply-chain management. “Electronic products typically have extensive bills of material requiring the procurement and handling of hundreds of different parts from different vendors, many with long order-lead times,” says Waldron. It is vital, he says, that manufacturers pay significant attention to transferring the OEM’s component inventory and to establishing an ongoing parts supply chain to the contract manufacturer. “A glitch with even the most inexpensive resistor can prohibit the timely delivery of a product,” he says.

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