In this Supply Chain Byte, Lisa Anderson highlights a recent breakthrough in manufacturing—and why collaborative supply agreements are important. When suppliers and manufacturers align goals, share information and commit together, progress moves from idea to impact.
A recent example of a successful collaborative supplier agreement is related to rare earths that brings together three companies. Rare earths are required for almost everything needed to support future growth, from artificial intelligence to computer chips to medtech devices. The first magnet was made in the U.S.A. in the last 25 years, and it directly relates to this collaborative supplier agreement. VAC, a German based company that is one of the few rare earth magnet producers outside of China has invested in a U.S. subsidiary, eVAC. eVAC just completed construction on a rare earth permanent magnet manufacturing facility in South Carolina with support from the DOD and a Qualifying Advanced Energy Project Tax Credit. The first magnet was produced there.
In addition, UCore, a U.S. deep mineral exploration company has evolved and pivoted to focus on processing technology which is a vital need to build capabilities as China dominates this field with 80% of the global market. They developed proprietary technology for critical minerals separation and plan to deploy it its first commercial processing facility in Louisiana. There was a memo of understanding with VAC, eVAC and UCore to develop a collaborative supply agreement for high-purity rare earth oxides. This is exciting news for building the capabilities to scale production rapidly.
What should you take away? Executives must pivot and think about creative and innovative solutions to take advantage of opportunities while doing so profitably and successfully. Evaluate unlikely supply chain partners, competitors, public-private partnerships etc. The only avenue to scale rapidly with limited resources (capital, talent, infrastructure) is to think creatively, consider vertical integration-like opportunities and develop strategic partnerships. The status quo and continuous improvement will not suffice to succeed in the next decade. Evaluate radical change and innovative ideas to thrive.
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Strategic Partnerships in the Medical Supply Chain