Long lead times remain one of the most vocalized challenges that orthopedic manufacturers face today. Customers, profits, plans and personnel are all negatively impacted by them. James Kwan has worked on the OEM and the supplier sides of orthopedics, and shared his ideas and successful experiences to help you optimally respond to lead times, reduce them and ultimately create and sustain an agile supply chain.

2. OPERATIONS:
TOP REASONS FOR LONG LEAD-TIMES
&
WHAT TO DO ABOUT THEM
James E. Kwan

3. DESCRIPTION
Long lead times remain one of the most vocalized challenges that orthopedic manufacturers face
today. Customer, profits, plans and personnel are all negatively impacted by them.
SESSION OBJECTIVES
MY OBJECTIVE
Share with you my ideas and successful experiences to help you optimally respond to lead times,
reduce them and ultimately create and sustain an agile supply chain
TAKE-AWAYS
 Understand industry challenges and opportunities
 Gain best practices for small and mid-sized device companies and contract manufacturers
 Learn how to nurture Quality-Speed-to-Market partnerships
What is an AGILE Supply Chain?

4. AGILE SUPPLY CHAIN
 AGILE SUPPLY CHAIN refers to the use of responsiveness, competency, flexibility, and quickness to manage how well a
supply chain entity operates on a daily basis.
 An AGILE SUPPLY CHAIN uses real-time data and updated information to leverage current operations and real-time
data against demand forecast, which helps to improve the overall efficiency and productivity.
AGILE SUPPLY
CHAIN
Virtual
Process
Integration
Network
Based
Market
Sensitive
Market Sensitive
 Supply chain is capable of reading and
responding to real demand
Virtual
 Information-based supply chain, rather
than inventory-based
Network Based
 Network based Virtual Market sensitive Process integration. The use of
information technology to share data between buyers and suppliers is, in
effect, creating a virtual supply chain

5. 1. Balance of Personal Experience & Industry Perspectives
 1000+ years of experience from pre-OMTEC survey participants
 Additional years of experience and perspective from audience participation and Q&A
2. Utilize a DMAIC Process Improvement Approach
 There is an obvious problem with the process for most companies
 There is potential to result in increased revenue, reduced cost and improved efficiency
 There is collectable data, multiple options to improve and control lead times
3. Incorporate feedback from my Network & Personal Experience
 Pre-OMTEC survey of OEM & CMO experts
 15 OEM participants, 10 CMO participants, 5 Other
 Validate trends, beliefs, best practice
4. Provide Recommendations & Discuss
 Summarize Conclusions & Recommendations
 Discuss Strategy, Information & Inventory and Supplier Relationships
5. Confirm that this Session has Met Your Expectations
SESSION APPROACH

6. PRE-OMTEC SURVEY
Survey Participants
 All in the orthopedic industry
 Small & Medium-Sized Companies
 Owners/CEOs
 C-Suite Executives
 Supply Chain Experts/Consultants
 Manufacturing/Technology Experts
 Venture Capital Investor/Tech. Incubator

7. PARTICIPANTS’ “HOT” QUESTIONS
Anticipated Questions
1. Why are lead-times increasing with suppliers?
2. Why does it matter?
3. What are the best practices?
4. How do they differ for OEMs and CMO organizations?
5. Other specific questions from audience?

8. QUALITY SPEED TO MARKET
Where is your organization feeling the pain?
(different solutions based on phase)

9. REASONS FOR LONG LEAD-TIMES?
Demand
Exceeds
Capacity?
OEMs
Outsourcing
More
Mgmt./Policy
Constraints
Other
?
Material
Constraints
Personnel
Constraints
Launch
Schedule
Compression
Poor
Planning
Lack of
Supplier
Leverage
Supplier
Quality
Make vs.
Buy
Strategy
Supplier
Relationships
Mergers &
Acquisitions
Instruments?Implants?
Cases & Trays?Customs/Specials?

10. SURVEY: Reasons for Long Lead-Times
Survey – Other Reasons
A. Poor supplier relationship management
B. Forecast volatility impacting raw material
C. Mix of demand vs. capacity & OEM outsourcing
D. Many new OEM companies needing CMOs
E. Inconsistent demand, large peaks & valleys
F. Relationships – OEM/CMO commitments
G. Superficial partnerships b/w OEM/CMO
Audience – Other thoughts?
My Perspectives
1) Demand is high, but there is capacity out there
2) Effective planning minimizes capacity constraints
3) With true partnership LT challenges can be solved

11. SURVEY: Long Lead-Time Impact
Survey – Other Reasons
A. Not leveraging CMO core competencies
B. Orders are not level-loaded
C. Customer satisfaction
Audience – Other thoughts?
My Perspectives
1) Depends on size of OEM and options they have
2) CMOs are equally frustrated
3) Overall final customer is impacted
4) For new products depends on Phase
5) For legacy products depends on life cycle

12. WHAT TO DO ABOUT LONG LEAD-TIMES?
SOURCE
MAKE
Vertical
Integration
Outsource
Partners
Supplier
Management
Strategy
S&OP
Project
Management
Quality
Speed to
Market
PLAN
It depends…
Vendor
Managed
Inventory
Supplier
Collaboration
…on your organization’s priorities & resources
Policy
Deliver on
Commitments
Satisfied
Customers
Company
Success

13. DMAIC PROCESS IMPROVEMENT
D
Define the
business
problem, goal,
potential
resources,
project scope
Define
M
Objectively
establish
current
baselines as
the basis for
improvement
Measure
A
Identify,
validate and
select root
cause for
elimination
Analyze
I C
Improve Control
Identify, test
and
implement a
solution to
the problem
Embed the
changes and
ensure
sustainability
Why use DMAIC?
 Is there a problem & are processes involved?
 Is there potential to improve revenue, efficiencies and reduce cost?
 Can we collect and analyze data to evaluate solutions?

14. PROBLEM
Severity:
 Significant disruption to product availability
Business Impact:
 Revenue
 Customer Satisfaction
 Relationships
Depts./Units Involved:
 Supply Chain, Eng., Prog. Mgmt., Executive Mgmt.
DMAIC - DEFINE
Define
GOAL
Goal:
 To have predictable supplier lead-times that eliminate
backorders, project delays, etc.
Business Objectives:
 Sufficient inventory to stock sets (launches)
 Enough inventory for sales replenishment
 Safety stock for inaccuracies in sales forecasts
RESOURCES
 Supply Chain Interviews
 Supplier Partners Interviews
 OMTEC Survey
 Other
SCOPE
 For today’s purposes to share perspectives/educate
 Going forward what can you change in your world?
Define the
business
problem,
goal,
potential
resources,
project scope
TOOLS
 Process Flowcharts
 SIPOC Diagrams/Mapping
 Voice of Customer/Supply Partners
Questions:
 What are your supply chain dynamics?
 How do you manage your OEM capacity?
 How do you leverage your CMO capacity?

15. DEFINE – Make vs. Buy
 Michael Pfitzmann & Arvind Kaushal – “Make versus Buy: A Decision Framework,” Booz Allen Hamilton, 2006

16. DEFINE – SIPOC
A SIPOC is a high-level view of a process.
It stands for Suppliers, Inputs, Process, Outputs and Customers
Supplier Input Process Output Customer
Person/Organization
That provides Input
to a Process.
Resource that is
added to a Process
by a Supplier.
Series of steps where
An Input converts to
an Output.
Resource that is
the result of a
Process.
Person/Organization
that receives
product or services.
 To give people who are unfamiliar with a process a high-level
overview
 To reacquaint people whose familiarity with process changes
 To help people in defining a new process
SIPOC is a tool that summarizes the inputs and outputs of one or more processes in table form.
 Suppliers and customers may be internal or external to the
organization that performs the process.
 Inputs and outputs may be materials, services, or information.
 The focus is on capturing the set of inputs and outputs rather than
the individual steps in the process.

17. SURVEY: Vertical Integration of OEMs
Survey – Other Reasons
A. No additional comments
B. N/A - CMO
Audience – Other thoughts?
My Perspectives
1) Stable legacy products – outsource if needed
2) New product development – vertically integrate
3) Balance volume & overhead absorption
4) Protect mfg./trade secrets/IP
5) Plan for surge capacity

18. SURVEY: Why use CMOs
Survey – Other Reasons
A. Blend of Quality, trust and communication
B. Relationships – mutual dedication to success
C. Brand. Reputation for quality, service & integrity
Audience – Other thoughts?
My Perspectives
1) Outsource for capacity & special processes
2) Keep new products inside if possible
3) Outsource legacy products to liberate capacity
4) CMOs possess unique competencies
5) CMO business models favor flexibility

19. DMAIC - MEASURE
BASELINE
 Current & past performance
 Process map of supply chain
 Supplier Management Metrics
 Data collection Plan
 Collect data
 Personal experience
 Pre-OMTEC Survey
DATA
 Historical Lead-Times
 Implant lead-time by supplier
 Instrument lead-time by supplier
 Cases & trays lead-times
 Cost of Quality
 Total Cost of Acquisition
 Etc.
RESOURCES/TOOLS
 Benchmarking
 Measurement System Analysis
 ERP/MRP
 Supply Partners’ Data
 S&OP/Integrated Planning
 Forecasting Models
 ABC Inventory Analysis
 Process Mapping
CONSIDERATIONS
 Compare your data with suppliers
 Breakdown L-T for PLAN-SOURCE-MAKE-DELIVER
 Breakdown data for A, B & C Inventory
Objectively
establish
current
baselines as
the basis for
improvement
Measure

20. MEASURE - ABC Inventory Management
Inventories are not of equal value…so, lead-times have different business impact
ABC Classification % of Inventory/Value Controls
A items 20% of SKUs --- 70% of sales volume/value tight control
B items 30% of SKUs --- 25% of sales volume/value moderate control
C items 50% of SKUs --- 5% of sales volume/value simple controls
 “A” items are very important. Because of the high value of “A” items, frequent value analysis is required.
 “B” items are important but, less important than “A” items
 “C” items are marginally important (except during new product launches)
Need to choose an appropriate order pattern to avoid excess capacity and/or Stockouts & Backorders
ABC Classification Order Pattern Safety Stock
A items Continuously build/order minimal inventory
B items Periodically build/order more inventory
C items Seldom build/order most inventory (*note*)
*note* - slow moving inventory leftover from launch

21. MEASURE – SCOR Assessment
T1 T2 T3 T4 T5
Total Lead-Time
(Total Cost of Acquisition)
 Supply Chain Council – “SCOR - Supply Chain Operational Reference Model” – APICS/ASCM, 2018
Enable
(Policies, Practice & Resources)

22. SURVEY: What CMOs Should Do
Survey – Other Reasons
A. Honor commitments
B. N/A - CMO
Audience – Other thoughts?
My Perspectives
1) Be honest about capabilities & lead-times
2) Do thorough contract/PO review
3) Be insistent on key information needed
4) Full transparency as partners
5) Prototype capabilities & sub-contract control

23. SURVEY: What OEMs Should Do
Survey – Other Reasons
A. Establish realistic launch schedules
B. Make commitments to CMO & develop relationship
Audience – Other thoughts?
My Perspectives
1) Be consistent and build relationships & trust
2) Share information & communicate constantly
3) Improve internal alignment with S&OP
4) Make investments to share risk/reward
5) Quality & capabilities over price

24. DMAIC - ANALYZE
DATA REVIEW
 Inspect data & sources
 Consolidate and present data
 Narrow down & verify root causes
GOAL
 To perform process analysis to determine the vital few
causes of lost time, defects and waste in the process that
creates longer lead times
RESOURCES/TOOLS
 Brainstorming
 Time Analysis
 Value-Added Analysis
 Value Stream Mapping
 Cause and Effect Diagrams
VERIFICATION
 Verify data through process analysis
 Process observation & comparative analysis
 Confirm root cause(s)
Analyze
Identify,
validate and
select root
cause for
elimination

25. ANALYZE – Cause & Effect Diagram
MANAGEMENT
LONG
LEAD-TIMES
MATERIALMACHINEENVIRONMENT
PEOPLE METHOD
Policy
Practice
Priorities
Relationships
Capacity
Additive Mfg.
Screw Machines
Mill/Turn
Coatings
Plastic
Metal
Bandwidth
Expertise
Talent
Cleaning/Pkg.
HT/Anodizing
Mfg./Assembly
Market

26. ANALYZE – Value Chain Analysis

27. DMAIC - IMPROVE
IDENTIFY
 As many solutions as possible
 Policy & Practice
 Leadership & Alignment
 Metrics/KPI Baselines
TEST
 Do mini testing cycles
 Refine ideas
 Collect stakeholder feedback
TOOLS
 PDCA
 To-Be Process Maps
 Weighted Criteria Matrix
IMPLEMENT
 Select the best solution
 Plan the implementation
 Training, documentation & communication
Improve
Identify, test
and
implement a
solution to
the problem

28. IMPROVE – Option Matrix
TIME TO IMPLEMENT
COMPLEXITY
LESS MORE
LOWHIGH
ABC
Inventory
Mgmt.
‘A’ Product
Focus/Strategies
Shared
Planning &
Forecasting
Mfg.
Postponement
Integrated
Planning (S&OP)
‘B’ Product
Focus/Strategies
‘C’ Product
Focus/Strategies
OEM owned
tools &
equipment at
Supplier
Agile Make vs.
Buy Policies
Agile Supplier
Management
Policy
Design for
Manufacturing
& Quality
Prototyping
Capabilities
Vertical
Integration
Investment
Better
Supplier/CMO
Communication
Shared Risk &
Gainsharing
Quality &
Metrology
Alignment
EE Apprenticeship
Programs
Disaster
Recovery Plans
Cost of
Quality
Total Cost of
Acquisition
Talent
Recruitment &
Retention
Product
Obsolescence
Vendor
Managed
Inventory
Aligned
Leadership &
Dept. Objectives
New Product
Launch/Rollout
Plans
Process
Control
Practices

29. IMPROVE – Tailwinds/Headwinds
FORCES SUPPORTING CHANGE FORCES OPPOSING CHANGE
Strategic
Supply Chain
Improvements
Tactical
Supply Chain
Improvements
Awareness of Opportunity
Impact on Sales
Impact on COGS
Lead-Time
Reduction
Impact on Agility
Impact on Relationships
Disagreement on Risk
Cost of more Inventory
Margin Erosion
Policy/Practice
Silo Management
What do you want to change & How will you get it done?

30. SURVEY: Best Practices (OEM)
Survey – Other Reasons
A. Commitments & relationships
Audience – Other thoughts?
My Perspectives
1) Everything starts with a true partnership
2) Different tactics for ABC inventory key
3) Tightly coupled information = right inventory
Survey – OEM Misc. Comments
A. Focus on DFM w/manageable tolerances
B. Better leadership/communication b/w depts.
C. Shared risk with forecast commitments
D. Linked information systems, focus on “A” items
E. Minimize schedule changes, agreed upon plans
F. Strong two-way partnership & communication

31. SURVEY: Best Practices (CMO)
Survey – CMO Misc. Comments
A. Predictable orders key to ensuring on-time delivery
B. Reduce multiple redundant inspections
C. Shorten planning frequency, accelerate hand-offs
D. Design-for-Manufacturability (DFM)
E. Reduction of machining operations
F. Vendor-Managed-Inventory
G. Shared risk & reward
H. Forecasting is not enough
I. Schedule compression/Laws of Physics
Audience – Other thoughts?
My Perspectives
1) Treat CMOs as partners and share perspectives
2) Communicate, plan, communicate, plan, communicate
3) DFM and product family strategies for CMO leverage

32. DMAIC - CONTROL
CHANGES
 Document
 Create QS and/or SOPs
 Process maps
 Checklists
 Etc.
ENABLERS
 Focus on “Forces for Change” & Change Agents
 Celebrate wins, repeat
SUSTAINABILITY
 Value: Determine what steps are required (are
of value) to the customer
 Flow: Remove waste in the system to optimize
the process to achieve a smoother pace
 Pull: Ensure the process responds to customer
demand (pull = want)
 Perfection: Continuously pursue “perfection”
in the process
MANAGE & MONITOR
 Metrics/KPIs
 Response Plan
Control
Embed the
changes and
ensure
sustainability

33.  SCOR Model – “Supply Chain Risk Perspective,” Supply Chain Council
Customer
Facing
Supplier
Facing
COMPANY
(OEM or CMO)
GLOBAL ENVIRONMENT
COMPANY’S ENVIRONMENT
CUSTOMER’S ENVIRONMENTSUPPLIER’S ENVIRONMENT
CustomersSuppliers
Internal
Facing
• Relationship Risk
• Supplier Performance Risk
• Human Resource Risk
• Supply Chain Disruption Risk
• Supplier Environment Risk
• Market Dynamic Risk
• Disaster Risk
• Political/Country Risk
• Supplier Financial Risk
• Regulatory Risk
• Operational Risk
• Technical Risk
• Financial Risk
• Legal/Regulatory Risk
• Environmental Risk
• HR/Health & Safety Risk
• Political/Country Risk
• Financial Risk
• Distribution Risk
• Relationship Risk
• Market Risk
• Brand/Reputation Risk
• Product Liability Risk
• Environmental Risk
• Political/Country Risk
CONTROL – Risk Management
Single/Sole-Source Supplier? Business Continuity Risks?
Financial Risk? Supplier Mix?

34. CONTROL – Product Strategy
MARKET PENETRATION
Trying to increase share of an existing
market with an existing product.
LOW RISK
PRODUCT DEVELOPMENT
Extending existing products within
existing markets.
MEDIUM RISK
MARKET DEVELOPMENT
Finding or creating new markets for
existing products.
MEDIUM RISK
DIVERSIFICATION
Creating new product lines or ranges
for sale in new markets.
HIGH RISK
PRODUCT
Present New
NewPresent
MARKET
SUPPLYCHAINCOMPLEXITY
NewPartnersCurrentPartners

35. • Long lead times driven by a number of variables depending on your companyD
M
A
I
C
Identify, validate and select root cause for elimination
 Use Cause & Effect, Value Chain and Force Field analyses to analyze data/options
 Get more data if needed but, identify root cause(s) for long lead-times
Objectively establish current baselines as the basis for improvement
 Look at your incremental and aggregate lead-times for getting product to market
 Utilize SCOR process and ABC inventory data to establish performance baselines
DMAIC – Take Aways
Identify, test and implement a solution to the problem
 Select easy short-term solutions, build on success and continue with more difficult solutions
 Options for improving lead times range from easy to complex
Embed the changes and ensure sustainability
 Look at both the CMO and OEM environment for risks & mitigation, establish metrics/KPIs
 Control & risk management depends on improvements implemented & company
Control
Improve
Analyze
Define the business problem, goal, potential resources, project scope
 Utilize SIPOC to define your inputs/outputs and opportunities for improvement
 Take a close look at your Make vs. Buy and Supply Chain policies & practices
Define
Measure

36. SUMMARY RECOMMENDATIONS
 STRATEGY
 Know your customer and supply chain options, risks & opportunities
 Construct a lean supply chain organization that eliminates waste, variability, uncertainty
 Determine your product strategy & then design your supply chain strategy
 INFORMATION & INVENTORY
 Build tightly coupled information infrastructures (Mgmt., Marketing, Eng., Mfg., Logistics)
 Build tightly coupled business processes (Collaborative Supply Chain)
 Construct tightly coupled decision support systems
 Utilize ABC inventory management analysis
 Implement postponement & VMI
 SUPPLIER RELATIONSHIPS & RISK MANAGEMENT
 Leverage existing relationships, build stronger relationships
 Establish true partnerships with mutual benefits/risks
 Evaluation the entire spectrum of OEM & CMO risks & mitigate

37. RECOMMENDATIONS - Strategy
STRATEGY
EFFICIENT SUPPLY CHAINS
(supply at lowest cost)
RESPONSIVE SUPPLY CHAINS
(respond quickly to demand)
Product Design Maximize performance at lowest product cost Postpone differentiation w/modularity
Pricing Lower Margins Higher Margins
Manufacturing Lower costs via utilization of capacity Capacity flexibility
Inventory Low Inventory Buffer Inventories
Lead Time Reduce, but not at expense of costs Reduce even if costs high
Supplier Based on quality & price Based on speed, flexibility, reliability, quality
AGILE

38. RECOMMENDATIONS – Info & Inventory
 Uncertainty is pervasive and degrades system performance in terms of operating costs and customer
service levels so, reduce uncertainly through collaborative partnerships and communication!
 Inventories are a consequence of system trade-offs and of the design and operation of the supply chain
(capacity, inventory, service level) and should buffer unpredictable lead times
 Operating policies must be designed carefully because not all customers and products behave in the
same way nor should they be managed the same based on product lifecycle and demand
 Strategic, tactical, operational decision making must be made jointly with your partners and must
consider the effects of uncertainty explicitly.
An “I” for and “I”
• The less information you have, the more inventory you will need
• The more information you have, the less inventory you will need
• Customer service, inventories, and capacity utilization: pick any two and the third is determined
• Reducing lead-times and system wide inventories without sacrificing customer service and operating costs
(i.e., overtime, expediting, etc.) requires a fundamental change to supply chain practices
 James A. Rappold, Phd. – “Supply Chain Leadership,” University of Wisconsin-Stout, February 19, 2007

39. RECOMMENDATIONS - Relationships
 James A. Rappold, Phd. – “Supply Chain Leadership,” University of Wisconsin-Stout, February 19, 2007
N/A
TYPE 1
Collaborators
• Same as TYPE 2, except that parties are
routinely involved in each other’s
strategic, tactical and operational
decisions
TYPE 3
Coordinators
• Demand and current inventory levels
and inventory policies are shared, but
otherwise deal at arm’s-length
TYPE 2
Cooperators
• Same as TYPE 3, except that parties are
routinely apprised of upcoming
changes by virtue of highly integrated
business processes.
TYPE 4
Communicators
• Orders placed as a response to signals
either from forecast or actual use
• May be unwilling or unable to do
otherwise
N/A
Level of
Decision
Systems
Integration
Level of Business Process Integration
Level of
Information
Systems
Integration
What’s your
relationship with your
suppliers?
What level of
Information & Decision
Systems Integration do
you have?

40. CLOSE
 Did I address all of the audience’s “hot” questions?
 Were my perspectives helpful?
 Did the survey data provide verification and context?
 What didn’t we cover that should have been included?
 Any other comments you’re willing to share?
KEY TAKE-AWAYS
1. Find balance demand & choose the right options for different phases of a product’s lifecycle.
2. The best practice is to have real-time information for PLAN-SOURCE-MAKE-DELIVER processes.
3. Select suppliers who have the right competencies, motivation and commitment to a partnership.
4. Partnerships & relationships are CRITICAL for QSTM of both new and legacy products.
5. Use SCOR, DIMAIC and other tools for addressing and anticipating supply chain challenges.

41. THANK YOU!
OPM Consulting, LLC
James E. Kwan
Owner & Principal
Park City, UT
Operational Project Management - Supply Chain Management - Organizational Performance Management