Roger Landsman, SYSPRO

ERP and the Digital Transformation Foundation for Medical Device Manufacturers

By Roger Landman
Roger Landsman, SYSPRO

Digital transformation is especially important to medical device manufacturers because they must have good quality data, and especially tracking metrics, to track complaints and device performance to comply with regulatory requirements. And these requirements are just getting stricter.

The COVID-19 pandemic caused enormous disruptions in manufacturing, and medical device manufacturers were not immune. A survey conducted in December 2020 examined the scope of the disruption and found that six out 10 manufacturers were affected by supply chain disruptions, and almost half (47%) were essentially unable to function because they were unable to access on-premise systems that lockdowns prevented them from operating.

Certainly, the pandemic presented some novel challenges, but most of these disruptions were the result of an enormous amount of new stress placed on old weaknesses: Inefficient manual operations still required a large number of people for on-site to work, management had limited visibility into the current state of operations and inventory, and real-time business data was unavailable to inform data-driven decisions and adapt quickly to changing conditions.

Manufacturing leadership have responded by accelerating their digital transformation efforts.
A recent survey from Dimensional Research shows that nearly all (91%) manufacturers have increased their investment in digital transformation, and more than three-quarters (77%) said the increase was significant or dramatic. An even higher proportion (95%) said that digital transformation is a requirement for the future success of their companies.

Digital transformation is especially important to medical device manufacturers because they must have good quality data, and especially tracking metrics, to track complaints and device performance to comply with regulatory requirements. And these requirements are getting stricter. For instance, the EU Medical Device Regulation that went into effect earlier this year requires manufacturers to track the lifecycle of their products, identify ongoing issues and make changes as needed to ensure patient safety.

Digital transformation is a complex journey for any company. Deploying new technology is arguably the simplest part of the process, while developing a long-term technology strategy when the future is unclear is probably the most difficult. Alongside this, the underlying processes and procedures must also be transformed, and careful change management is required to ensure that the project is a success. But the rewards of undertaking this journey are substantial—medical device manufacturers can gain significant increases in efficiency from automated and optimized processes. The capture and analysis of operational data provides insights that inform fast and accurate decisions, while new technologies enable the organization to become far more nimble allowing it to recognize and respond to changing market conditions earlier and faster. Quality management, patient and medical complaints, and compliance and tracking all become much simpler and much easier to manage. All of this provides companies with a significant competitive advantage and also makes their businesses more sustainable for the long-term.

The Challenges of Medical Device Manufacturers

The medical device manufacturing industry is facing significant challenges like every other manufacturing industry. For starters, skilled labor is increasingly tough to find for all manufacturers, including those who make medical devices. According to Deloitte, the skills gap has long been a persistent challenge for manufacturers, and it’s not getting any easier to solve.

Likewise, medical companies have to manage costs and optimize their inventory so that they are not carrying excess stock, yet always have enough on hand to avoid lost sales and delays due to a lack of raw materials. And they need to ensure that their supply chain is robust enough to withstand unforeseen shocks, especially given how specialized many of the necessary parts can be. Accomplishing this requires the whole supply chain to operate on the same platform so that all stakeholders have visibility into the supply chain to make planning and delivery more manageable and accurate. And inventory accuracy must be up to date, which can be a time-consuming project if using traditional, manual methods—time that many manufacturers really can’t afford to spend.

The Foundation for Digital Transformation

Digital transformation can help address all of these challenges. Increased automation can reduce the impact of skilled labor shortages; supply chain automation, advanced analytics and artificial intelligence (AI) can predict and secure the optimal amount of inventory to meet demand and minimize excess costs; analytics can optimize scheduling and, along with AI, enable predictive maintenance to increase equipment uptime and utilization. Additionally, automated systems can track and manage customer complaints and medical device performance in the field, centralizing information to ease compliance and enable improvements and upgrades. By combining all of these technologies, manufacturers can produce a superior product.

However, these technologies cannot operate as discrete systems; otherwise, they will just exacerbate the problem of informational silos. Instead they must be integrated into a holistic digital platform that collects, shares and analyzes information—a reliable, single version of the truth about medical device manufacturing operations.

An organization’s enterprise resource planning (ERP) platform should form that integration platform. When people think about ERP platforms, they typically imagine a system for providing core financial and business process visibility only. While that’s certainly true in certain cases, a well-architected ERP platform is capable of doing much more—organizations can integrate additional applications and point solutions into an ERP system to automate key business processes, provide real-time analytics for data-based decision-making, and help manage policy changes around procurement and sourcing. It should be simple to incorporate new, smart factory technologies into the ERP solution such as AI, analytics and internet of things (IoT) devices and platforms to provide real-time data and analysis within context. The ERP solution should serve as the single version of the truth for the entire operation if it is going to be effective going forward. Where previously the ERP system was the system of record, it has now become the platform of integration, but the business needs to embrace this change and leverage technology to improve their business – like some of the competitors are doing.

The medical devices sector faces some tough challenges as we emerge from the pandemic, but by establishing a strong digital foundation on which to build their digital transformation, they can position themselves for long-term success.

About The Author

Roger Landsman, SYSPRO