Medical supply chain expands ‘nearshore' capabilities, reach

Anaheim, Calif. — After a hard recovery from pandemic-era supply chain challenges, everyone in the medical plastics industry has two megatrends on their minds: supplier consolidation, and reshoring and nearshoring production closer to customers.

Customers want to get their products to market faster, Jeff Moss, CEO of Ascential Technologies, told Plastics News at MD&M West, held Feb. 5-9 in Anaheim, "by working with one company instead of four."

"Having four different [suppliers] might defer risk," Moss said, "but there's a longer time to get to market and a lot of complications."

Formerly Burke Porter Group, Ascential formed in 2023 from seven companies that now make up three business divisions under the new brand. The divisions include medical and life sciences, which covers design, manufacturing and automation; Burke Porter, the automotive and transportation division; and the industrial division, which provides testing products for safety and efficiency for companies in HVAC, appliances, heavy industry and energy.

With diverse capabilities under one brand, Ascential hopes to help customers design for automation and launch new product lines in North America, Moss said.

"A lot of customers, in their traditional model, immediately launch product overseas in a low-cost regions with manual labor," he said. "Customers with current product … in China, Thailand, Vietnam or Eastern Europe … are reshoring in the U.S. or North America."

OEMs are looking for partners in their supply chains that can scale production closer to their own locations, Matthew Miklos, vice president and general manager of Americhem Engineered Compounds, told PN at MD&M.

Americhem recently expanded with compounding centers in Pennsylvania and Denmark to meet demand for medical-grade materials. Next, the company plans to expand with more compounding centers in Asia, Miklos said.

"We want to have all that technology, the compounding toolkit ... on the ground in Asia, for Asian OEMs and contractors," he said. "It's also there for OEMs here that want to produce in Asia. It's going to be the same formulation made on the same equipment."

Staying flexible to small-lot compounding gives the company an edge in the medical market, Miklos added.

"A lot of compounders … want to raise their minimum orders to 2,200 pounds, maybe 10,000-pound minimum orders," he said. "If you're making a small, startup device, you can't order that kind of inventory and sit on it."

Resin distributor Formerra opened a new warehouse in Malmö, Sweden, to support health care customers in Scandinavia and Europe.

"There's real opportunity in that location … to understand what's going on around regulations and reach … within that region," Formerra CEO Cathy Dodd told PN at MD&M. "Our customers need that material when they need it, and we're now able to provide what they need and in a timely manner."

Formerly part of Avient, Formerra, with its new owner HIG Capital, is investing in the health care market by growing its technical sales team and line card, Dodd said. Its new private-equity owner "doubled down … to help us identify areas we knew were gaps, whether it was a regional growth or material alignment … and they've supported that investment," she said.

In November, Formerra expanded with the acquisition of Mexico-based Suministro de Especialidades and Irish materials supplier Total Polymer Solutions.

Now, Formerra is "looking at the globe," Dodd said, to reach where customers, or even suppliers, are located.

"Reach is becoming increasingly important in the health care space," Kelly Wessner, general manager of Formerra, told PN. "As OEMs and large contract manufacturers become more global, they need common materials in multiple regions.

"A lot of the challenges the plastics industry faced over the last few years has driven companies to evaluate," Wessner said. "I think everybody lives with the last couple of years in the back of their heads now.

"Risk mitigation is so important with the health care industry," she added. "You can't stop producing. … [Companies] are starting to anticipate the next challenge that we're going to face on a global basis.

"The ability to get materials produced in North America into Europe and meet all the regulations is critical to meeting the standards for manufacturing," Wessner said.

From OEMs to contract manufacturers, the entire molder base is considering how to "get materials localized to where it's efficient and also cost-effective," she added.

"Our customers bring a lot of insights to us about where they need us," Wessner said. "Historically, we've thought of shipping our North American capabilities to Asia. … Now we're thinking about shipping in-region, in a more broad and sophisticated way."

Protolabs, a Maple Plain, Minn.-based prototype and digital manufacturing specialist, rebranded its manufacturing network, formerly known as Hubs, acquired in 2021, to Protolabs Network to highlight new capabilities available for its customers.

"A lot of the capabilities traditional Protolabs didn't have around material and specifically end tolerances, we can now do over the network," Luca Mazzei, strategic growth officer at Protolabs, told PN at MD&M. "That's what prompted the rebrand.

"Over the next 12 months, we're going to continue to integrate" with network partners, Mazzei said. "More and more parts are going to be from our traditional factory as well [as] from our network."

The company has also seen increased medical demand, specifically for its "bread and butter … quick-turn tools prototyping," he said, and higher demand for small-batch and "bridge" production from customers reshoring or nearshoring production.

"Large companies are trying to rethink, post-COVID, the supply chain and trade issues," Mazzei said. "Not just [reshoring]; they want to have more flexibility and want to have a more resilient supply chain. … They want to have production and suppliers close to the market. They don't want … a central place [that] covers everything with lower costs. That experience hurt them in the tough period."

Similarly, Protolabs "tends to have fewer [suppliers] and work much more closely with them … than some of our competitors," he added. The medical supplier base seems "highly fragmented [while] the large manufacturers become more sophisticated."

Protolabs Network currently includes more than 250 supply partners with locations in Europe and North America. It "continues to add partners," currently investing in network sourcing in Asia, Mazzei said.

The medical market has given Protolabs "more complex projects, where we've … had to use both capabilities of the factory and the network to fulfill them because they were either higher volume or steel tooling that we don't have in the factory," he said.

This year, Protolabs will be investing in automated, customized validation and inspection, which medical customers "especially" are demanding, he said. "It's critical for the industry."

"We have developed a bunch of proprietary inspection automation capabilities," Mazzei said. "Over this year, we're going to release a couple of inspection capabilities."

The programs will allow customers to specify which dimensions and how many dimensions they want in an inspection or validation, he added.