ILLUMITI INNOVATION BLOG

Command and control: How SAP Business One can help manage inventory for Medical Device distributors

By: Bertus Jacobs
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Let’s face it: inventory doesn’t manage itself, especially when you’re selling products that can impact people’s health for better or worse. A robust enterprise resource planning (ERP) system should put you in control of your inventory, not three steps behind it. From quality control to superior reporting and analytics, SAP Business One delivers tools that take the guesswork out of product management decisions.

When you bring a product into your warehouse, you can’t make it available to the public until it goes through quality assurance. For example, latex gloves need testing to ensure that they’re free of holes, and a medical imaging device must be checked for mechanical and other flaws.

Business One helps manage the QA process with a virtual warehouse that locks in batches before they’re released to customers. Doing that lets you keep what’s under quality control from what has been quality cleared.

Without a virtual warehouse, as soon as you receive a product, it goes straight into inventory. There’s nothing to stop salespeople who aren’t in the physical warehouse from putting it on order to sell, whether it’s passed QA or not. Releasing untested devices or supplies could compromise your business by leaving you open to litigation from patients and customers.

A virtual warehouse also makes returns easier. If a product comes back to the physical warehouse because a buyer was unhappy with it, it doesn’t belong with the rest of your inventory – it should be isolated or quarantined. After going through an inspection, that item will be cleared for sale, or you must destroy or otherwise dispose of it. By flagging the product, a virtual warehouse eliminates the chance it will get resold without meeting that test.

Consignment inventory—goods you own that reside at a location outside your physical warehouse—is another application. If you sell spinal boards to a hospital, for instance, you might keep them there for emergency use. A virtual consignment warehouse can track products at multiple locations, down to the serial number and expiration date. The latter comes in handy for transferring items. Let’s say you have a batch of saline solution in Vancouver that’s getting close to expiration. With Business One, you can ship it to Calgary using a simple inventory transfer request, where it’s needed right away.

SAP has you covered on the reporting and analytics side, too. The typical medical devices and supplies business has many SKUs, each with multiple batches and serial numbers. You don’t need to know if all of your batches and serial numbers are in stock at every minute, but it’s important to understand what will expire this week so you can plan based on that information. Business One’s dashboards let you see the whole picture.

The same goes for forecasting. Many suppliers put minimum inventories on products in their warehouse, to guarantee that they have, say, 1,000 infusion pumps at all times. In most cases, though, customers with a static inventory level don’t need to buy up to that amount because they aren’t turning the product fast enough.

SAP’s intelligent forecasting examines historical data and sophisticated planning algorithms to see how much of a particular product you’re actually selling. If that item is trending down, Business One will recommend that you stock less, keeping your inventory values lower, and give you the option to override that call.

You can also use the system to determine if there’s seasonal demand for a product. The results are so accurate that one company SAP works with saved significant time by cancelling its manual forecasting. For companies that sell medical devices and supplies on consignment rather than own them, intelligent forecasting also puts suppliers at ease by offering proof of product demand.

Are you tired of running reports in QuickBooks or BusinessVision just to get basic information about a product or customer? Business One’s enterprise search function available with SAP HANA allows you to canvass the entire database in real time. For example, if a customer calls to check what their last order was, just type their phone number or email address into the search bar and drill down.

SAP offers many layers of reporting, starting with standard queries. From there, without any technical expertise, you can build more complex requests. The next level: interactive analysis that builds a link directly into Excel. If all else fails, you have access to Crystal Reports, which is embedded in the system and an SAP owned product.

Business One is also a powerful analytical tool for anyone who sells to wholesale distributors like McKesson. When you get retail data from those big players, you can plug it into SAP and compare it with your own information on sales to end users such as pharmacies. The results could prompt you to go the wholesale route with certain products.