DEC 2016

Published by ORTHOWORLD Inc., BONEZONE delivers strategic sourcing & product commercialization solutions to orthopaedic device company decision makers and their partners.

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67 BONEZONE • December 2016 Lars Rohrberg Director of Product Management and Innovation, Cardinal Health Inventory Management Solutions We're going to see a greater recognition of manufacturers and providers that need each other to solve issues. The shared data between the two parties is going to help drive this. [A recent trend] is creating visibility to the data as to where the products are and also visibility into the actual true con- sumption, so that signal basically channels all the way back to the point of manufacture. Mr. Rohrberg expanded upon this thought during the panel's discussion on speeding the supply chain: You can't manage a supply chain unless you actually know where the items are. If you leverage machine-readable codes, whether barcodes or RFID, you make it possible for those on the front line—the sales people—to have an effi- cient way to handle inventory management on a single, uni- fied platform. That creates visibility for corporate, to show where the items are. Then when things go missing, because they do, you can know before the business day is over and can start tracking those things down. You can tell the sales rep, "I forgot; I transferred that in the hallway of the hospital, because there was an emergent case somewhere else." They catch up on these records. You can't catch up in December, because nobody will remember what happened; the item is just lost, and that's a write-off. That's where things have to go. What metric should manufacturers use to measure success? Mr. Rohrberg suggests: At the top of my list is inventory turns. Capture what's actually being used as opposed to what's being bought by the hospital—they could be the same, but often they're not; they're different metrics. Inventory turns is a driver. Especially orthopaedic inventory, in which product has an expiration date. How can you attract top supply chain talent? Use of the latest technology won't deliver an effective supply chain if the people component is missing. The right people make successful companies, and the most efficient supply chains will be run by leaders who employ out-of-the-box recruiting and thinking. Recruiting Mr. Hooker has noticed more companies pulling from outside of healthcare to boost their logistics teams. "They're being brought in to add a level of expertise and not to disrupt, but just to question the current process," he says. "They're asking innocent questions: Why do you do it this way? Do you do it this way because…?" He suggests opening recruitment to those outside of the medical device industry who can learn quickly, adapt to a complicated regulatory environment and utilize cre- ative and innovative ideas from other disciplines to make front-line decisions. "Also, personnel from the hospital supply chain may be interesting to bring to the manufacturer side," he says. "Understand your customer by recruiting supply chain folks from your customer base." Skillsets Device companies could benefit from better proj- ect management of upstream and downstream supply chains. Mr. Kwan pointed out that the largest orthopaedic manufacturers have created value chain analysis groups that work across different company functions. "More progressive and more competitive organizations are breaking down those barriers and managing projects in an agile project management perspective," he says. To be successful in the future, supply chain folks must extend their perspective beyond their buying or planning or warehouse expertise—whatever their main responsi- bilities. Consider understanding your sales colleagues' day to day. "Project management means enlightenment of the busi- ness and what happens to the product," he says. James Kwan Managing Director and Owner, OPM Consulting I agree with Robin. If you look at the automotive and even the electronics industry, one of the main points of com- petition for the Asian market, for Japan and China, had been their relationships—their networks within their supply chains. They would leverage and stream- line that and create consortiums among different component makers. It's a little bit harder to do in our free enterprise sys- tem in the U.S., but we probably have to do that, especially the smaller- to mid-sized companies, because the big five companies are dominating. They are leveraging third-party providers. [Smaller companies] almost need to have lever- age in terms of scale by having a consortium or some sort of network that works for orthopaedics. Even generics could go to some sort of heavily-regulated eBay or Amazon at some point for instrumentation and oth- er products. Stranger things have happened. There are disruptive trends and technologies out there that require both the contract manufacturers as well as the OEMs to be more nimble, and they have to learn from the electron- ics and automotive industries and how they dealt with and responded to changes.

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