So how do you publish an article from the client’s perspective, without breaking any non-disclosure agreements? Well you find yourself an ex-client which has been acquired for $1.5 billion, and have them tell you about their experience working with LSO. We are lucky that one such former client now works with us here at LSO.
Gary Fulbright is the Director of Materials & Logistics at LSO, but in a former life, as he likes to put it, he was the VP of Operations for SensorMedics Corp. We’ll just let Gary tell you his story:
SensorMedics’ experience with LSO, in my opinion, is a prime example on how to manage your vendor. The relationship was mutually beneficial, with SensorMedics gaining in savings and convenience through LSO’s one-stop shop model, and LSO garnering one of its biggest clients to date. As the VP of Operations, I was heavily involved in the outsourcing of business to LSO. Back in 1995, SensorMedics was trying to make its HFoV device (a Class III device – high frequency ventilation for neonates) more cost effective. We had already invested in cleanrooms to build the product, but everything was on hold because the engineers were having a difficult time with redesigning the device. SensorMedics engaged with Barry Kazemi to (CEO of LSO) help with the redesign issue and that was how we (my former company) became LSO’s client.
Initially LSO only handled the product redesign, and interfaced with the FDA on SensorMedics’ behalf in this regard. But Barry convinced me to move some of our production business to LSO. So for a while SensorMedics was building the product at two locations – our local facility and at LSO. Little by little though, we saw the benefits and savings of moving more of our production to LSO. Once LSO showed us that they were also capable of handling all our inventory needs, it just made good business sense to move all production operations here. So now instead of ordering 500 different parts from 30 different vendors, we just dealt with one single vendor.
By 1998 we had moved all production of the HFoV device to LSO, allowing SensorMedics to use its facility and cleanrooms for other projects. The warehousing and handling of components went away and eventually we moved drop-shipment of products to LSO. We didn’t have any more freight charges, didn’t have to deal with 30 different vendors, we had removed the need for accounts payable activities and didn’t have to invest in a facility, manpower, etc. LSO also managed the vendor base as far as our Quality System was concerned.
SensorMedics got very lucky in that we found a contract manufacturer that could expand with us and meet our growing demands in different aspects of the supply chain. This was a true cradle to grave model, where all I had to do as the client was place an order and our vendor (LSO) would order the parts, inspect them, manage supplies, build the product, package it, and ship it out. Everything moved like a well oiled machine.
It’s surprising to note that, years later, most companies are still unable to successfully emulate this model, which in my opinion is a shame. I am staunch believer in Outsourcing non-core activities, but the secret lies in finding the right vendor. One that has the flexibility to adapt and grow with you and that can provide you with the span of supply chain activities. This is every Operational Manager’s dream.