The medical industry, with its growing adoption of electronic devices, is changing rapidly, and the supply chain needs to evolve with it.
In a previous article, I outlined how the burgeoning LED market has driven changes in the way electronic components supply chain participants conduct business. This segment provides another case study about how the supply chain is adapting to vertical industry needs. In this case, technological advances, the medical demands of an aging population, and strict regulation combine to create new opportunities for players in the electronic components supply chain.
The use of electronic devices in the medical industry began in the 1940s, with the development of pacemakers for heart patients, and has evolved rapidly to include highly advanced surgical and diagnostic equipment. Analysts across the board agree that this industry shows strong signs of sustained growth:
According to a September 2013 study by market research firm IHS iSuppli, revenue for consumer medical devices is forecasted to reach $8.2 billion by the end of 2013, and grow to $10.6 billion in 2017.
In June 2012, research firm Global Information predicted medical semiconductor revenue to reach $6.4 billion in 2017, driven by increased demand for new devices gaining regulatory approval.
While the medical industry presents an attractive market opportunity, there are many factors that supply chain participants, including manufacturers and distributors, must consider in order to successfully penetrate this market.
Continued support of extended lifecycles -- Medical devices often require multi-year development cycles before obtaining government approval and, after entering the market, are then expected to last from seven to ten years or more. These varying product lifecycles require distributors to maintain a range of components and date codes, including obsolete and end-of-life components, and to adapt warehousing facilities and fulfillment processes accordingly. Franchised and authorized distributors that specialize in managing a diverse portfolio of EOL and obsolete components have an advantage over other distributors in pursuit of the medical components business.
Prevention of counterfeits -- The threat of counterfeit medical devices is small but troubling, since just one counterfeit device failure can result in injury or death to a patient. According to the World Health Organization, 8 percent of medical devices worldwide were counterfeit as of 2010. Franchised and authorized distributors, who guarantee direct lineage and traceability of components, are best positioned to stop counterfeits and preserve the integrity of the supply chain. These distributors have warehousing and logistics facilities that are certified to properly store components to be used for medical devices such as temperature or moisture controlled and ESD 20.20 certified environments.
As both the medical and LED industries illustrate, the electronic components supply chain is dynamic, and players must be proactive in developing their business models and processes if they wish to compete in today's leading markets. Neverending changes in technology reward manufacturers and distributors with the vision and appetite to adapt.
Franchised and authorized distributors, who have long maintained their own forward-looking standards, have proven themselves to be successful in competing for these high-risk, high-reward opportunities, and provide just one example as to how the electronic components supply chain is responding to the unique needs of diverse verticals.
I see a lot of similarity between the medical device market and defense/aerospace market. Both require reliable components as the end-use is life-critical. Additionally, counterfeit components pose a very real threat to the respective supply chains. OEM's in both aerospace/defense and medical need to be certain that they have a well thought out obsolescence management plan in place.
Additionally, it is imperative that as components go end of life that OEM's have reliable, certified and reputable distributors who specialize in EOL and obsolescence issues.
anandvy, you are right. I think continuous upgrading of information, of market trends as well as rapid decision making is very important to supply chain. Chances fly, the early participant could win the market.
The supply chain dedicated to supplying equipment and electronics for hospitals must always keep itself up to date with the changing treatment patterns and introduce new technology at the best possible time that generates the highest amount of interest. Not only that, as the author explains, the supply chain (which is still plagued by things like defective parts usage, corruption etc.) has to correct itself where the life of somebody is concerned. Moreover, since recently every hospital has been uploading patient information into the cloud, hackers have to be taken care of and security has to be increased, because anybody with the knowledge of hacking can affect the health of a patient.
Nanotechnology promises to be disrputive in the medical field. Intel is working on a huge push in this direction--and that's going to impact the medical field. Sensors implanted in teh body...and all that. It's going to be interesting to see how these technologies change the supply chain as well.
With the increase of counterfeit electronics in the distribution chain, it is clear that many of these high-risk suppliers are employing increasingly sophisticated techniques to pass off fake components.
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