Now, it’s time to consider the next “down” cycle. While we can’t know for sure when it will occur, many researchers and experts are anticipating change within the next few years. Given the economic risk, manufacturers cannot afford to ignore the oncoming recession.
Same Skills, New Path
In traveling across the nation visiting various automotive suppliers, a noticeable difference exists as you leave the car mecca of the United States: many suppliers don’t focus on automotive products. Instead, it’s just a part of what they do. For example, one firm I visited in Missouri dedicated only 10% of their operation to automotive. Few suppliers in Michigan can say the same…
With a recession on the horizon, and a large portion of manufacturing in Michigan focused solely on automotive, how can we avoid a repeat of 2008? The sensible approach to this is diversification.
The best time to diversify is now, when things are going well and you can support change with the cash flow from your ongoing, profitable work. However, most of us tend to resist change because we get comfortable doing one thing (in this case, supplying the same products to the same customers or market). Then, when the inevitable downturn comes, we don’t have the resources or the inclination to change. Quite the Catch 22.
Those manufacturers who are able to overcome this natural urge to avoid change will be the ones who survive and thrive through the next recession, making their companies into a more competitive operation. One such path of change is with medical devices.
Some might be intimidated by the level of detail that is required to manufacture medical devices. However, none of this is beyond the skills of an automotive supplier. Through my work as a quality mentor, I often audit IATF 16949 (auto) facilities as well as ISO 13485 (medical devices) quality standards. Interestingly, some of the automotive standards are more stringent than medical devices.
I’ve seen both sides and know that a move from automotive to medical devices is no more challenging than an OEM launch that changes product, process and people at the same time. If a company can survive one of those, they can easily survive this transition.
Beyond widening product offerings and bringing in a whole new market of customers by diversifying, manufacturers can gain a competitive advantage in the medical device sector by achieving MedAccred accreditation. Provided by the Performance Review Institute (PRI), this is an industry-sponsored audit program for qualifying special processes involved in medical device manufacturing, including injection molding, welding, printed circuit board assembly, wiring harnesses, etc.
Going through this process of achieving accreditation gets you on a special list of businesses that medical device manufacturers such as Stryker, Medtronic and Johnson & Johnson use for sourcing. Recently, certain items have been sourced away from long-term suppliers who were not accredited and instead given to suppliers who had their accreditation, making it clear that contracts will be increasingly awarded based on this accreditation going forward.
With the uncertainty of the automotive industry and economy as a whole, medical devices are one option for manufacturers to pursue to generate stable sales now and into the future. There are many other paths available to diversify your production as well. Deciding to diversify is the hardest part. After that, it’s just work. Don’t wait to make changes until after the inevitable downturn, when you’re busy scrambling to keep your business alive…
To learn more about how to diversify products, or how to achieve MedAccred accreditation, contact firstname.lastname@example.org.
MEET OUR EXPERT
Quality Program Manager
Bob Jenkins is a Quality Program Manager at The Center. In his role, he manages and delivers training and implementation assistance to organizations in the field of quality improvements. As an Exemplar Global Certified Auditor, Bob assists clients with Quality Management System implementations such as ISO 9001:2015 and IATF 16949. He provides internal auditor training and consulting services for various groups, including production, production management and corporate management, in disciplines involving the automotive core tools of quality systems consisting of FMEA, PPAP, APQP, SPC, MSA, and Root Cause Analysis/Problem Solving. Bob also teaches blueprint reading.
Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.