Intense global pressures, such as regulatory scrutiny, tax increases and reimbursement challenges, are causing stalled top-line growth for medical device organizations and prompting them to find ways to increase operational efficiencies. One way that companies look to reduce costs is by rationalizing their information technology (IT) spending. Although this practice works in theory, it often leads to users struggling with ineffective processes and potentially opens the company to compliance risks.
Rather than settle for sub-optimal processes and systems, organizations must better understand the differences between enterprise resource planning (ERP), product lifecycle management (PLM) and enterprise quality management systems (EQMS), and leverage this understanding to make strategic IT investments that will positively impact their business performance.
The Organizational Disconnect
Time and again, organizations follow afamiliar path when evaluating new ITinvestments. The quality organization identifies a need and a short list of vendors to evaluate, with the primary concern being to find a solution that will meet their needs—i.e., help them maintain compliance, now and in the future as the organization and regulations evolve. IT professionals have a different perspective. They want to identify vendors that fulfill the identified requirements at the lowest total cost of ownership (TCO). Frequently low TCO is associated with leveraging existing systems rather than buying new, with the incremental support and infrastructure costs, so IT always is looking for ways to extend existing systems.
After thoroughly evaluating the different options, the quality organization decides on the best IT solution. However, the IT organization often challenges the purchase of a new system when they already own a system that supports the same process and meets the identified requirements. Quality teams adamantly may refuse to move forward with the existing option because they don’t believe they can maintain compliance with that option. As a result, the project often comes to a standstill.
This can be avoided by understanding what each department is looking for in the system selection process. This article will explore the different features and uses of the three systems most commonly deployed by device companies (ERP, PLM and EQMS) and outline the advantages and disadvantages of each in meeting the needs of both IT and quality departments.
The Options
Each of the technologies discussed in this column is geared toward a specific audience and has features/functions that appeal to that community as well. Here’s a quick summary of each technology:
ERP
• Primary audience: Operations andsupply chain
• Processes: Inventory management, hold status, bill of material
• Core competency: Inventory management, costing
• Key value proposition: Enable supply chain efficiencies
PLM/Document Management
• Primary audience: Research and development (R&D), new product development
• Processes: Design history file (DHF), document management, bill of material, change order processing
• Core competency: Reusable parts,revision control/document management
• Key value proposition: Develop new products faster
EQMS
• Primary audience: Manufacturing quality, auditors, complaint handling units
• Processes: Corrective and preventive actions, non-conformances, audit, complaints, holistic change management
• Core competency: Workflow management, closed-loop processes, configurability
• Key Value proposition: Streamline processes and enable continuous improvement in both processes and products
Expand or Complement?
While each of these technologies handles its core competency well, each also tried to expand into non-traditional functionalities in response to their organizations requiring them to “do more with less,” a phrase we often have heard amid the economic downturn. This results in simple functionality that might meet the needs of certain business cases, and maybe even look attractive during software demonstrations, but ultimately falls short when even the slightest complications arise—complications that can include multiple product lines, discrete vs. process manufacturing and supporting multiple changing regulations.
The most common scenario where organizations look to simply leverage an existing system is with ERP, as these systems often represent a company’s most significant software investment and are viewed as one-size-fits-all tools. The key point about ERP is that vendors of these solutions tend to include quality management functionality for free (one can only surmise that the effort and resources needed to implement and maintain such software makes it a viable business model to provide the software itself free of charge). IT strategies that focus on total cost of ownership certainly should investigate the cost effectiveness of integrating ERP into EQMS. Since the challenges and drawbacks of this model are well documented, let’s instead focus on the technologies that are discussed less:
PLM and EQMS.
PLM and EQMS: Evaluatingthe Cases
PLM is a different story from ERP. While ERP began as a technology to streamline operations and provide data to management to make more reliable decisions, PLM was designed to help R&D bring new products to market faster by introducing the concept of “reusable parts.” Clearly, it’s easier to make the next generation of a product (including validation and documentation activities) when you reuse components from an existing product, and PLM provides technology that enables such reuse.
The other critical part of PLM is revision control. Manufacturing organizations simply can’t function if design changes aren’t propagated effectively across the organization, just as in the consumer world. For example, can you imagine purchasing a new iPhone 4S from Apple that came in an iPhone 3 case? Many device organizations use PLM to store all their standard operating procedures, policies and procedures to ensure revision control in this critical process.
The vision for PLM in device companies makes sense: A single system to manage all design information from initial concept to the different stages of development and through end-of-life, while applying appropriate controls along the way. DHF information is managed and maintained in the system and because of reusable parts, new products or the next generation of existing products can be introduced faster than ever before. That’s a great vision, but many companies have failed to achieve it for a myriad of reasons including mergers and acquisitions, legacy products and paper-based design documentation.
PLM historically divides change control into two steps: engineering change requests and engineering change orders, with appropriate control mechanisms based on the stage-gate process in R&D. Engineers favor this model because it makes the product central to change control. That makes sense, but what about the non-product aspects of change control such as facilities, labeling, documentation, training and more? This is why many companies place the change request in the process-based EQMS system and use PLM for the execution, or change order, aspects for the subject matter that is managed within that system. It’s just not conducive to use PLM to manage holistic change control because it lacks the process-capabilities needed to coordinate activities in disparate systems (labeling, training, etc).
Now that PLM vendors are entrenched in change control, they are looking upstream into the drivers of change control in anattempt to add an incremental revenue stream. PLM vendors now are attempting to build CAPA modules to capture “inputs” to change control. This makes sense on the surface, but where do CAPAs come from? Primarily non-conformances and complaints, as well as audit deficiencies. Logically, PLM also aims to capture these to show the inputs to CAPA as well—which is the space on which EQMS has been focused for years. One good test to evaluate vendors is to ask your quality and regulatory colleagues to describe the complaint management process and then ask vendors their vision of the same process. Undoubtedly, EQMS vendors more closely will express what end-users describe, while PLM vendors will focus more on the change request/ engineering change order.
If PLM’s core competencies developed in the past 15 years are revision control and reusable parts, while EQMS’ core competencies developed in the past 15 years are workflow management and closed-loop processes, what’s the likelihood that either could quickly and fully develop the functionality that took the other more than a decade to develop and refine? Not likely.
Device manufacturers must ask the question, then, whether they really want to be a software vendor’s “test case” for a critical component of the business—quality management.
And what is the impact of not effectively managing quality?
Here are a few possible outcomes:
• Increased regulatory risk: CAPA continues to be the number one item cited by regulatory bodies, while new regulations such as electronic medical device reporting are an afterthought, at best, for PLM and ERP vendors.
• Impact to top-line growth: We all know that PLM allows companies to innovate faster. But what if you’re innovating the wrong things?
• Increased TCO: Changing processes in systems costs money; validation costs even more. ERP and PLM simply cost more to implement and change than EQMS.
• Increased time-to-value: Implementing any system takes time and stretching a solution’s functionality beyond its limits takes additional resources before any business benefits are realized—if at all.
• Hidden costs: Due to a) customization and b) force-fitting an individual business into a templated model.
• Failed projects: What happens after years of trying to go live with the wrong system? Turn it off and try again, all at unnecessary cost and risk to the business.
The Takeaway
As medical device companies strive to achieve the perfect mix of IT systems to optimize their business, it’s important to recognize the strengths and weaknesses of all potential systems to ensure what’s being leveraged will truly bring the business forward and reduce TCO.
All too often, immediate tangible costs, particularly in technology, are given precedence over potential cost savings and compliance improvements. No one wants to introduce a new system without a compelling reason to do so; however, an organizations’ strategy needs to include systems with required key strengths.
For many medical device companies, this will include:
• Supply Chain Management (ERP);
• Revision control and reusable parts (PLM); and
• Workflow management and configurability (EQMS).
In today’s competitive environment, companies that choose to “leverage” ERP or PLM to handle EQMS capabilities are really electing to fall behind the competition by placing themselves at greater regulatory risk. They also are likely to spend more money than if they chose the path of implementing a best-of-breed EQMS system and integrating it into their system landscape.
Tim Mohn is an industry solution director in Sparta Systems’ Product Management group. Previously, he served as worldwide quality systems manager at Ortho-Clinical Diagnostics, a division of Johnson & Johnson. He has also held positions at Pfizer Consumer Healthcare and Wyeth Pharmaceuticals.