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A Digital Strategy Enhancement to Counter the Copycats

Updating your medical device business to compete today – and tomorrow

In order to compete, medical device manufacturers must:
1. Design for ease-of-use for new buyers and user
2. Be open-minded to innovative business models
3. Increase efficiencies in operations
4. Partner as more specialties in skills and technology are required.

Let’s take a look at a success story of a medical device OEM that had a steady revenue generator in their consumables business until they found themselves losing out to second- and third-movers.  They knew that to compete they needed to evolve to a digital business strategy and systems-level approach with a smart, connected device.

A little background on the company: 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.  How did this medical device OEM develop a strategy to address this competitive threat and regain market share of their testing consumables?

A proven approach to success in the digital economy:

Revise your product strategy to incorporate digital to reap the benefits of a competitive differentiator. 

A digital product strategy is really an information strategy.  How you leverage that information will transform your business model.  Packaging new physical and digital functions into your product allows you to generate valuable data to guide how you 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, like revenue streams from subscription services and sales of product use data.

How to implement a digital product strategy?

First, ask: What is important to your customers? A customer-centric strategy will keep your data explorations relevant and keep you from suffering “analysis paralysis.”

We all know that data can provide you with key insights that allow you to make better business decisions.  But do you know how to interpret that data to generate those insights?  Do you have a plan on how to leverage your data?  Are you gathering the right data to adjust the customer experience to what your target market expects?

The medical device OEM asked us to create with an actionable plan to better use their data to regain market share.  One of their dilemmas involved investigation of the current state of clinics and other stakeholders, the situations when they needed to run a test in the lab, and the sources of frustration for their customers when our client couldn’t fill a request because the medical device OEM’s supply chain reaction time was too slow.  We looked at the business value of addressing each customer need and identified a data source from their test system that supplied usage and availability data to develop our plan for mitigating the issue.

The opportunity here was to combine data in unique ways to find valuable answers to our questions.  Based on our investigation, we determined that the client could set a trigger for automatic resupply once their customers reached a certain low-stock threshold.  The information collected from the deployment of our digital product business model led us to our successful recommendations.  Currently, our client is evaluating additional opportunities to use their data.  These include identification of usage trends for new product development and pinpointing 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?

Establishing a use case for a new medical device, navigating through its quality and regulatory certification, and securing market and mind share for an unknown innovation is no simple feat.  New device development and launch requires a “systems thinking” approach to ensure each stage of the design, development, and manufacturing processes connects with and considers the concerns of other stages.  An effective systems-level approach necessitates coordination and collaboration across users and relies on a system of record providing a single source of information and truth for all those involved in development.

With our test tube client, 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 due to close communication between the client’s engineering, supply chain, IT, and marketing teams.  The platform stored and analyzed usage data from the client’s testing systems and plugged into the client’s ERP for customer and product inventory and ordering information, incorporating the learnings and decisions that came from the interactions between all stakeholder groups.  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, the client’s existing business systems and Logic PD’s platform components.  By integrating and considering all factors that influence the design and manufacturability of a device in the early stages of the development process, we reduced time-to-market, increased productivity, increased product quality, and lowered the total cost of the client’s New Product Introduction.

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

This manufacturer used their digital strategy to increase consumable sales through automated restocking of their testing tube consumable.  This service provided our client with a crucial point of differentiation that late arrivers to the market had not developed and could not provide.

By increasing communication touch points through the supply restock service, the client was able to increase the product’s “fit” with the customer need.  And in the clinic, never having to wait for the resupply shipment significantly boosted 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?

As you consider how to change your approach to manage the complexity of a digital solution, you will find a long list of firms that can help you meet the needs of your development process.  Look for those that have successfully implemented a systems-level strategy to help ensure you deliver a comprehensive solution.  When considering the current and future requirements to be competitive in your market, make sure to audit all stages of your development process and study how they integrate with and affect one another.  Doing so will help keep your product pipeline full and orders coming in hot, and will keep your company from ending up in – as we like to say in Minnesota – the frozen tundra!

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