Discrete Medical Overview
When you make medical devices, every day and every decision can mean life or death for someone. You may not ever meet the people whose lives your product saves, but you know they’re out there. And because medical devices are so critical to the health and well-being of the people who rely on them, medical device manufacturers are held to high standards and are closely regulated – not just for financial compliance but for compliance to good manufacturing practices as called out by CFR Part and other similar regulations.
Discrete Medical Key Processes
Medical device companies are being pressed to introduce new products faster than ever before. Global consumers and medical professions are demanding more effective and precise diagnostic, monitoring and treatment equipment that is cost effective and meets stringent regulatory requirements. This has put pressure on manufacturers to utilize design talent wherever they find it – at hospitals, directly from physicians and educational institutions. The need for collaborative design tools, that align to other internal systems including quality and track and trace has skyrocketed – traditional methods of new product introduction are too slow, too costly and don’t provide the visibility needed in today’s medical device manufacturing environments. Manufacturers are grappling with:
Discrete Medical Design Issues
- Rapid new product introductions are required to remain competitive
- Design for manufacturability is key to cost control and modern manufacturing methods like lean and six sigma
- Shared components, for base components and kitting help to reduce inventory costs and potential stock outs
- Design processes and solutions aligned to quality and traceability processes
- Global design teams and supply chains make visibility and communication more important than ever
Discrete Medical Design Metrics
You can’t improve what you don’t measure, and analytics and process measurements are basic to modern manufacturing methodologies such as six sigma or lean. Many people say the design process can’t be measured – it’s too creative. But effective design processes show up in many common business metrics:
- Reduced obsolescence due to more effective phase in and phase –out processes
- Lower inventory and fewer stock outs due to shared components
- Fewer suppliers to deal with as the number of components, and associated quality, become more manageable.
If you don’t know where you’re going, how do you know when you get there? Planning provides the roadmap to manufacturing success. From high level sales and operations planning to ensure that the company’s strategic objectives can be met, right down to production schedules for each day at each work center or cell, planning is the heart of manufacturing.
Discrete Medical Plan Issues
The one thing you can count on is that the real world rarely matches up to the plan. So it’s important that you start with the best possible plan, and that you have visibility to react quickly when things go wrong. Materials are late or do not meet quality standards; tooling breaks, workers call in sick – the list of potential pitfalls is nearly endless.
- Inaccurate forecasts may lead to excess inventory – or worse yet, unhappy customers who don’t get their products on time. For a medical product this is not acceptable.
- Poor planning can result in excessive unnecessary costs due to unplanned overtime or special freight charges to bring inventory in sooner.
- Not taking demand signals such as replacement or expiration dates into account can leave you without inventory to meet mandated replacement orders
- Inaccurate inventory records can cause line stoppages due to shortages
Discrete Medical Plan Metrics
The results of poor planning can show up in virtually every performance measure:
- Excess inventory from materials stocked to meet demand that never materializes
- Large WIP caches in queue at work centers
- Poor on time customer order delivery performance
- High freight bills and expediting fees
- Frequent unplanned overtime, high cost variances
It’s well understood that industry leading medical device companies have the most effective supply chains. In these companies, materials are intelligently sourced and key suppliers are treated like partners – integral parts of the design and delivery process. Suppliers are chosen based on a myriad of criteria, possibly including their proximity to the manufacturing facilities, the price of the item; trade terms, their delivery capabilities and most importantly quality reliability. Each supplier’s performance is continuously measured and usually shared with the supplier.
Discrete Medical Source Issues
Effective sourcing is a complex balancing act that involves weighing the relative merits of a host of complex details that may not always be fully quantifiable up-front. With limited time and data for analysis, buyers use their “best guesses” to estimate the impact of a particular factor in a sourcing decision. Coupled with the mandate on limiting the number of suppliers that so many companies enforce, it’s no wonder many buyers skip the analysis and place orders with their tried and true vendors.
- Poor quality can affect your ability to meet customer promise date on orders and potentially close down your plant
- The cost and difficulty of managing off-shore suppliers may dwarf the cost savings in prices
- Higher safety stocks or expedited freight charges may be needed to respond to fluctuating demand
Discrete Medical Source Metrics
Not so long ago, the only metric applied to the purchasing department was purchase price variance (PPV). Today, manufacturers better understand the effect that sourcing decisions can have on every aspect of their business. For example:
- Supplier performance ratings can help determine if a supplier should be replaced or if contracts should be reallocated to multiple suppliers
- Safety stocks are a function of lead time – so if lead time increases with distance, overall inventory levels may rise
- Poor quality materials may not show up until WIP, resulting in serious regulatory implications
- Purchase price variance is part of the story – but landed costs and the costs of managing remote suppliers needs to be factored in as well
Numerous studies have shown that better performing medical device companies have almost universally adopted a “modern” manufacturing methodology. The surprise is that it makes no difference whether it’s Lean, Six Sigma, TQM or something else; what matters is the commitment to a methodology for continuous improvement. But when faced with the demands of day-to-day manufacturing, very often this commitment becomes secondary. Effective enterprise applications can help you to maintain this commitment by giving you the visibility you need to manage your manufacturing processes.
Discrete Medical Make Issues
If everything went according to plan, manufacturing would be easy. Unfortunately, there are a nearly infinite number of things that can go wrong. Is the right quality built into the product and can you meet the regulatory reporting for quality on the plant floor. Perhaps your customer is responding to changes in their demand by changing order quantities or due dates. Machines break down. Almost every decision made in your organization affects your shop floor. How you respond to unforeseen events can make or break the company’s profitability.
- Inaccurate inventory records result in parts shortages – and missed completion dates
- Unexpected customer demand results in changed production priorities and may result in excess inventory or missed shipments
- Failure to have proper manufacturing and quality records during a regulatory audit can shut down the line
- You need specialized process capabilities that require you to out-source some or all of your manufacturing process
- Unexpected machine breakdowns or tooling defects require unplanned schedule changes or re-routing of orders
Discrete Medical Make Metrics
Almost everything that happens in an organization affects what eventually happens in manufacturing. The trick is in understanding the cumulative effects of all these decisions and achieving your goals despite unplanned events.
- Design decisions affect both cost to manufacture and quality of the final product
- Inventory management decisions affect the ability to complete orders as planned
- Forecast errors result in excess finished goods or late customer deliveries
- QA and QC variances can stop the manufacturing process
Every time you interact with your customers, it’s an opportunity to cement your relationship – or not. Some research has shown that customers rate the ease of doing business with suppliers and the access provided to information about their orders as nearly as important as the actual products they buy. Your business processes and the enterprise systems that support them can make or break any customer engagement by making it seem effortlessly easy.
Discrete Medical Engage Issues
- Poor business processes or inadequate systems contribute to loss of market share by frustrating or annoying customers.
- Customers also want to have custom configurations that provide exactly the features they need – but they can’t be expected to understand the intricacies of your product engineering
- If things go wrong after installation or a product needs repair, customers expect things to be quickly fixed the first time a technician comes to call
- Customers want to be able to quickly check the status of their orders by themselves
- Customers expect that the product meets stringent regulatory quality standards
Discrete Medical Engage Metrics
If you treat customers well, you’ll be rewarded with repeat orders and word of mouth referrals. But treat them badly and watch your market share melt away. Beyond measuring calls to the complaint line, how can you be sure your systems and processes are not sending your customers straight to your competitors?
- Failure rate of finished goods and parts and kits define the value of the product
- Repeat order rates may show that customers are not satisfied after engaging with you. Measuring repeat order results may help you understand what you’re doing right.
- Customers understand that sometimes things go wrong. They do not understand when service technicians have to make several trips because they don’t bring the right parts or don’t have the right skills or tools. Completed service call rates can help you understand if you’re annoying your customers or using the opportunity to cement the relationship.
- Sometimes a customer just needs the answer now – they want to check their order status or place an order by themselves. Sometimes they want to talk to a CSR in your call center. Measuring call volume and self-service visits can help you satisfy your customers varied needs by providing the right tool and the right service levels.
- Quote to order conversion rates can help you understand if your customers like your products and pricing, but they may also reflect whether your business processes are too slow or cumbersome to meet your customer’s needs.
Even if you do everything right – you’ve got a great product, high quality, the price is on target – you may not achieve the market share you deserve. For medical device companies if you consistently miss promised delivery dates or if you short ship items or ship the wrong items than it is probable that you will quickly lose that customer. Fast, efficient, consistent and accurate are the hallmarks of great companies’ delivery systems.
Discrete Medical Deliver Issues
When the end-of-day or end-of-month crunch hits, your team wants to perform. They try their best to fill all orders quickly and perfectly, but system errors or cumbersome processes can get in their way. Drop shipments and direct deliveries to multiple addresses are challenges in themselves. Coupled with requirements for traceability knowing what went where is critical. Customers increasingly demand special packing or pallets, special labeling or even bar codes and RFID chips.
Discrete Medical Deliver Metrics
Even beyond the obvious – are orders going out on time without errors – there are clues that can help you streamline your business processes and improve profitability while delighting your customers with perfect orders. You need to measure your performance and then dig in to the underlying causes if you miss the mark.
- Perfect orders are critical when your product is used to save a life. Late deliveries point to problems in inventory or production management - or maybe poor forecasting.
- Shipping the wrong items may point to materials stored in the wrong locations or mismarked inventory. Bar-coding or RFID can help solve this problem and improve performance by identifying materials correctly at picking and at put away.
- When your inventory record shows an item is in stock but the bin is empty or the count is off, short shipments happen, followed by unhappy customers. Inaccuracies in finished goods inventory is a good predictor of future customer satisfaction issues.
- Freight charges can be better controlled when you have visibility into all of a customer’s orders and the costs of different shipping methods.
When the inevitable happens and your product needs maintenance, it’s a perfect opportunity to make your customer glad they chose to buy from you. Medical device equipment is used in life saving activities and are expensive to maintain back-up so getting in to fix quickly is critical. From the time the customer places the service call until the time the technician leaves their premises with the product back up and running, the clock is ticking. Most of us hate when things break down because of all the annoyances associated with service calls - even besides the fact that our equipment isn’t working. Give your CSRs easy information access to your customers installed records so they can speak intelligently as soon as they answer. Dispatch the nearest technician with the right parts and the right skill set the first time, every time. Provide accurate estimates of arrival times.
Discrete Medical Service Issues
It’s costly to provide excellent service to products and equipment at customer sites, but it’s REALLY costly to provide bad service. When the CSR has to annoy the customer by asking for information that should already be in your system, you’re slowing down your call turnover time. That costs money through increased headcount. When you send out a technician who doesn’t know how to fix the product the customer has, so you have to send another tech out for a repeat visit; it costs you time and money. If the tech brings the parts for an older or newer revision than the customer has, it costs you money. When the tech brings the wrong part, it costs you money. Even worse than the out-of-pocket costs is the gamble you take with losing that customer forever.
Discrete Medical Service Metrics
By treating your customers’ goodwill like the valuable resource it is, you can cement that relationship and save money in the process. Good service can win you that customer for life. But how do you know you’re needlessly spending money and squandering customer goodwill?
- Measuring the elapsed time from when the customer first logs the call to its final resolution can show you the effectiveness of your service organization
- Skills tracking along with measuring training completed can ensure that you have technicians with the right skill set available in a reasonable time frame.
- A high level of repeat service calls for a single incident may mean that your techs don’t have the right parts with them the first time they go on-site.
- Maintaining the as-built, as maintained records of your customer’s equipment can help you save money by minimizing repeat calls due to wrong parts.
- Warranty costs can show you not only how reliable your product is, but how well your service is satisfying your customers.
Modern manufacturing methods put as much stress on the financial systems as they do on the manufacturing side of traditional restrictive enterprise applications. Traditional cost accounting with its emphasis on work order variances and detailed material tracking and operation reporting doesn’t cut it when you’re back-flushing materials from open storage locations and replenishing by kanban rather than pre-pulling inventory by work order from closed secure stockrooms. For some medical device companies having to deal with retailers mean that they have to support traditional trade and promotions management processes. Electronic payments have largely replaced traditional paper checks, so accounts receivable has no hash totals to reconcile cash against. Mergers, acquisitions and intra-company supply and demand mean finance needs flexibility like never before. Consolidations and eliminations, multi-currency, and automatic allocations are just a few of the items on your accounting team’s wish list.
Discrete Medical Finance Issues
Government compliance mandates have put strict new controls on the finance team, but the business requires streamlined processes to remain competitive. Finance teams struggle to find the right balance between controls and the business’s emerging needs. New ideas like vendor managed inventory render traditional payables processes obsolete when the supplier processes both the receipts and the invoices. The global economy means international business is the new normal while frequent mergers and acquisitions make chart of accounts and general ledger flexibility mandatory. Varying compliance regulations require localizations; multi-currency transactions affect profitability; cash management is crucial; and reporting has to be quick and easy.
Discrete Medical Finance Metrics
The finance team is used to metrics - much of accounting is designed to measure and report the business’s performance. But compliance regulations means new measures, new reports and new controls need to be put in place or the company and its officers can be at risk. Finance often struggles to put the right checks and balances in place to allow the smooth running of the business and still ensure traceability and confidence in the numbers.
- Measuring inventory and COGS can be tricky if inventory is consigned at the customer’s site, if a supplier drop ships goods or if part or all of production is outsourced.
- Intra-company shipments and orders require careful reporting to ensure profits and revenue are not over-stated
- Cash flow projections can show whether DSO is on target and that out-going payments are in line with actual inventory levels
When shopping for new enterprise applications, savvy buyers don’t just focus on long lists of detailed functionality. It’s more important now than ever that the infrastructure and architecture of the system is flexible and adaptable so that the business can react to changes quickly.
Discrete Medical Enable Issues
Companies today run a mix of applications from multiple vendors and their ERP system is usually the core or backbone of it all. The infrastructure and architecture of the ERP system are crucial. Master Data Management capabilities are key to ensuring consistency of data among disparate systems. Quick implementations are required because the lean and mean manufacturers of today don’t have the resources to do long involved implementation projects and lots of training. That means the systems have to be intuitive and easy to use. And since business processes are the real key differentiators among competitors in the age of rapid product introductions and short product life-cycles, the ability to hone these processes through cost-effective simple customization is essential.
Analytics and business intelligence are also important to enable all the measurements you need to run your business well.
Discrete Medical Solution
||Support for ECOs /ECNs
Product Change Control (PCC)
Master Data Synchronization Management Support for
Product Change Control (PCC)
Master Data Synchronization
Time-phased planning, costing and execution of capital project
Costing using Enterprise Edition
|Product Lifecycle Management (PLM)
Process Cell Capacity Planning
Sales and Operations Planning
Rough-cut Capacity Planning
Product Line Planning
Distribution Network Design
Materials Requirement Planning
Master Production Scheduling
Capacity Requirements Planning
Supplier Collaboration Portal
Purchase Order management
|Supply Chain Portal
||Mixed Mode Manufacturing, Manufacturing Execution Workbench
Production Scheduling Workbench
Lot Serial Traceability
WIP Lot Trace
Shop Floor Control
Process visualization with full kanban support
||Manufacturing Execution System
Automated Data Collection
Lot/serial allocation at order time
Customer Relationship Management (CRM)
Customer Self-Service (CSS)
Customer Schedules APM
Lot/serial allocation at order time
Buying groups Questionnaire for configured items
Features and options
||Direct shipping to retail stores
PO to third party to drop ship to customer or distributor
Standard shipping from the warehouse
Inventory Control (min/max)
QAD Consignment Inventory
QAD Supply Chain Portal (SCP)
Returns process including RMA, warehouse, and accounting orders
Vertex Sales and Use Tax Interface
||Support for Sox, GAAP, IFRS, CFR Part, ISO 9000, RoHS
Support for e-Pedigree QAD Business Intelligence (BI)
QAD Quality Management EDI eCommerce
Enterprise Asset Management (EAM)
QAD Trade Management System (TMS)
Customers and Supplier Schedules
Advanced Pricing Management (APM) for Medical