Medical Device Link.

Originally Published MX July/August 2001

Information Technologies

Part 3: The Bold New Web

The Web revolution is rapidly reaching even the most complicated processes of medtech development and manufacturing, but top management's role will be critical in separating hype from reality.

Cliff Henke

In corporate America, the advent of highly advanced information technology (IT) systems has brought about a revolution in management thinking. As illustrated in the TV-commercial anecdotes that have opened the previous installments of this series, however, the course of this revolution has unfolded only gradually. At first there was ignorance and confusion ("ERP?"), followed by the dawning of a business vision (but, "I don't know how to do that"). And today, corporate leaders are ready for the next phase—ready to adopt and reap the benefits of IT applications in their businesses.

What many corporate leaders are finding in this next phase, however, is a need to adjust to a reality far less fruitful than the commercial bounty that many IT companies originally promised to deliver. True to the zeitgeist, a current TV ad satirically predicts that soon more people will be using the Web than there are people on earth, and doing so using Web systems that are operational eight days a week.

Somewhere between today's next phase and the hype lies the future of IT applications for medtech companies. Increasingly, the consensus of observers is that in many cases that future has already arrived, and that it does indeed reside on the World Wide Web. How such Web-based IT systems can improve overall competitive advantage and corporate performance—as well as create previously unforeseen ways to do business and exploit new market opportunities—is the subject of this article, which is the final installment in this series.

Why the Web Is Here to Stay

A white paper by the Aberdeen Group, a Boston-based consulting firm, points to three forces that are driving Web-enabled collaborative commerce. First is the ever-shrinking amount of time allotted to the product development portion of the average product life cycle, a development brought about by the intense global competition of the past decade.

A second factor is the development of a more horizontal, yet still integrated, supply chain, coupled with manufacturers' readiness to mix in-house and outsourced manufacturing functions almost at will. All by themselves, these elements have created an industrial manufacturing system of such enormous complexity that it nearly cries out for the solutions that Web-enablement offers.

Finally, says the Aberdeen Group report, markets are demanding increasing customization. In response, companies are shifting their manufacturing strategies from a philosophy of "build to stock" to one of "build to demand."

The only real way to meet the challenges represented by these trends is through truly collaborative product commerce (CPC) in the virtual, secure, real-time environment offered by the Web.

"The fundamental business concept behind CPC is that manufacturing organizations obtain the greatest competitive advantage by creating better products in less time, at less cost, and with fewer defects than their rivals," the Aberdeen Group report explains. "This product-centric business solution unifies the product life cycle by enabling the on-line sharing of product knowledge and incumbent business applications such as ERP (enterprise resource planning), SCM (supply-chain management), CRM (customer relationship management), PDM (product data management), and CAD/CAM (computer-aided design/manufacturing)."

Fortunately, according to the experts, most of the technical obstacles to offering user-friendly, less-expensive Web-based applications have now been surmounted. Below are some examples of how Web-based product development and manufacturing management have truly come of age.

Collaborative Product Development

Collaboration is becoming more and more important in the research and development phase of the product life cycle. "PDM is where we were five years ago," says Vince Barletta, director of industry development for the medtech group of Agile Software Corp. (San Jose). "We are now well into collaborative commerce, where, if a manufacturer wants to make changes to a device or system, it can broadcast proposed changes to a selected vendor list. In return, the manufacturer quickly gets estimates of costs and lead times so that it can start to address these issues immediately."

The most attractive systems allow all the stakeholders involved in such changes to collaborate, thereby optimizing overall design and manufacturing and minimizing the negative impact of the changes (see Table I). Once the changes are agreed upon, the system pushes the pertinent data to the company's ERP system so that it can generate the appropriate engineering change-order documents.

"Many systems offer the ability to express a design drawing on the Web, so that a surgeon collaborating on the research project can open up the design in the browser of his own computer," explains Chris Blanchard, business development manager for Intergraph PDM Solutions (Cincinnati), a systems integration consultant. "These systems also have mark-up tools that allow the surgeon to make comments right onto the drawing, and that information then gets stored in the system."

Such Web-enabled solutions are typically based on application-specific protocols (ASPs), meaning that the storage capacity and software needed to run the system reside on a Web site—not on the user's computer system. This process speeds implementation and saves companies enormous sums of money.

One example of the trend toward Web collaboration in product development is the alliance recently announced by WebScope (Sunnyvale, CA), a provider of Internet-based real-time collaboration solutions, with Commerce One Inc. (Pleasanton, CA), a major e-commerce firm. Through the alliance program, users of the Commerce One.net marketplace will have access to the WebScope collaboration system.

WebScope has announced a similar alliance program with PrecisionMatters Inc. (San Francisco), host of PartQuoteMedical.com, an e-marketplace recently launched for medical device manufacturers. Through the new alliance, says PrecisionMatters CEO Bill Malecki, designers can collaborate with suppliers. In addition, the company employs a third-party firm to perform vendor audits compliant with ISO 9001 and FDA's good manufacturing practices requirements. Such audits help participants in the marketplace to overcome a major objection that many device OEMs have to doing business on-line, says Malecki.

Advanced as they have become, however, these collaboration tools for product development still have their limits. For instance, no current system offers participants the ability to share engineering data that can be incorporated into CAD/CAE or PDM systems so that design engineers can test candidate materials or components in a design—or conversely adjust the design to accommodate performance characteristics of the possible materials or components. Most observers expect that these limitations will soon be overcome, however, as collaborative commerce tools are already improving at lightning-fast speed.

Web-Enabled Manufacturing

In March, DataSweep (San Jose), a major provider of real-time collaborative manufacturing solutions, announced the Web-enablement of its flagship product, Advantage 4.0. DataSweep's system features a supply-chain collaboration portal that gives manufacturers a seamless and personalized real-time view of manufacturing operations across plants, divisions, and throughout their private supply chain, anywhere in the world. The system includes new applications to automate returned-material and repair processes that enable cradle-to-grave traceability, even for individual products. The collaboration portal not only enables complex analysis of data from manufacturing and repair operations, but also extends this analytical capability to correlate data from DataSweep's solutions with those from clients' other enterprise applications, including CRM, PDM, and ERP systems.

One user of the DataSweep system is Flextronics International (Singapore), a multinational sup-plier of electronics manufacturing services to a variety of industries, including medical device manufacturing. According to Jim Puzar, Flextronics's senior global program manager for IT, use of the DataSweep system enables Flextronics to "quickly deploy multiline manufacturing and repair facilities around the world, and then make this information visible via the Web to customers and internal people to use to drive improvement."

DataSweep's portal notifies users if critical performance indicators deviate from user-specified thresholds. Users can then drill down on report parameters to isolate the root cause of deteriorating trends in real time. "Multinational manufacturers can see, correlate, and analyze critical information captured in factories around the world," says Kevin Chao, cofounder and vice president of engineering at DataSweep.

One of the challenges that slowed the adoption of early Web-based systems was figuring out how to make them work with manufacturers' existing IT systems. According to the experts, that obstacle no longer exists. Current Web-based systems can be readily integrated with manufacturers' legacy design, regulatory compliance, and manufacturing systems. In fact, using the Web's open-architecture extensible markup language (XML), several companies now offer scaleable products designed to enable an organization to build an integrated solution less expensively (see Table II).

In May, two providers took these concepts a step further. J. D. Edwards & Co. (Denver), maker of the OneWorld Xe collaborative commerce system, and Camstar Systems Inc. (Campbell, CA), maker of the InSite Web-enabled collaborative manufacturing system, announced a "seamless integration" between their two products. To enable faster, easier integration, the two companies announced new plug-and-play collaborative manufacturing adaptors.

The enterprise management services of the new InSite system provide multiplant manufacturers with centralized control of the underlying data definitions and process modeling for their individual plants, while allowing for localization and plant-specific configurations. Synchronization and coordination of change orders can be automatically managed by transmitting them to remote plants, all without disrupting production. J. D. Edwards and Camstar have a long-standing technology and business partnership that recently resulted in their 25th common customer deployment at Axsun Technologies (Billerica, MA), a developer and manufacturer of photonic subsystems for optical equipment suppliers.

InSite's collaborative supply chain interface permits real-time access to production intelligence via standard Web browsers on workstations, PCs, and thin clients. Supporting both Netscape and Internet Explorer browsers, InSite is an example of how state-of-the-art solutions now allow manufacturers to deploy collaborative decisions that extend beyond internal company boundaries and outward to their customer and vendor supply chains. Such supply chain transparency is the foundation for the operational and communication infrastructure required for successful e-business and e-manufacturing implementations.

DataSweep has also announced a partnership with J. D. Edwards along the same lines as the Camstar deal.

Despite all they can do—and all it is hoped they might do in the future—Web-based collaborative manufacturing systems may still not be the right solution for every type of medtech manufacturer. While small, cash-strapped start-ups might benefit from the scalability of such systems, for instance, it is really large companies whose businesses most demand the tailored solutions that Web-enabled systems can offer. "Following the success of our Internet-based model, we're diversifying our portfolio of products and services to address the particular needs of larger pharmaceutical companies," says Kurt Mussina, president and CEO of Inceutica (Santa Clara, CA), a provider of customer relationship systems.

" 'One size fits all' doesn't apply in this diverse industry," notes Mussina. "Our large pharma customers are telling us they need a tailored, intranet-based solution. By leveraging our expertise and our proven technology in Web-based systems, we are meeting that need."

Visions of the Future

Most of the experts interviewed for this series of articles say that the Web-enabled future of collaborative commerce systems is already well established. In fact, they say, it was where the evolution of such systems had to be headed all along. "The only way to deal with the complexity and size of the information management challenges today and in the future is via the Internet," says Mark Schaub, a founder and chairman of NetRegulus (Oakbrook Terrace, IL).

By using Web-based systems to integrate the functions and legacy systems of all the companies aligned in a product's life cycle, manufacturers can achieve the desired state of "intelligent collaborative commerce," says Chris Williams, chief technology officer at Ingenuus (San Francisco), an ERP systems provider. "The real future of this technology lies in involving all the stakeholders in each critical business process, and integrating their needs in order to optimize the bottom-line results for each company," he says. "Companies need to focus on the critical business processes, not the technologies.

Williams cites the case of Dell Computer (Round Rock, TX) as an organization that focused on critical processes and improved to the point of having a competitive advantage. It then patented those processes—and, Williams stresses, guards and improves them as vigorously as its product-oriented intellectual property.

"I think this process of integration is headed toward electronic expeditors," adds Williams. "Today, expeditors are the people who have to jump into a car or get on a plane to deliver a critical piece of equipment when a manufacturing department suddenly discovers that a project can't ramp up to production volumes without it."

All too often, says Williams, such discoveries are not made until companies are trying to meet market volumes. "Up until that point, through all the pilot production tests, the company's ERP or PDM system would indicate that everything was functioning properly. By contrast, electronic expeditors would force users to predict how a project would fare in full-scale production with various volumes and market share objectives.

"That's the only time a company really makes money," he notes. "Until then, these projects are just spending money—and in the case of the medical device industry, a lot of money."

For some analysts, the attraction of Web-based systems is not just what they can do for individual projects or processes, but what they can do to help entire companies. Using Web-enabled systems helps companies speed their growth, making them more attractive to capital markets and, in turn, speeding their progress up the growth curve, says Dick Hardy, vice president of Expandable Software Inc. (Santa Clara, CA).

Hardy cites the example of Ventana Medical Systems (Tucson, AZ), whose BenchMark automated histology staining system recently won a gold award in the 2001 Medical Design Excellence Awards competition. Using scalable product data and manufacturing management tools, Ventana was able to go from start-up to pilot production, reaching an initial public offering stage in three years. Hardy says that such hypergrowth will be faster still with the widespread use of Web-enabled, secure, and refined collaborative solutions that are integrated with each enterprise's own systems.

Similar increases in speed are possible in many phases of product development and manufacturing. In the regulatory approval phase, for instance, Web-enabling the processes of data gathering and analysis could dramatically reduce the time required to conduct clinical testing (see Table III). Shiv Tasker, president of Phase Forward (Madison, WI), imagines that Web-based systems could enable companies to refine trials as they are being conducted, rather than having to wait for the analysis of all data before designing the next round of trials. "Think of what such an ability would mean for the capital burn rates of companies in product development," he says.

Conclusion

The future of collaborative product development and manufacturing has arrived on the Web. Astute CEOs and their management teams are already learning to exploit these technologies to speed time-to-market and help them through to their next round of financing. As such, the time for truly collaborative product commerce is now. If you think the last decade of new product development has been swift, just wait.

Better yet, look around—fast.

Cliff Henke is a freelance writer based in Southern California.