- 6 September 2017
In the past, medical device manufacturers have marketed their equipment without giving much thought to the cost involved. With a changing landscape that includes an older population and rapidly increasing medical costs, private insurers and governments are limiting reimbursement amounts for medical devices.
We’ll explore the ways enterprise resource planning (ERP) software allows medical device manufacturers to save money, improve processes, and increase productivity.
New Sales and Marketing Models
Instead of sending salespeople out to physicians’ offices, many medical device manufacturers are choosing to deliver substantial product information and allowing customers to order online. CRM functionality embedded within enterprise software can streamline the order management process. Information is collected from across the organization and made easily accessible to sales representatives, customer service personnel, and customers.
The order-handling process is facilitated by the ability to integrate pricing, configuration, credit checking, order validation, and order availability. The moment a customer places an order, all necessary departments are notified and can begin to fulfill the order. Because all the information is available online, the customer can easily track the order, eliminating the need for costly administration.
Simplification of Outsourcing
Many medical device manufacturers are outsourcing manufacturing and/or R&D to reduce costs. ERP systems allow organizations to cooperate efficiently with suppliers, while monitoring and analyzing their performance. ERP systems ensure easy interactions with vendors by providing the ability to automate RFQs, purchase orders, changes to orders, releases, and payments.
Suppliers can send out electronic invoices and acknowledgements, as well as details about availability. Productivity is increased due to the elimination of human error in data entry, faxes that are difficult to read, and misplaced paperwork.
Support for Lean Manufacturing
ERP software facilitates cost savings in the manufacturing process by reducing waste in both business and manufacturing practices. All data and records are stored, allowing for an analysis of the data. In this way, manufacturers can discover areas where processes can be improved.
Enterprise systems replace wasteful processes that use paper with more efficient electronic methods. Centralized data storage reduces duplication of data, and helps ensure company decisions are made using accurate and current information. All the information required by users is available online and can be accessed instantly.
When Optivus Proton Therapy Inc. of San Bernardino, California outgrew its enterprise automation system, the organization searched for an advanced solution that could track the time of personnel, almost 80,000 activity line items, and inventory that consisted of thousands of parts, instruments, and components. Epicor ERP was chosen due to its ability to handle Optivus’s time tracking, accounting, manufacturing, and service needs.
Using the Epicor ERP system, the company was able to connect all its processes. Optivus can now track all assembly and manufacturing processes, determine part locations, and track inventory. Purchase orders can be created with detailed line items linked to specific project stages. What’s more, accounting disparities between billing, purchasing, and receiving can be rectified.
Automation of Smaller Production Runs
Enterprise software supports lean manufacturing, thereby allowing automation in the production of smaller quantities. With enterprise software, kanbans are activated automatically for replenishment when additional products are needed to meet reduced inventory levels or additional orders. This is achieved either by moving a product, by manufacturing a product, or by alerting the supplier to ship a supply. As a result, unproductive manufacturing and planning processes are eliminated.
Continuously Improving Efficiency
Efficiency is an ongoing process. ERP software provides the ability for ongoing improvement. When improvements are made, the system documents the changes and their effects on metrics such as cost, efficiency, and lead times. The data can then be utilized to make future improvements.
ERP software contains business intelligence tools that deliver the means to measure efficiencies across the business, including:
- Dashboards and alerts that can notify management of imminent waste problems. These alerts can specify which areas need to be improved.
- Interactive tools which enable managers to mine data for opportunities to eliminate waste.
- Information presented graphically that displays the ways various areas of the enterprise interact with each other. This prevents businesses from making changes in one area that may hurt another part of the organization.
In the case of Optivus, the company previously had no way to integrate its various processes together. It was relying on Microsoft Excel spreadsheets to manage billing and financial information.
After turning to Epicor ERP, Optivus could, within seconds, not only determine the stage of any manufacturing or assembly process, create detailed purchase orders with line items specific to each project step and track the status of inventory, but also reconcile differences between purchasing, receiving, and billing.
“It is so easy to now to pull up a job and review all the materials needed and issued for its completion,” the company’s purchasing and material management manager said.
The Value of ERP
ERP software is the best solution for assisting medical device manufacturers to increase efficiency and reduce costs throughout the enterprise. ERP automates workflows, and serves as a source for operational data and documents. This ensures more effective collaboration with customers, vendors, and partners.
CRM abilities allow customers to place orders online and provides direct access to information, enabling innovative methods of sales and marketing. Automation of communication streamlines outsourcing and reduces risk. Analytics minimize waste in manufacturing and help to continuously improve processes.