Industry Q&A: Outsourcing vs. Offshoring (Medical Product Outsourcing)

Marc Tanowitz offers insights on the differences between outsourcing and offshoring and how each are applied for optimal results. "If you're talking to the head of manufacturing for a medical device manufacturer, they may look at all of their third-party providers of finished goods and subassemblies that they resell as direct-material vendors rather than outsourcing providers. And they may be right, because they're issuing a purchase order and they're buying some goods. There's no extended commitment, and they're really just paying for that finished good and service to be completed by a certain day. But there are other vendors that have said, "let me take this whole component or device and give someone the specs and they will own all of the raw material procurement and they're going to be registered by the manufacturers and approved by the FDA." That's when you start moving into outsourcing relationships where the outsourced vendor is able to add value through capabilities such as an understanding of the regulatory environment in the country of manufacture as well as the country of sale, to the extent that the product will be sold in multiple countries. Outsourcing is like a joint venture. If you want to make it successful, it's incumbent upon you as the buyer to really invest in that relationship from a tactical and strategic executive level to collaborate to optimize that relationship."

Medical Product Outsourcing