The medical device industry is experiencing a digital revolution that will require a re-think of how it designs and manages products and interacts with customers. Major advances in wireless technology, miniaturization, automation and computing power are encouraging the development of new connected medical devices that can generate, collect and transmit data. As smart devices become more common, medical device manufacturers will need to look at how technology can improve manufacturing and the customer experience.
Challenges in the medical device industry
The medical device industry designs and manufactures a wide range of products to diagnose, monitor, and treat patients. With medical devices being impacted by new technology developments, the industry can use these advancements to help achieve better patient outcomes and new ways of engaging with patients, as well as producing devices that leverage new technologies. While there are many opportunities, there are also a number of challenges facing the industry.
Regulatory requirements
Medical device manufacturers have to design products to precise specifications and tolerances and produce them according to rigorous manufacturing requirements in order to adhere to strict regulations. The products must also operate for an extended period of time, potentially a patient’s lifetime.
Regulations are growing to ensure product safety and the traceability of all components along the supply chain. A raft of regulatory changes in Europe and the US will require manufacturers to take a proactive approach to new technology options as they evolve.
The customer experience
The medical device industry is under increased pressure to hold or reduce prices. This pressure is coming both from healthcare providers and consumers who may also now have a choice between a medical device and a consumer device that performs a similar function – hearing aids vs earphones is an example.
Device manufacturers have begun to realize the importance of a deep understanding of their end-users. They are investing in solutions and adopting new business models that will allow them to develop this understanding further and improve the patient experience.
The move to deeper customer insight is going to be accompanied by a move from an illness-focused health care system to one of well-being and prevention. Instead of focusing on how to treat illness, medical technology is likely focusing on how best to mitigate people having an illness or a medical event. This Solutions to these challenges will come from software and data collection that medical devices will include. The data collected may even be more valuable than the hardware.
The combination of a growing number of consumer companies providing devices such as watches and fitness trackers, and the need to collect and analyze greater volumes of data in more detail will have a significant impact on medical devices manufacturers. The drive to digitize the business will be even greater than the changes generated during the pandemic. For example, imagine receiving an order from a hospital for an item required for surgery, then being able to immediately locate the item in a warehouse, and deliver it on the same day. This will require a highly digitized inventory management and logistics system and will require ever tighter controls on data that is gathered to ensure patient privacy.
A new business model
The standard business model for medical device manufacturers has been to sell a product. However, as software and data become more valuable relative to the hardware, companies will need to consider the “as-a-service” model to sustain and grow revenue. This is another type of customer orientation that recognizes customers are looking for solutions that combine reliability and other value-added services. Manufacturers who adopt this model will package their products with a unique set of services that creates a competitive advantage. This doesn’t just require better after-sales service, warranty and repair management, but also technology in the product to provide real-time status information to the manufacturer. It also means moving from a product to a service mindset, moving from transactional, product-based sales to becoming more outcome-based.
Digital transformation in the medical device industry
Digital transformation in the medical device industry offers new opportunities in terms of:
- execution: by improving performance and reducing costs through collaboration, streamlining processes, and enhancing capabilities across the organization;
- engagement: by delivering differentiated, digitally-enabled products and services to customers and other stakeholders;
- innovation: by offering insights that help envision and deploy new products and services with new or improved value.
Companies are therefore looking for technology solutions that can help them:
- – improve performance
- – reduce costs
- – improve inventory management
- – enhance delivery and services to customers
- – use data and analytics to differentiate products and services as well as to drive future innovation.
The need for industry-focused solutions
A typical ERP solution helps companies automate their accounting, finance, and business management functions, but medical device manufacturers need more than that. They need a solution that aligns with their industry’s unique needs.
A software vendor that has deep experience and expertise in the industry will understand specific business requirements and make it easier to communicate and share ideas. The vendor can also address issues and provide resolutions much quicker than a generic software provider.
As medical device companies move into a technology-oriented future, they will need access to industry-specific solutions that can help address the issues they will find as they evolve operations and business models for a new normal.
Due to innovations in digital technology, competition from consumer technology companies, and new care models, manufacturers will need to adopt new technologies to support the new business models that they will need to survive and thrive.
In Part 2 we will uncover how an ERP system specifically built for medical device manufacturers can help address these urgent issues.
