In planning for growth in 2019, medical product and component manufacturers can take a cue from the technology strategies now being employed by the fastest growing companies in this industry. These strategies were captured in a recent survey of 151 North American manufacturers that research firm Decision Analyst conducted on behalf of IQMS. Through the survey, Decision Analyst was able to identify those medical device companies growing at least 10 percent faster than their peers, as well as the technology practices of these manufacturers.
Notably, the group of highest performing medical product and component manufacturers are obsessed with getting product and process quality data permeating through their supply chains and production networks in real time to find ways to improve. And in so doing, they are creating analytics-driven cultures that value data above all else when making decisions. Moreover, these businesses are successfully integrating analytics, business intelligence (BI), real-time monitoring, mobile reporting access, and quality management to gain valuable insights that enable them to capture new opportunities quicker than competitors.
Investments Focus on Empowering Teams and Supply Chains
In follow-on interviews with the fastest-growing medical device manufacturers, two major trends emerged. First, real-time reporting of results and key metrics permeates the production floors of these manufacturers. Everyone on the shop floor knows what he or she needs to do to improve the metrics for which they have responsibility. The energy, intensity, and ownership created on a shop floor are noticeable—and the sure sign of a high-growth manufacturing company.
Second, a primary criterion for prioritizing tech investments has more to do with how strong of a network effect medical industry manufacturers can create in their supply chains. That is because strategic sourcing, procurement of parts and materials to support new products, and supplier quality all depend upon how much of a positive contribution every member of the supply chain makes. And for medical products outsourcers, the supply chains are more complex, often including the leading medical brands, their suppliers, vendors, quality assurance, inspection, and compliance teams. Survey results find the companies demonstrating the greatest flexibility and strength of their supply chains and the network effects they create have the strongest catalyst for growth.
It should be no surprise the CEO of a leading medical device manufacturer says every tech investment is evaluated on its contribution to the supplier and production network the company relies on daily. This is in line with findings from the Decision Analyst survey, which indicate the days of making tech investments that don’t contribute to the digital ecosystem are over.
The Five Tech Investments of High Growth Medical Device Manufacturers
With a focus on strengthening their supplier and production networks, the medical device manufacturers growing 10 percent or more annually balance technology planning with a strong bias for action and execution. And their selective use of analytics, metrics, and KPIs keep their efforts on track to deliver the desired results while quickly removing any barriers. Goals guided by analytics, metrics, and KPIs are the guardrails these fast-moving companies rely upon to stay on track to many of the most ambitious goals in all of manufacturing today. With this in mind, following are the five tech investments these companies have made or plan to implement—and in which other medical product and component companies should invest in 2019 if they haven’t done so already.
1. Integrate analytics, business intelligence, real-time monitoring, mobile reporting access, and quality management to discover and act on insights faster than competitors.
Among high performing medical device manufacturers surveyed, 42 percent do so already. The CEO of a medical product company, which has been growing 15 percent a year, stated the focus on integration isn’t just to improve process workflows; it’s to create shared ownership over product quality. Having the right analytics and BI applications fed with real-time monitoring data streams is enabling the entire supply chain to course correct quickly if there is any variation in product quality. The same CEO noted, “Shared quality across any supply chain becomes the new reality, and everyone owns improving it 24/7.”
2. Initiate track-and-traceability across the production network, combining real-time monitoring, supply chain system integration, and quality management.
Thispractice, which is being employed by 78 percent of high growth survey respondents, is another aspect of the investment strategy that drives shared quality ownership deep into any supply chain. There are the tactical aspects of gaining greater visibility across every supplier and tracking inbound shipment quality levels. However, the fastest-growing medical device manufacturers have moved beyond this and are looking to understand why product quality varies so significantly across production centers and individual production lines. Track-and-traceability also serves to strengthen the network effect across the supply chains of these companies.
3. Integration of analytics and BI systems with quality management and compliance systems across a single ERP platform gives high growth companies an edge in managing the cost of quality.
Without exception, medical device manufacturers growing 10 percent or more a year know their Cost of Quality and what factors most and least influence it. Among these companies, 62 percent integrate analytics and business intelligence with their quality management and compliance systems. The fastest-growing manufacturers also excel at tracking the impact of their decisions and supplier contributions to improving the Cost of Good Quality. These companies are relying on the network effect to keep Costs of Quality under control so they can deliver excellent products to their customers while protecting gross margins.
4. Make reliance on analytics and BI applications to track compliance, quality, and key customer metrics become a passion.
This practice is already embraced by 78 percent of the high-performing medical device manufacturers surveyed. There’s a big difference between using analytics and BI-generated metrics to look in the rear-view mirror of any manufacturing operation versus relying on them as a heads-up display the way jet pilots do. The fastest growing manufacturers are using metrics like jet pilots, looking into the future and seeing how best to navigate their growth routes with the greatest speed. The goal is not just to rank quality efforts, but to out-innovate competitors and grow faster by using solid predictive insights.
5. Recognize that adopting mobile technologies on their shop floors today is a must-have for remaining competitive tomorrow.
Already, 89 percent of the highest growth medical product and component companies surveyed are making information available via mobile phones, tablets, and other devices. For instance, the CEO from one of the top 10 percent medical device manufacturers surveyed stated the business is using mobile devices for everything from audits and compliance reporting to individual product inspections. “We had a knowledge gap between our quality, engineering, and supplier management teams, and the fastest way to solve it was to upload inspection data via smartphones right from the shop floor,” the CEO observed. “Within a month of doing this, we improved inspection and final quality levels over 35 percent.” Here, mobile support was a means to an end. The medical device manufacturer now uploads all inspection data into a private cloud, and every supplier, vendor, and selection team see the data in real-time.
The secrets to growing faster than the market and competitors can be found in how tech investments are orchestrated to accomplish challenging business goals. Medical device manufacturers growing 10 percent a year or faster are selectively choosing technologies that give them the chance to achieve network effects; create an entirely new, shared definition of product quality; and make their entire production networks more transparent. And with more compliance and regulatory demands coming to the medical device manufacturing industry, the high-performing group has already done the hard work of redefining who they are to scale with the future.
Louis Columbusis currently serving as principal at IQMS. Previous positions include director product management at Ingram Cloud; vice president marketing at iBASEt, Plex Systems; senior analyst at AMR Research (now Gartner); and marketing and business development at SaaS start-ups. Columbus’ academic background includes an MBA from Pepperdine University and the Strategic Marketing Management and Digital Marketing Programs at Stanford University Graduate School of Business. He also teaches MBA courses in international business, global competitive strategies, international market research, strategic planning, and market research. Columbus currently is a member of the faculty at Webster University and has taught at California State University, Fullerton; University of California, Irvine; and Marymount University.