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Spotlight on Medical Device Manufacturing: Part 3 – The role of Enterprise Software in Price Justification and Cost Cutting

  • 19 June 2013
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Categories: ERP

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Samurai slicing dollar bill with sword Samurai slicing dollar bill with swordEnterprise software is central to the operation of any medical device manufacturer.  These solutions serve as the central source and repository of operational data.  They document and automate workflows.  They even allow manufacturers to efficiently collaborate with customers, partners, and suppliers. As such, enterprise solutions can play a key role in helping medical device manufacturers justify prices and implement measures to reduce costs.
Justifying product prices

In their efforts to prove a product’s quality to regulators—and justify its price—medical device manufacturers make substantial manpower and cash investments in product testing.  They document their results through every step of the product lifecycle, accumulating massive amounts of data.  For example, a typical phase three study for a drug delivery device can generate enough data to fill a container lorry.

 

A vendor that fully integrates product lifecycle management (PLM) capabilities with its enterprise software can help manufacturers manage the documentation of proof required through the trials process to identify and communicate the value of these devices.

 

Rather than having to rely on multiple databases and documents in multiple locations, manufacturers can rely on PLM as a central knowledge repository for process and product history.  The PLM repository can control and manage all documentation associated with a product throughout its lifecycle, including CAD drawings.  It provides an electronic vault where documents can be stored securely and where access and versioning are tightly controlled.

 

Accuracy and completeness of documentation is ensured because PLM automatically manages and groups source documents with supporting sub documents.  PLM promotes integration and exchange of this documentation information among all enterprise users who interact with the product. It enables audit tracking and can provide advanced document search and retrieval functionality.

 

Using PLM capabilities will make it easy to gather appropriate documentation, simplifying the process for demonstrating product quality and efficacy to insurance companies, Medicare/Medicaid officials or payment authorities for national healthcare organizations in Europe.

 

Implement new sales and marketing paradigms

 

Rather than sending direct sales forces to physician’s offices, many medical device manufacturers are providing considerable information about their products and how to use them, as well as allowing customers to order their products over the Web.  Medical device manufacturers that wish to put in place these new sales and marketing paradigms can simplify their efforts using Customer Relationship Management (CRM) functionality embedded within Enterprise software.

 

CRM capabilities simplify the order management process by aggregating information from across the business and making it readily available to customers, sales reps and customer service agents. Integrated pricing, configuration, order validation, availability checking and credit checking smooth the order-handling process.

 

As part of these CRM capabilities, workflow management speeds order processing, eliminating delays and handoffs to all affected departments. As soon as an order is captured, inventory, accounting, planning, production and shipping are immediately notified and can start fulfilling the customer’s requests.  All participants’ activities are synchronized to work effectively toward more quickly fulfilling the customer requests.  During the life of the order, current and accurate status information is available online so the customer can track their order with a few mouse clicks, eliminating administrative burdens for the manufacturer.

 

Simplify outsourcing

 

As medical device manufacturers seek to outsource functions such as R&D or manufacturing to reduce costs, they need to collaborate efficiently and effectively with suppliers and monitor supplier performance.  Enterprise software systems offer capabilities that promote tighter collaboration and efficient operations throughout the supply chain while allowing medical device manufacturers to analyze key metrics regarding supplier performance.

 

Automation improves coordination with suppliers. Electronic queues on supplier portals, direct connections with Web services allow manufacturers to automate the communication of RFQs, purchase orders, changes, releases and payments.  Vendors can respond with electronic acknowledgements, electronic invoicing, and coordination on availability. These capabilities make communication faster and more detailed while eliminating human error from manual entry, messy or illegible faxes or lost paperwork.  Additionally, optimal integration with supplier systems helps manufactures avoid miscommunication, delays and confusion.

 

Business Intelligence capabilities within Enterprise solutions that include graphical queries and drill down capabilities provide manufacturers with metrics about supplier performance.  Manufactures can view supplier metrics such as measurements of supplier quality and supplier nonconformance to reduce risk in outsourcing.

 

Support lean manufacturing

 

Enterprise systems support Lean manufacturing through their ability to reduce waste in numerous business and manufacturing processes.

 

For starters, it’s impossible to improve what you can’t see.  Enterprise systems store all the data, definitions, and records of the activities of the organization.  Reporting and analysis capabilities allow manufacturers to analyze this data to find opportunities for improvement, offer “what if” analysis to help focus efforts on the highest payback activities, and measure the progress of efforts to eliminate waste.

 

Enterprise systems also reduce or eliminate wasteful paper based processes, allowing manufacturers to manage their enterprise information and business workflows using efficient electronic processes.  Enterprise systems typically store enterprise information from applications centrally, allowing different departments and companies within the organization to share and use information in real-time.  This reduces data redundancy and inaccuracy to ensure that key strategic and tactical decisions are made from accurate and up-to-date information.

 

Automated workflows improve the efficiency of business processes by enabling entire processes to be real time and paperless—whether they’re best practices or processes unique to the organization.  The system keeps track of all the tasks that must be completed in each process and presents individual workers with a list of activities they must accomplish in order for the task to be completed at the right time.  It also gives users instant, online access to all the information they need to complete the task, whether that’s drawings, material requirements, manufacturing instructions or quality documentation.  Manufacturers can customize automated workflows as necessary to further improve efficiencies by building business rules into any function in the system.

 

Automate Smaller Production Runs

 

When Medical Design Technology Magazine asked what one process that gained acceptance over the one process that recently gained acceptance will lead to more efficient manufacturing, Ron Earle, recently retired group senior vice president of B. Braun Medical, Inc.’s OEM/Industry Division, replied, “Automation for smaller production volumes that need finite quality checks and repetitious tolerance assembly.  Companies have been looking at lower cost production sites around the world over the past decade or so for commodity products. Today, with technology being target specific, alternate therapies are being assembled in the U.S. by contract manufacturers with small-volume automated assembly processes.”

 

Lean plants often use Flow production and Kanbans to flow work smoothly through the plant based on demand with minimal delays, handling, inventory, downtime, scrap, and rework.  Flow manufacturing is characterized by production lines and/or cells in which work is pulled piece by piece through the process, not in batches.  The flow of work is controlled through physical signals called Kanbans that can be tags, labels, containers, or electronic signals. Kanban based flow manufacturing is conducted without work orders and the waste associated with work orders.  Flow manufacturing is also much faster than traditional processes, more flexible and responsive to changes, ties up less inventory and delivers higher quality at less cost.

 

When Lean manufacturing is supported by enterprise software, production of smaller product quantities can be automated.  With enterprise software, as inventory levels or order demand require additional product, Kanbans are automatically triggered for replenishment, whether through the movement or manufacture of product or by notifying the supplier to ship off an existing blanket order.  This removes wasted processes in planning and production.

 

Support for continuous efficiency improvements

 

Lean manufacturing is not a one-time implementation; it is an ongoing process of improving efficiency.  Enterprise software support continuous improvement.

 

Enterprise systems contain the definition and documentation of processes and procedures, which are embedded within the system’s routings and workflows.  This existing “documentation” allows organizations to clearly see what happens today.   As improvements are made and changes are entered into the system’s files, these new definitions enforce and perpetuate the improvements.  Comparative measurements document the effect of changes on lead times, costs and efficiency. After the initial objectives are achieved, the system captures the input needed for the next round of improvements.

Business intelligence tools embedded in the enterprise software provide a way to measure efficiencies across the entire enterprise. They enable:

 

• After the fact analysis

• Dashboards and real time alerts warn management of impending problems early, before waste is generated and these warnings can also point to areas needing improvement

• Powerful interactive tools allow managers to dig deep into data and mine for waste and elimination opportunities

• Graphical views of information provide insight into how different parts of the business interact with each other. With this insight, organizations can avoid changes in one area that will negatively impact other parts of the business

From an Epicor White Paper

About Epicor

Epicor Software Corporation is a global leader delivering business software solutions to the manufacturing, distribution, retail, and service industries. With more than 40 years of experience, Epicor has more than 20,000 customers in over 150 countries. Epicor solutions enable companies to drive increased efficiency and improve profitability. With a history of innovation, industry expertise, and passion for excellence, Epicor inspires customers to build lasting competitive advantage. Epicor provides the single point of accountability that local, regional, and global businesses demand. For more information, visit www.epicor.com.

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