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Medical Device Software The Top 5 ERP Software Benefits for Medical Device Manufacturers

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By Chuck Schaeffer

The information systems that support medical device manufacturers are changing at nearly the same pace as the businesses themselves. Medical device manufacturers continue to incur increased compliance mandates, customer demands, complex business processes and global competition, and therefore must leverage technology to stay competitive. As shown in the research below, ERP software is the top technology investment among manufacturers.

Manufacturing Software Investments

Having deployed ERP systems for over two decades I’ve witnessed the technology evolution from mainframes to mid-range hosts, to client/server and now to the cloud. And while the technology evolution has resulted in more flexible and cost-effective business applications, those aren’t the biggest gains for medical device manufacturers.

Instead, from my vantage point, I clearly see the biggest benefits from modern ERP systems being improved alignment with the company's top business objectives. We've reached a point where ERP software is no longer just satisfying finance, production or other departmental activities, but instead delivering the automation and information to directly support and impact the company's top business objectives.

There’s no limit to the strategic advantages a thoughtfully designed ERP system can deliver, but from my experience, there are a number of key capabilities which consistently deliver big payback in relatively short periods. Here are five of those ERP benefits that reliably produce quick value and sustained payback—and directly support the company's top objectives.

  1. Improved Order Fulfillment. Order planning and fulfillment is critical to achieving customer service and revenue goals, but can get complex for medical device manufacturers. Inaccurate planning has downstream consequences such as sales shortfalls, stock-outs and lower inventory turns. Several ERP systems are now particularly strong in assisting with this basic but multifaceted process by simulating demand planning scenarios and visualizing the logistical interconnections among (actual and forecast) sales orders and the dependent manufacturing and purchase order processes.

    When ERP systems connect the information dependencies and deliver easy to consume order planning and fulfillment information, each of the company's departments work in concert, production managers are alerted to early detection of possible production variances (such as missing raw materials or insufficient machine capacity), distribution managers improve on-time delivery performance and the company does a better job in meeting customer expectations.

  2. Manufacturing Automation. Medical device manufacturing doesn't follow a single production process, even for a single company, so supporting business systems have to offer both flexible capabilities and deep feature sets. Certainly it's a good idea to begin with a solid foundation that includes broad MES (Manufacturing Execution Systems) capabilities such as Manufacturing Specifications, Recipes, Bills of Materials (BOMs), Work Plans, EDI and barcoding/RFID.

    But to really maximize your investment, you need to drill down to some of the key software functionality that automates otherwise manual activities and delivers big impact, such as contract manufacturing that links customer contracts with billing, production and costing; vendor rating/management which measures business partner conformance and impact (in time and dollar terms) and improves partner performance; and product costing to the ingredient level and with the ability to get accurate OEE and per-unit cost information. Medical device manufacturers that plan for this level of detail during their ERP software deployments are most certainly going to get significantly higher payback on their software investment.

  3. Serial and Lot Tracking. While food manufacturers typically receive much of the negative headlines associated with product recalls, medical device manufacturers have an equally critical need to ensure full traceability for end to end lot and serial number tracking and management. Fortunately, some ERP systems now automate serial and lot tracking and traceability, swift product recall processes, quarantine of suspect products and comprehensive audit trails.

    Traceability requirements go beyond linear searches from procurement to QA to production to sales, and must include Usage to Origin or Origin to Usage tracking, backward traceability for finished goods, forward traceability for parts or ingredients, and finding a supplier lot number, SKU, shelf life or country of origin. There should also be support for problem inquiries, problem diagnosis and corrective actions – all of which are part of a comprehensive audit trail. However, recording the receiving, production, inspection, shipping and related transactions can get complex when dealing with indirect distribution channels, multiple SKUs for the same items, shared customer relationships and changing units of measure with parent/child steps (i.e. from pallets, to boxes to items) during the distribution process.

    Fortunately, with some thoughtful planning this is one of those manufacturing activities in which technology can automate entire tracing processes, thereby increasing data accuracy (by eliminating rekeying of data), decreasing cycle times, aiding FDA and other regulatory requirements, improving customer safety and better protecting the brand. Not only do efficient recall efforts lower the time and cost to the company, as well as decrease risk to patients and company reputation, they also supplement a company's ability to apply systemic root cause analysis and implement Corrective Action/Preventive Action (CAPA) processes which may then reduce the likelihood of future product recalls.

  4. Compliance. Whether a small R&D start-up or a billion-dollar manufacturer, you have to follow the same complex set of ever-changing local and global regulations. These regulatory requirements are many and varied, but some common compliance measures satisfied by leading ERP systems include certification of manufacturing specifications (fully audited with electronic signatures), verified inventory adjustments (often by using password controls before permitting posting), quarantine areas and controls, and support for FDA record-keeping and compliance requirements, such as the 21 CFR part 11 (secure electronic signature and document controls) and FDA 21 CFR 820 (manufacturing requirements for product safety and efficacy) among others.

    By automating these processes, the ERP system can save a lot of time, mitigate compliance risk and improve the overall efficiency of overloaded staff. From a technology perspective, compliance mandates may also involve new internal controls, privacy rules, audit trails, security measures and a host of other issues which are generally better accommodated with modern ERP systems.

  5. Enterprise-Wide Automation. ERP isn’t just for back-office systems. In fact, the goal of ERP software is to achieve a single, central, enterprise-wide information system. ERP includes CRM software, and only when CRM is added can companies achieve front to back office, enterprise-wide (cross-departmental) business process automation and closed loop reporting.

    High value CRM benefits for medical device manufacturers include support for relationship sales strategies (i.e. when selling through physicians and not directly to patients), account planning, mobile fields sales and service support, sales order management with electronic signature capture, inventory management with tracking of demo or sample units, regulatory compliance for sales and marketing messaging, KOL marketing campaigns, PRM (Partner Relationship Management) and marketing/lead/sales support for independent sales reps.

Manufacturing Software Summary

In no way are my five benefits an exhaustive list, but they are telling examples of how forward thinking medical device manufacturers are applying technology for significant gains. Every medical device manufacturer has different objectives, challenges and constraints. But I have yet to meet a medical device manufacturer that cannot benefit from the strategic capabilities delivered by an enterprise-wide information system or the specific ERP feature sets which can automate otherwise manual and time consuming activities. End

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We've reached a point where ERP software is no longer just satisfying finance, production or other departmental activities, but instead delivering the automation and information to directly support and impact the company's top business objectives.







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