Originally Published MX March/April 2001
IT Solutions for Medtech Manufacturers
Part 1: The IT Lexicon
Software-based tools can streamline your company's business processes—but you'll never know until you learn to speak IT.
Cliff Henke
A
recent television commercial for an information technology (IT)
company illustrates the point: two executives in an airport are
talking about various projects, and one admits that she is having
integration problems with the enterprise resource planning (ERP)
system and other systems under her charge. The other executive grows
more and more stupefied as the acronyms of the computer age continue
to flow effortlessly from his colleague's lips. At last, he looks
up in panic.
"ERP?" he mutters, pronouncing it as if it were a word.
Unquestionably, the lexicon for computer systems designed to streamline various aspects of the medical device industry has grown to the point of challenging even those most adept at remembering acronyms. Perhaps even more confusing, the lines distinguishing the categories of such systems have blurred considerably. <
This article—the first of a three-part series on the use of information technologies by medtech manufacturers—examines the ever-changing wordscape that describes and categorizes such IT systems, with particular attention to how the various types of systems relate to one another. Future installments will look at the current state of IT offerings in use by medtech firms and the future of such technologies.
The Rapid Evolution of Software Tools
Whatever industry a company may be in, a broad array of IT systems are now available to help operate its business processes. This article focuses on those that are most critical to medical device manufacturers—specifically, systems designed to streamline regulatory compliance, product data management, and manufacturing planning and management (see sidebar).
Virtually all of the IT applications discussed here originated in industries other than medical device manufacturing. In fact, say several IT experts, the device industry has been a slow adopter of such systems for two reasons. First, and most obvious, the highly regulated nature of medtech manufacturing has made the industry hesitant to adopt technologies that would have direct implications for their regulatory compliance. This was true even after FDA gave its blessing to such systems—and it's still true today.
The second reason is more subtle but perhaps even more important. Medical device manufacturing has incredibly sophisticated data management needs that go far beyond even regulatory requirements. Most companies today outsource much or all of their design and manufacturing; most have patient-tracking issues in geographically distant places; most have or are contemplating export sales to a broad list of countries; and most produce devices that are complicated to design and manufacture, involving hundreds—even thousands—of parts, materials, and subsystems. "The only industry comparable to the medical technology sector for the sophistication of data management needs in a regulated environment is the nuclear power industry," says Chris Williams, chief technology officer at Ingenuus (San Francisco). "However, what's really unique about medtech companies is that these data management needs exist even for small and start-up companies."
Product Data Management. Not long after affordable computer-aided design and engineering (CAD/CAE) packages became available to design engineers in the 1980s, companies realized that they were beginning to generate mountains of data. This result was a function both of market demands driving faster times-to-market as well as the fact that these packages made it easier for product development teams to repeatedly make changes and test variations of designs. Product data management (PDM) systems were born to manage such data proliferation.
"For device manufacturers, the benefits of PDM are similar to those experienced by companies in other industries where designs are typically complex and involve teams of people," says Chris Blanchard, business development manager for Intergraph PDM Solutions (Cincinnati), a systems integration consultant. "PDM also helps engineering teams archive data so that it can be reused in subsequent design iterations. Typically, companies can experience as much as a 50% reduction in their project cycle times."
For medical device firms, Blanchard adds, such a reduction is especially important because these companies are often lean and involved in extremely expensive projects that burn capital at a high rate. For device manufacturers, reduction in time-to-market often results in enormous bottom-line savings and can be the difference between gaining or losing market share.
Initially, many PDM systems would not interface well with manufacturing systems, and data had to be reentered, resulting in loss of time, accuracy, and capital. Today, the major PDM systems have such interfaces, usually through documents called bills of materials, which design departments use to hand product data over to manufacturing departments. In turn, bills of materials files can then be imported into the manufacturing department's IT systems.
Manufacturing Planning and Management. A wide variety of the manufacturing-related management techniques developed over the past half-century have already been computerized. Among such techniques are materials requirements planning (MRP I), a set of inventory control methods, and manufacturing resources planning (MRP II), which manages the entire factory workflow.
In recent years, such systems have also begun to incorporate features designed to manage corporate finance, human resources, and a variety of other functions. Unnamed at first, such business-savvy systems have since become known as ERP systems.
"Think of PDM as the upstream management application and ERP as downstream," explains Blanchard. In effect, PDM is the family of IT solutions that manage the product life cycle from R&D through final design, while ERP systems manage the life cycle segment from that point through marketing, customer service, maintenance, and repair.
Regulatory Compliance Software. Anyone who has worked in the regulatory or quality assurance department of a device company knows that the FDA-mandated document storage requirements for even one product's life cycle are enormous. And that's just the physical storage; retrieval is quite another issue.
Over the years, increasingly sophisticated systems have been developed to automate the filing, storage, and retrieval tasks. At the Baxter Pharmaseal (West Covina, CA) facility roughly a decade ago, for example, a proprietary archival system was introduced, based on sophisticated databases, networks, and optical storage integrated with management software.
Regulatory compliance systems have had to evolve as the regulatory demands have increased. This category now includes solutions to address not only GMP compliance and premarket filings, but also clinical trials, postmarket surveillance, design controls, and the regulatory demands of European and Asian markets. However, all these systems must interface with device manufacturers' PDM and ERP systems. If they do not, data management becomes at best redundant and inefficient; at worst, regulatory compliance can be jeopardized and liability exposure can become more probable.
Financial Management Applications. This category includes systems to help automate corporate finance, accounting functions (e.g., accounts receivable and payable), and payroll management. Again, these systems have their birthplaces in other industries but are just as important to device firms.
Sales and Marketing Tools. These include packages for competitive intelligence, market forecasting, sales force automation, and customer interaction management. Like financial and ERP systems, these tools originated in other industries. In the cases of order entry and customer management applications, they can now be integrated with the supply-chain management (SCM) solutions that are becoming popular.
Enterprise Resource Planning. ERP, in a literal sense, evolved from MRP I and MRP II systems. The term describes a family of software applications designed to support and automate such business processes as financial management; human resources; production, logistics, and operations; and strategic planning and market forecasting. ERP systems are accounting-oriented information systems for identifying and planning the enterprisewide resources needed to take, make, distribute, and account for customer orders.
An ERP system differs from the typical MRP II system in technical features such as the use of relational databases, use of object-oriented programming language, the addition of some CAD/CAE tools, client/server-distributed architecture, and open system portability. The specific features and potential of ERP systems will be discussed in the second installment of this series.
Why CEOs Need to Speak IT
Despite the great potential of IT systems for device firms, the gap between the promise of such integration and the actual result is often large. The experts say there are several important reasons for such a gap, and, like most other management challenges, they center on human limitations as opposed to technological ones.
Whatever the details may be, all the reasons for failure in implementation boil down to a single, underlying issue: lack of CEO leadership. "It's why CEOs and other members of the executive suite have to become intimately involved with these projects," says Brett Williams, a former top executive with Medibuy.com (San Diego) and now an industry consultant. "CEOs must lead. Only they are in a position to explain to the company what they are doing, why they are doing it, and what it means to everyone within the organization. Too often, there is organizational resistance that will just kill projects. Employees must work together or these projects will never live up to their promise."
The challenges that medical device firms face in implementing IT systems will be addressed in the second installment of this series, which will detail the current generation of IT solutions available to medical device manufacturers through various vendors. Look for the second part of this series in the May/June issue of MX.
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Enterprise-Related Information Systems: A Lexicon There are a variety of software solutions—many of which are now Web-enabled—that medical device companies are using to shorten time-to-market, ensure regulatory compliance, and improve manufacturing efficiencies. However, many software developers and systems integrators often blur the lines among the different categories of information technology (IT) solutions and put their own linguistic twists on the types of systems they offer. For the many they've confused, here is an aid. Electronic Data Interchange (EDI). A method of exchanging data using on-line computer networks. EDI is now giving way to Internet-based solutions because the interchange involves proprietary on-line links. Enterprise Resource Planning (ERP). Computer platforms that integrate various aspects of a company's computer requirements into a single network. Modules often include strategic planning, market forecasting, corporate finance, accounting functions, payroll, human resources, production, operations, customer interaction management, logistics, supply-chain management, and sales force automation. Data entered in one module are automatically reflected in the rest of the ERP modules in real time. Materials Requirements Planning (MRP I). Perhaps the oldest type of computer system in manufacturing enterprises, MRP I systems help manage inventory, streamline parts and materials ordering, and project resource needs based on manufacturing schedules and volumes. Manufacturing Resources Planning (MRP II). MRP I systems evolved into more-sophisticated manufacturing information systems and planning tools that enabled not only better inventory control, but also better control over a company's entire workflow and organization of manufacturing lines. MRP II systems also optimize factory scheduling and human resource needs on the factory floor. Product Data Management (PDM). A system that compiles, stores, and records all files related to product design. Many systems will house the data in a way that can be directly transferred to computerized machine tools on the manufacturing floor, eliminating the need to reenter the data and thereby saving time and reducing manufacturing inefficiencies related to human error. Regulatory Compliance Software. These systems are designed to help device manufacturers comply with FDA's regulatory requirements for lot traceability, process validation, corrective actions, and other data-intensive aspects of design and manufacturing. The data files are organized in ways that enable manufacturing to comply with FDA inspection and other audit requirements. Supply-Chain Management (SCM). Web-enabled and internal IT tools designed to streamline a company's supply chain, from the sourcing of materials and services through the distributors, wholesalers, dealers, hospital group purchasing organizations, and end-users that make up the sell side of the supply chain. |
Cliff Henke is a freelance writer based in Southern California.
Copyright ©2001 MX