Supply Chain Digitization is Essential to Medtech Manufacturing Success

While most medical product manufacturers have been undergoing some form of digital transformation for the past few years, the global COVID-19 pandemic brought the need to accelerate these efforts into stark relief. In the pandemic’s early days, six of 10 manufacturers were affected by supply chain disruptions—many of which continue to this day, according to a December 2020 SYSPRO survey of manufacturing leaders.
 
Medical product manufacturers consider digital transformation as a way to gain efficiency, agility, and flexibility. These abilities will fuel growth, enable them to adapt to changing market conditions, and weather any future global crises, as it’s unlikely that SARS-CoV-2 will be the only unexpected challenge the world will face in the decades ahead. However, digitalization requires more than the deployment of systems such as factory digital twins, automated equipment monitoring, and real-time asset tracking. Artificial intelligence (AI), machine learning (ML) and pervasive sensors via the Internet of things (IoT) are all powerful technologies, but unless there’s a digital foundation in place that brings them together into an integrated whole, medical product outsourcers will not enjoy the full benefit of digital transformation.
 
ERP and the Medical Supply Chain Transformation
The supply chain is a major concern right now, with long delays for critical parts and container ships waiting days, even weeks, to find a berth. It’s never been more important to have accurate visibility into the supply chain and current operations so management can make strategic decisions about how to best use their available resources.
 
For medical product manufacturing, the enterprise resource planning (ERP) platform provides a solid foundation for digitalizing the supply chain. Organizations have historically thought of ERP as primarily a financial and supply chain management system, but an ERP built expressly for medical product manufacturing can do far more. These platforms can easily integrate with innovative smart factory technologies to provide significantly more information in real-time within a richer context.
 
The race to provide medical grade oxygen to hospitals during the pandemic is a good illustration of how supply chain and operational visibility can work together to help manufacturers overcome current challenges. Supplying medical facilities with enough oxygen to support the flood of COVID-19 treatments during the worst parts of the pandemic has been a challenge. Hospitals in some developing nations completely ran out of oxygen, leading to preventable deaths, while some institutions in developed nations like the United States experienced close calls with their oxygen supplies.
 
The problem was not a lack of available oxygen. Medical oxygen ordinarily accounts for only 3 percent of the $38 billion global manufactured oxygen market, so there’s plenty of raw O2 available. The problem is the industrial oxygen manufactured for metal fabricators and auto plants is not pure enough for medical purposes, and the distribution channels are completely different. Pivoting from serving industrial plants to medical facilities requires investment and meticulous change management.
 
With a strong digital foundation of a flexible ERP, however, it’s possible. For example, one African manufacturer converted 8,000 industrial oxygen cylinders into medical oxygen cylinders. The manufacturer was only able to do so because it conducted meticulous and thorough planning and preparation, supported by technology. The manufacturer could make a rapid changeover precisely because it already had a strong digital foundation with a flexible ERP system, giving it the necessary visibility to plan and the ability to accommodate rapid business changes.
 
In another example, a mid-sized ventilator systems producer worked with a much larger manufacturer in a different industry to deliver in six months what previously would have taken 15 years to create. Operations from both companies worked closely together to streamline operations, uncover efficiencies, and identify operations that could be conducted in parallel. It also required close and constant communication with suppliers. Having a solid, flexible ERP system provided the agility the manufacturer required to scale up operations 80 times faster in a very short period of time.
 
Attaining Digital and Operational Agility
Attaining this kind of agility requires an ERP and other foundational systems such as a product lifecycle management (PLM) platform that is firmly in place and tightly integrated. That provides the foundation on which a digital transformation program can be built. Next, business and IT managers should collaboratively identify a specific area where digital transformation will have the largest impact in the shortest amount of time. For example, perhaps a company needs supply chain redundancy and a rapid means to source and vet alternate suppliers for critical components. Or, maybe management needs better visibility into how products move along supply and distribution chains.
 
Regardless of the starting point, it’s critical to ensure these technologies are integrated into an organization’s foundational systems, especially its ERP. Having a single source for reliable business data is the only way management can make rapid, informed decisions. Once an initial project proves out the value of digital transformation, the initiative can be expanded. In this way, IT builds trust throughout the organization, which is a critical component of digital transformation success.
 
The pandemic has been extremely challenging for medical product manufacturers, but it has also provided an opportunity to emerge from this crisis significantly stronger. The need for digital transformation is clear, so the will exists to undertake ambitious projects like this. As long as manufacturers have a strong digital foundation and plan their transformation carefully, the industry will be well positioned to not only survive the next disaster, whenever it arrives, but also to grow and thrive when the economy finally recovers.
 
Roger Landman is head of product management at SYSPRO. He is a specialist in the operations field after having worked in several industries throughout the world. With his skill in operations, Landman became a corporate trouble-shooter for underperforming businesses, and eventually began his own consultancy specializing in this. His passion remains Lean manufacturing.