Configuration Management and Product Configuration in the Medical Device Industry

Posted on: December 15, 2020 | By: Ethan Naegele | QAD Financials, QAD Manufacturing, QAD Business Process, QAD Distribution

Configuration Management

Configuration management is “a process for establishing and maintaining the consistency of a product’s performance, functional and physical attributes with its requirements, design and operational information throughout its life.”

Configuration management streamlines the quote-to-delivery cycle for to-order medical device manufacturers because it enables the generation of items, bills of material, engineering drawings, routings, and instructions. Additionally, configuration can create and/or enable required attributes, characteristics, and specifications for the manufacturing process of the configured products.

 

 

Product Configuration

One major subcategory of configuration management is product configuration, which allows for customer self-service and ensures that a customer’s order is correct. The benefits of product configuration are numerous for companies with complex products—which often applies to medical device manufacturers. Later, we will discuss the benefits of product configuration.

Product Configuration Basics

There are several different types of product configuration that range in approach and complexity. In one type, there is the simple features and options approach at sales order entry. In this approach, the user selects specific options for each feature of the product, but the choices do not impact or affect how the user selects other options. There are no interdependencies.

Another approach is rules-based configuration, where one choice the user makes can impact the others. For example, if the user is ordering an infusion pump to administer drugs to a patient, and the user selects that the patient is an infant, the user may then be limited to the dosage, flow and measurements of the pump compared to adult patients.

There are also model-based configurators, which use logic, rules, and algorithms to calculate elements of an order from a base version of the product, leaving an end-result that is possibly different from any other order. For example, if the user is ordering an infusion pump to administer drugs to a patient, and the user selects that the patient is an infant, the user may then be limited to a subset of the products that make up the infant product delivery system, like tubing, Y connects, stopcocks and catheters that are smaller compared to adult patients.

 

Challenges

“To-order” (for simplicity’s sake, the term “to-order” covers companies that make-to-order, assemble-to-order, configure-to-order, or engineer-to-order) medical device manufacturers face numerous challenges to keep the customers and shareholders satisfied.

Customer Satisfaction

Customers may face several difficulties regarding the timing of delivery. The desired delivery date usually is not the date they receive the order, and it is difficult to quote accurate due dates for to-order products without sophisticated systems due to the different lead times of the various materials which compose the product. These materials may be purchased, manufactured in-house or a combination of both.

Furthermore, the customer does not always receive the product as desired due to miscommunications of options or configurations. These miscommunications can occur anywhere from sales to final assembly for various reasons. For example, the salesperson may misunderstand the request, or the production personnel may misinterpret the correct processes, attributes, characteristics and/or specifications for the configured product.

Profitability

There are numerous factors which often contribute to expensive operations for a to-order medical device manufacturer. One factor is that required information gets repeatedly handed off throughout the entire business and manufacturing process cycles, which results in inefficiencies. Additionally, the sales force and customer service often must recontact the customer and then correct invalid orders, and other mistakes may be caught throughout the process which may negatively impact the customer experience.

Competitiveness

The engineers must often allocate their time to ensuring that newly configured orders meet their criteria, and therefore, the engineers are unable to spend that time on innovating toward new product development or process enhancement. Although such innovation is required in the to-order medical device industry, for this reason, it is often hindered, thus compromising a company’s competitive stance.

 

Why Configuration Management is a Solution

With all of the above challenges in mind, it is now clear that at every step of the supply chain, it can be difficult to produce the appropriate medical device product for a customer. Therefore, it is critical that the product and process configuration is unified across the organization, which minimizes handoffs of specialized information.

Solution Requirements

  • Enterprise or Unified Supply Chain Configuration Solution
    • People from all functions will have to use the system because the configurator must configure the resources and processes required to produce the products in addition to the products themselves.
  • Error-Proofing
    • The system should not allow for invalid option selections. The system can also eliminate errors if it can automatically create bills-of-material and routings usable by purchasing, production, and your ERP system.
  • Intuitive and Flexible
    • The configuration system should be flexible enough to fit many business models, allowing for freedom on how many parameters the user can configure at once.
  • Cost of Ownership
    • There are a range of different configuration management solutions on the market, with a range of prices. Often, the costs of configuration software tools are by node, with differing price points depending on the node. Types of nodes include servers, databases, and storage.
    • Keep in mind that the initial license cost is only a first step toward the end goal of a fully-functioning system. Organizations looking to implement a configurator system must also consider the costs of ongoing maintenance and operation of the system.

 

Best Practices

To ensure that the user harnesses the benefits to follow, there are several simple best practices that the user should adhere to:

  • Define and document all configuration rules and dependencies on paper before attempting to build the model in your configurator application
  • Define standards and conventions related to the use of features, options, and rules to ensure uniformity and consistency
  • Early testing
    • Test early and often to avoid bugs in the configurator.

 

Product Configuration Benefits

An optimal configurator will afford the following features and benefits for the customer:

  • Regulations: prevents the customer from building products that do not follow regulation.
  • Constraints and Dependencies: set constraints on how many and what types of high-energy-consumption parts may be used. Also, the system should be able to identify when parts are dependent on other parts and notify the customer when the product is being manufactured.
  • Module Selection: automatically links the customer’s entries and requirements to specific modular parts and products that are available.
  • Visualization: link to schematics or other visuals to represent the product and entice customers.
  • Multiple languages: support multiple languages to be palatable for the international customer experience.
  • Pricing: offer not only a quote after product configuration, but also offer discounts based on pricing group affiliations, customer location and selections the customer has made during configuration. The configurator ideally also considers varying currencies.

 

Operational Benefits

  • Reduce manufacturing lead times by 80%
  • Eliminate errors at order entry by 98-100%
  • Reduces inventory replenishment coverage and BOM product structuring by over 80%
  • Achieve a 40-80% reduction in bill of materials, routings, and drawings maintenance
  • 100% product and component standardization
  • Reduce product information going through engineering from 70-80% to 5-10%
  • Unify existing ERP, CRM, CAD, PDM and APS systems
  • Reduce lead time from engineering to factory floor from weeks to minutes
  • Another benefit is that items, bills, and routings to support your business are stored in the user’s “History,” until they are active, so users do not have to sort through large amounts of “active” information.

 

General Benefits

  • Total processing lead times cut by over 50% (in conjunction with process streamlining)
  • 75% reduction in “to-order” engineering process for very complex system configurations
  • Expanded sales volume without adding staff
  • Streamline order flow handling steps by 75% or more
  • Ability to introduce new products and product lines effectively, without adding personnel
  • Ability to handle new product lines through mergers and acquisitions
  • Save 50% or more man/hours of engineering time per year
  • 80%-90% automatic order processing without engineering approval
  • Reduced need for CAD drawing vaults; the configurator can re-create them dynamically and accurately
  • Free up engineers to improve products

In summary, the results: higher customer satisfaction, better internal efficiencies, higher profit margins, and more competitive configured products businesses.

 

Example of the Effect of Configuration Management

One practical example of a product configurator delivering tangible business value is with a client who produces highly configurable operating room devices. Our client was able to reduce order entry time from 2-days, which included live consults with in-house engineers, to a 30-minute, customer self-service activity leveraging a rules-based configurator model.

 

Choosing the Right Configuration Management Tools + Next Steps

Choosing the right configuration management system for your medical device organization means considering factors such as your ERP system, the ease of use of the configurator, and its functionality, making it a complex decision for many companies. Logan Consulting can help your organization with this decision process. To learn more about how Logan Consulting can transform your medical device business, please contact us here.



Is Your Accounting Software Hurting Your Business?
Is Your Accounting Software Hurting Your Business?

Free Download:

Is Your Accounting Software Hurting Your Business?

Download the guide ›

Top 10 Inventory & Operations Decisions Distributors Are Making Blind
Top 10 Inventory & Operations Decisions Distributors Are Making Blind

Free Download:

Top 10 Inventory & Operations Decisions Distributors Are Making Blind

Download the guide ›

2020 Nucleus Research Report on ERP Technology

Free Download:

2020 Nucleus Research Report on ERP Technology

Download the guide ›