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MTS Blog: Med Device Industry Optimization - From Luddite to Citizen of Shangri-La

It is generally believed to be true that in 1779 Ned Ludd, a young textile worker, smashed two stocking frames in protest of industrialization.  Fellow English workmen who destroyed laborsaving machinery during the early 1900s were known as “Luddites.”  Today, the term is used to characterize someone who fears or loathes new technology.  Sound familiar? 

Medical device manufacturers are embracing advanced inventory and case management software at a surprisingly slow rate.  With massive inventory investments and large annual write-offs, the stakes are high.  Add on top the costs of inefficient inventory control, countless hours devoted to tracking and accounting for inventory, and an overall lack of visibility of product placement and usage, and the inability to adopt new technology becomes an industry catastrophe.  Now is not the time to be a Luddite.

Phrases of Inventory Control

Medical device companies live in various states of maturation when it comes to inventory management.  Too many companies still exist in the Archaic phase where reps schedule surgeries on their personal phone’s calendar without providing visibility to their managers or manufacturers; inventory tracking is managed by white board or spreadsheet; ordering and replenishment are done with paper forms, faxes, or voicemail; and data capture and utilization are not priorities.  The next rung up is the Basic phase, which means that companies are beginning to use enterprise resource planning (ERP) software, customer relationship management (CRM) systems, or home-grown platforms that offer a partial answer but are not designed to handle the many facets of medical device inventory management.  Companies that advance to the Controlled and Managed phase are using software to manage a variety of functions, but the ability to capture and utilize data is hampered by a lack of integration.  Overall the two biggest challenges underlying these phases are a piecemeal approach and the use of systems and methodologies never meant to provide comprehensive solutions. 

Defining Industry Optimization

The evolution of industry is of paramount importance to societal success, and the chief indicator of progress is the adoption of technology.  As medical device companies employ comprehensive inventory and case management systems, insight is gained that enables real-time decision making, communication increases across the enterprise, costs decrease as inventory is more effectively utilized, and time is saved from the c-suite to the sales reps.  Characteristics of a company operating within the industry optimization phase include:   

-    Case scheduling is managed with integrated software that provides complete visibility across the organization.
-    Consignment inventory is tracked at item, tray, and kit level, including responsible party at rep level and physical location of product.
-    Real-time visibility of loaner kits is available at rep level as well as status tracking of internal kit process.  Ability to see and relocate loaners from one location to another for infield transfer.
-    Sales orders are entered into enterprise-wide system through mobile phone app.  Integrated processing of usage, replenishment, and sales order.
-    There is real-time capture of item level detail upon each transaction. 
-    Detailed information offers rich data, and data analytic tools provide predictive, actionable data.
-    Physical inventory is located at hospitals, distributor, and sales rep sites.

A Glimpse into the Future

In Lost Horizon, James Hilton’s 1933 novel, explorers search for Shangri-La, a mythical place where people live in a blissful, utopian society.  Shangri-La becomes, in modern parlance, the pinnacle of excellence that man strives to achieve.  The Shangri-La of the medical device industry will require next generation thinking.  Such a state would entail: integrated software that provides detailed and full visibility, inventory that is centrally located and forward deployed, broad use of mobile technology, the ability to replenish point-to-point and manage just-in-time inventory, and sophisticated analytics that drive inventory allocation and modeling.  

To enter this brave new world, medical device manufacturers will need to achieve industry optimization, and to do that they must accept the need for a comprehensive inventory and case management system.  The solid foundation that comes as a result of being industry optimized is a base from which manufacturers can ascend to medical device Shangri-La.  But, a quick note to Luddites, don’t even bother to try.