Abbott’s device group had a supply chain ‘mind shift,’ Lisa Earnhardt says

When I profiled Abbott EVP and Medical Devices Group President Lisa Earnhardt earlier this year for our Women in Medtech issue, I couldn’t include everything from our hour-long interview in that October cover story.

But as we work on Medical Design & Outsourcing‘s January 2025 Leadership issue, I wanted to share some previously unpublished comments from my conversation with Earnhardt about how Abbott — the world’s eighth-largest medical device business — thinks about its vendors and suppliers.

The trend at other leading medical device manufacturers — most notably at the world’s largest, Medtronic — has been to cut costs and/or improve quality by shrinking the supplier list and building deeper relationships with those that make the cut.

That’s also been a big focus at Abbott, Earnhardt said.

“The pandemic taught us a lot, only because there’s nothing like a crisis to show you where maybe there’s opportunities for improvement in our supply,” she said. “And we certainly did find that, whether it be from a business continuity standpoint, whether it be from just thinking about our product portfolio and … optimizing that or simplifying that [or whether it be] thinking about the external partners that we work with and [their potential] to be a partner versus just a vendor.”

She described that as a “bit of a mind shift” where Abbott leaders put more emphasis on unleashing value from vendors and suppliers, not only to reduce Abbott’s cost of goods sold and improve product quality, but also to build value “for the partner by deepening those relationships.”

That also increases Abbott’s supply chain resilience and visibility, helping to ensure the company’s products will be where they’re needed when they’re needed at an affordable cost, she said.

Abbott’s size as a larger organization beyond medical devices — spanning diagnostics, nutrition and pharmaceuticals, all of which share some external partners — means it has significant purchasing power to leverage.

“There has been consolidation in the space, most certainly,” Earnhardt said. “[We’re] thinking about who are the ones who we really believe are going to be the winners in the future — those that cannot just meet our needs today, but who will be able to meet our needs and anticipate our needs two years, five years, 10 years from now — and you start to see differences in capabilities as it relates to our partners.”

And finally, another update from when we first published our interview: Abbott has opened its new manufacturing plant in Ireland, which Earnhardt described as a significant investment in automated manufacturing of its FreeStyle Libre products.

That was another initiative Abbott undertook with help from external partners to develop the manufacturing equipment and design the products for automated manufacturing.

“We knew for a product like FreeStyle Libre and a condition as widespread as diabetes, we needed to really make that investment up front in automation,” Earnhardt said. “There’s quite a bit of work there, both the work as well as the sheer capital investment.”

Designing for automation requires careful planning, an understanding of what can be automated and what should be automated, as well as what parts of the process to outsource and what to retain in-house.

“We might want to retain that because of our competencies, we might want to retain that because of intellectual property or trade secrets, that kind of know-how, if you will,” she said. “And then sometimes you have to recognize that there may be external partners that make the most sense.”

For more from Earnhardt, read our 2024 Women in Medtech cover story.