Outsourcing Design and Engineering Services: An Interview with Mark Schwartz of Product Development Technologies

     Outsourcing the design of a new product in the medical device manufacturing industry is still a relatively recent change to the way companies address the process. Historically, a company would be very cautious in seeking an external partner to handle its design and engineering needs for a project. However, more recently, medical device manufacturers are welcoming this practice with much less trepidation than they felt previously. In addition, recent inclusion changes to ISO 13485 will hold design and engineering firms to a higher standard much like their manufacturing counterparts. The availability of this certification is likely to further ease concerns medical device manufacturers have had in the past regarding the outsourcing of the design and engineering of their product concepts.

     Mark Schwartz’s company, Product Development Technologies (PDT), a leading design and engineering consulting agency, has extensive experience in serving as a partner to a number of medical device manufacturers. As the CEO and one of the founders of the company, Schwartz has witnessed the slow adaptation of this outsourcing trend in the medical device industry. “Design is one of the last service disciplines to embrace outsourcing. We’ve seen this in accounting, advertising, HR, etc. for years. It’s warming up now and I predict that we’ll see the emergence of larger and larger firms.”

     Since PDT is one of the design and engineering firms recently awarded the ISO 13485 certification, Schwartz must make every attempt to maintain strong processes throughout the product development cycle to ensure quality management standards are met in each project. “The product development process always benefits from strong process standards. The creative aspect of the project is not lost because procedures are in place; in fact, it’s the opposite,” he explains. The commitment to this philosophy has brought Schwartz and PDT success that has been recognized by BusinessWeek, the Industrial Designers Society of America, The Consumer Electronics Association, and INC. Magazine.

     In this exclusive interview with Mark Schwartz, Medical Design Technology asks about the impact of the change to ISO 13485, the growth of the trend to outsource the design and engineering of a medical device, and his thoughts on the market in general.

Q: What impact does the recent change in ISO 13485 certification have on U.S. design firms?
A: I think it is similar to the impact that ISO 9001 has had on the manufacturing industry; it establishes a baseline standard for which we operate under. ISO forces you to establish a process and then mandates you stick with it and further requires you to continually refine and improve that process. It makes you focus on continuous improvement. It also helps to streamline the effort of selecting a design partner. If you are certified, it simplifies and speeds the
vendor survey/audit.

Q: Will this certification establish a tougher barrier to entry for U.S. design firms seeking to serve medical device companies?
A: To a certain degree, yes. It requires a commitment of time and money before, during, and after the certification process. It is not particularly difficult but does require discipline and dedicated resources. I think it will make it tougher on the small firms.

Q: Will ISO 13485 filter out firms not specifically equipped to handle the needs of device manufacturers but who already have them as customers?
A: That is hard to say. Design is a very relationship driven business. I doubt it will be so black and white, but I could see certification becoming a requirement where firms will be given some time to comply.

Q: Do you know how many U.S. design and engineering firms have already received this certification?
A: Unfortunately, we do not have a firm number of design and development firms that have the certification. What we do know is that our registrar is one of the largest national certification bodies and that we were the first that our registrar had certified, leading us to believe we are among a very small group with certification in the U.S.

Q: How much of medical device design and engineering tasks are currently outsourced by U.S. manufacturers?
A: Medical device design outsourcing is consistently increasing. While I don’t know exact numbers, I do know that OEMs are realizing more and more that the best strategy is to focus on their core competencies and to outsource aspects of the product development process that are the core competencies of qualified design and development firms. By doing this, OEMs realize benefits in more rapid product development cycles, resulting in quicker times to market that ultimately means greater profits. The OEMs also benefit from contracting firms’ expertise in complex and niche technologies, as well as design expertise, that can have a huge impact on manufacturing costs. Because of these and other benefits, medical device design and engineering tasks are being outsourced by manufacturers more every single year.

Q: How will this change as more companies achieve this certification?
A: I think it will go up. Certification will make medical device companies more comfortable with the concept of outsourcing. Manufacturers are constantly under pressure from the FDA to properly qualify contractors and ensure that their processes are sufficient. This certification gives the manufacturer this assurance immediately.

Q: Will the availability of this certification to U.S. design services firms reduce the percentage of design and engineering jobs outsourced outside of the US?
A: There will be a cycle I think. Companies new to outsourcing will want to do it locally first, then start to cost reduce off-shore. We’ve seen a similar cycle in the consumer electronics industry. Smart firms like ours will stay a step ahead by having our own offices in low labor areas. We currently have 40 engineers in the Ukraine that give us low labor and two shift coverage. Our clients benefit because they can deal with any of our local offices while we manage our lower cost labor pool to reduce their overall costs.

Q: What technologies in medical device manufacturing do you find to be the most interesting? Why?
A: PDT and TZ Inc., our sister company, work heavily in the area of smart materials. We are currently developing intelligent fastening technologies with TZ Inc. that are based on these materials. Cardiac stents are another example where these smart materials are used. As these materials evolve, I think they will play a much larger role in the future.

Q: Where do you see the largest growth potential in medical device manufacturing?
A: I think it will be in the areas of monitoring and prevention. As the technology permits, people will monitor themselves for many more things. Blood pressure, pregnancy, glucose, etc. are conditions that can be checked and monitored now. Other common conditions will follow and hopefully help reduce health care costs.

Q: Is there a specific sector of medical device manufacturing that is outsourcing tasks to design and engineering firms at a greater instance compared to other areas? Why?
A: Generally, I’d say that the more of a commodity that a product is, the