ILLUMITI INNOVATION BLOG

Traceability key to ERP for Medical Device Companies

By: Bertus Jacobs
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As a distributor of medical devices and supplies, your customers trust you to deliver products that improve and even save people’s lives. On the other hand, if those products have any flaws, they could harm patients. That’s why it’s vital to be able to trace your inventory at all times, from a CT scanner to a box of surgical gloves. Without a high level of traceability, you have less control over product quality—and you could be exposing your business to unnecessary risks.

An enterprise resource planning (ERP) system offers visibility into inventory. In other words, what’s coming in, what’s in stock, what’s in transit, and what’s committed to customers? A robust ERP should do much more than that, though. True visibility into inventory means tracking a product and every single component making it up in real time, plus quick and easy access to its entire history.

SAP Business One gives you that power. For each product, it creates a unique identity, including details such as supplier, serial number and expiration date. Unlike batch processing systems, Business One also shows you exactly which items have moved, and where, throughout the course of the day. Having access to this information is essential in the medical device business, where many products get repackaged in bundles or resold. For distributors, it helps solve several problems.

First, Business One alerts you well in advance that a product expiration date is approaching. Armed with that knowledge, you can move the inventory in question before it’s too late. What’s coming due in the next two or three months? Good luck figuring that out with an Excel spreadsheet. Keeping tabs on expiration dates is especially important for medical device distributors, because disposing of potentially hazardous products like syringes can exceed the value of the items themselves.

Second, you stay on top of product recalls. When an invasive product such as an implant gets recalled, removing it from shelves rapidly is crucial. A manual audit to determine where the product came from, and what quantities ended up where, could take a week and your company could be hit with regulatory or non-compliance fines. Business One allows users to enter codes identifying all batches of an affected item. Within minutes, it can pinpoint the supplier of that product and how much of it is in your warehouse and in stores. Among other things, this allows you to inform customers of the recall without delay.

Third, with SAP, every product you sell has a detailed history. For each item, the system creates a log of the warranty and all transactions involving its serial number. Think of it as a customer equipment card that provides full traceability. Besides current location, this profile shows you how the product got to the warehouse and whether it left and came back for resale. When a returned item is resold, that transaction becomes part of the product history.

Having a customer equipment card also lets you plan service calls. If you sell an X-ray machine, for example, the information attached to the serial number could include a preventative maintenance schedule. For anyone selling larger devices, maintenance is a key source of recurring revenue.

Finally, SAP keeps track of smaller items that aren’t sold in batches. For instance, the Ontario government requires distributors to report how many syringes they sell each month via their various product lines. In other ERP systems, such reporting details might vanish without a trace, but SAP offers that level of granular insight into inventory.