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Electronics
Industry
Medical Devices
The intersection of healthcare
and technology
The medical device industry is in the midst of
fundamental change. Mature and emerging markets
are growing at very different paces. Disparate regional
and country-specific regulations are on the rise and
subject to rapid change. And industry consolidation is
reshaping the entire sector.
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Introduction
Evolutionary and transformational changes are becoming major challenges in the
medical device industry.
The 1990s saw technological advances and international expansion take its toll on
the small entrepreneurial businesses that had characterized the medical device
industry. As the cost of research and development doubled, larger corporations with
deeper pockets came to dominate the industry. Economies of scale became even
more important with the growth of regulations worldwide.
The 21st century has ushered in explosive growth in the demand for medical
devices as the populations of many industrialized countries have aged. Market
growth and the incessant demand for better, and often less costly, devices are
challenging enough, but meeting these demands in the face of global regulatory
proliferation and continued industry consolidation leaves little room for error.
Forces of change
While the overall market for medical devices is growing, some mature markets are
growing at a much slower rate. Traditional cardiac rhythm management devices
and cardiac surgery devices experienced slower growth within the United States.
Products such as new drug-eluting stents offer alternatives in this area. Products in
the ear, nose and throat market experienced slower sales growth. Expansion into
emerging markets has offset reduced growth in mature markets.
To make matters even more complex, medical device companies often face higher
than typical legal exposure to patient lawsuits, patent infringement claims and
product recalls.
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IBM’s strategic approach for the medical device industry
IBM is meeting the challenges of medical device manufacturers in four strategic
areas.
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3. Keeping operations efficient and profitable
• Medical device companies have traditionally maintained excess inventories for
products with low production costs because an inability to provide devices on
demand may result in lost sales, not to mention lost lives. But as products mature,
maintaining high inventories becomes significantly less profitable.
• Effective product lifecycle management (PLM) can enable better, more informed
decision making to enhance profitability.
• Enterprise resource planning (ERP) and automated tools can ease the burden of
validation. Testing tools run against validated requirements, regression testing for
completeness on major changes in functionality, and ISO standards implemented
across an ERP all assist in this area.
• Remote disease management uses a variety of technologies that allow for outpa-
tient monitoring and disease management to assure efficient, timely treatment.
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IBM’s history of serving the needs of the medical device industry
IBM has worked with many clients in the industry. Our involvement has ranged
from detailed process design workshops to providing hosting and support of
validated instance environments. IBM has managed ERP implementations at some
of the largest medical device companies to providing strategy workshops on new
technologies, such as remote patient monitoring. IBM has served the needs of
companies that collectively account for over 50 percent of worldwide medical device
revenue.
Leveraging this experience, IBM has taken the initiative to create asset-based
solutions and develop white papers that create a “proof of concept” (POC) that
targets a medical device industry solution. They include such topics as:
Many medical device companies utilize an SAP solution for ERP. “Bolt-on”
functionality, such as Global Complaint Handling (GCH), is often used to address
industry-specific requirements. But by developing a solution within the core ERP,
medical device companies can save the cost of additional software, integration
and maintenance. SAP’s Customer Relationship Management (CRM) module can
be used as a solution for GCH, integrating the ERP Central Component (ECC) with
key components of the CRM module such as: Enterprise Service, Business Partner
Management, Products and Services and Complaints and Returns.
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SAP GCH Component Overview
CRM GCH
(CRM Service
Component)
Business Products
Partner & Services
Management Management
(CRM and/ (CRM and/
or ECC) or ECC)
Installed
Base
Management
(CRM and/
or ECC)
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The IBM SAP CAPA solution provides the following benefits:
Recording and
Quality planning processing internal or
external problems that
are primarily caused
Quality by poor-quality goods
inspection or services
Quality
certificates
• The IBM CAPA POC relies
Quality on Quality Notifications
as messages to capture
notifications “events”
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Field Inventory/Trunk Stock Controlled by RFID
Medical device companies’ sales forces call upon hospitals, physicians and other
medical establishments with an inventory of available products, commonly referred
to as “trunk stock.” SAP offers solutions to track and account for trunk stock and IBM
has built RFID solutions that trace the movement of tagged items throughout the
supply chain.
IBM offers a full range of RFID solutions to help design, construct, evaluate and
adopt an RFID strategy that makes sense for medical device companies today and
down the road. They include:
• RFID Solution Development Workshop – a fast way to learn how to assess and
focus your RFID efforts
• RFID Quick Start Testing – provides initial tag evaluation and recommendations for
unique products, including packaging, packing configurations and use cases
• RFID Site Surveys – validates the ability of RFID equipment to function properly on
location
• RFID Quick Start Value Assessment – creates a business case model based
on operational data and related financial and sensitivity analysis based on IBM
benchmarks
• Pilot Planning and Execution – provides key lessons learned from IBM to meet
integration needs and enable validation of business case assumptions
Despite the benefits, the commissionaire model adds several layers of complexity to
the distribution process because it requires additional detailed tracking of product
movement to achieve the tax savings sought. This heightens the importance of
accurate and efficient supply chain management – one of IBM’s many specialties.
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Global Service and Repair Management
IBM has developed an integrated customer sales and service proof of concept
that improves visibility and streamlines the processes of contract and order pricing,
service management and in-house repairs, field service repairs and scheduled
maintenance. Some of the highlights of this solution include:
One of the major challenges and differences between these geographies is the
amount of required detail tracking while safeguarding patient privacy. But patient
privacy requirements differ significantly in each market. In the United States, it
is necessary to track implanted devices to the implanting facility and the actual
patient receiving the device. In Europe, on the other hand, it is forbidden to maintain
information on the patient receiving the device.
Each scenario requires very different processes and a deep understanding of how
to implement the different mandates with shared global solutions. Understanding
how to issue a sale, block patient information, track device implants and apply
security technologies are several of the key areas in which IBM expertise has
provided critical assistance.
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Summary – The IBM Advantages
IBM has a long and successful history with clients in the medical device sector. Our
experienced consultants understand the unique requirements of the industry and they
understand how technology and process solutions can create benefits for our clients.
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