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A Digital Solution to Beat Out the Counterfeits

A story of how to update medical device consumables business to compete today – or just kick ass

To simply reiterate what you’ve already been told, in order to compete, medical device manufacturers must: 1. Design for ease-of-use for new buyers and users, 2. Innovate business models, 3. Increase efficiencies in operations and 4. Partner as more specialties in skills and technology are required.

Okay, so now let’s take a look at a success story of a medical device company that had a steady revenue generator in their consumables business until they found themselves losing out to counterfeiters. They knew that to compete they needed to evolve to a digital business strategy with a smart, connected device.

A little background on our client: Their hematology testing system is one of the most advanced on the market, creating efficiencies with fast test times and easy to read results. The lab technician places a test tube sample into the testing system, the sample mixes with the reagents within the tube and the testing system determines the results. After several years on the market, competitors began making test tubes compatible with the client’s testing system, reducing consumable sales significantly. Here we tell the story of how we helped this medical device manufacturer create a strategy and develop a digital solution to address this competitive threat and regain market share of their testing consumables.

A proven approach to success in the digital economy:

Revising your product strategy to include digital you can reap the benefits of a competitive differentiator for your future. 

Let’s first define what we mean by a digital product strategy: This is really an information strategy and how you leverage that information will transform your business model. Together with the valuable data, you are packaging new physical and digital functions into your product to allow you to drive in-field product customization, product automation and product monitoring. This digital product strategy generates new revenue sources beyond the initial sale of the physical product, including revenue streams from subscription services and sales of product use data. With this approach you can then have a differentiated product that creates efficiencies for both you and your client and makes your customer happy.

So now that we are all on the same page to the strategy that will drive your smart, connected product/service, let’s take a further look at HOW it’s done.

First, make the case. Have you discovered what is important to your customers?

Your customer-centric strategy will keep data out of the black hole.

We all know that data can provide you with key insights to allow you to make better business decisions. But if you are now gathering data, do you know what to do with it? Do you have the data to provide the customer experience your target market expects? Do you have a plan on how to leverage your data?

With our medical device client we needed to come up with an actionable plan to better use their data to regain market share. We looked at the current state of clinics and other stakeholders (the who) run out of test tubes (the what) when they need to run a test (the when) in the lab (the where) because the medical device company’s supply chain is slow (the why). Taking that information we could map out the desired goal to determine opportunities to get us there. We looked at the business value of addressing each customer need and identified a data source from their test system that supplies usage data to develop an actionable plan.

The opportunity in this case and for many others is to combine data in unique ways to find valuable answers to our questions. Based on our map we determined that we can set a trigger for when customers reach a certain threshold for an automated resupply. By taking this opportunity we achieved a lean digital product business model that drove to where we wanted to go. Currently, our client is evaluating additional opportunities including utilization of the data to identify usage trends for new product development and targeted marketing opportunities to increase usage in high volume customers and spur growth in lower volume customers.

What about connecting all of the complex parts?

Regardless of the product and service value and your strategy, getting to market with all the pieces and parts is no simple feat. How you do this with complex requirements requires a complete systems approach to ensure each stage feeds and connects with others for cross-functional and optimal processes, a single source of information, and improved coordination and collaboration across users.

Here, with our test tube solution, we used an Analysis of Alternatives (AoA) to help the team determine the best back end infrastructure to support the client’s existing devices and users. The chosen platform leveraged existing systems and was able get up and running quickly and efficiently. The platform stores and analyzes the usage data from the client’s testing systems as well as plugs into the client’s ERP for customer and product inventory and ordering information to incorporate required interactions between all stakeholders. Business rules were created as a result of the analytics so a restock shipment of consumables would be triggered after an inventory threshold was reached.

Logic PD worked to ensure that all pieces of the digital solution were linked together for seamless communication between the testing systems, client’s existing business systems and Logic PD’s platform components including analytics and customer support.  By integrating and considering all factors that influence the design and manufacturability of a device in the early stages through our process including valuable prototyping and infield testing stages, we can better facilitate faster time-to-market, increased productivity, increased product quality, lower cost of NPI and increased business opportunity.

In the case of this customer their consumables business was being captured by a counterfeit competitor. How do you combat?

This manufacturer used their digital strategy to increase consumable sales through automated restocking of their testing tube consumable.

  • By leveraging the data they are able to determine when consumables are low and create a service that allowed their customers to never run out.
  • By increasing communication touch points through the supply restock service, the product usage data can tell you so much more than when they need a refill on their consumable.
  • And in the clinic, never having to wait for the resupply shipment significantly boosts their customer satisfaction.

As medical device manufacturers continue to look for data-driven points of competitive advantage and other differentiators to compete, what additional value are you considering for your customer solution? And how are you evolving your business model to capitalize on this value? Whether you are focused solely on the product or the consumable or adding additional services or even subscription revenue there is always the opportunity to provide further value. As you look to change your approach to manage the complexity of a digital solution you will find a myriad of firms that can help. Look for those that have successfully implemented a systematic strategy to help ensure you deliver a comprehensive solution (see our Outsourcing Article). In our current and future competitive state, you must look at all possible angles to remain competitive and not end up out in – as we like to say in Minnesota – the frozen tundra!

 

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