Moving mountains: the medical device supply chain1 October 2012
Today’s global and borderless market for medical devices demands a sophisticated supply chain. Heiko Ansorge and Dr Philipp Schiegg of Siemens Healthcare tell Nic Paton how both efficiency and security can be safeguarded.
Today's medical devices are manufactured across the globe and can end up almost anywhere in the world. Manufacturers have complex regulatory, customs and excise, and security regulations to contend with, and logistics - for example, if cold chain storage
or end-to-end sterility is required - can be a further challenge.
In the healthcare environment, the implications of getting it wrong - of a hospital being left stranded because a key piece of kit or a device component is not working and its replacement has yet to arrive - can be significant.
Heiko Ansorge, global director of transportation management for the service business at Siemens Healthcare, argues that ensuring the relevant components and parts for devices make it to the right place at the right time in order to keep patient throughput functioning seamlessly comes down, in large part, to two things: reliability and responsiveness.
"Speed is very important," he says. "When you are talking about medical devices, there is, almost inevitably, a support and life-saving aspect. So there is a big responsibility that goes with that. Devices or their components need to be sent out as quickly as possible, especially when you are in a 'room-down' situation.
"For example, if in a hospital's radiology department a certain key component is not functioning in the way that it should, that can have a huge knock-on effect. The challenge is how to do that, how to ship the part and get the order dispatched in the most effective and time-efficient way possible."
The transportation of medical device components can mean anything from the smallest box to large-scale units. It may also mean close and ongoing coordination and communication with internal suppliers as well as external clients. How products, devices or components are stored, warehoused and picked for transportation is also be a key consideration.
Within Siemens Healthcare, for example, the warehousing side of the business, which comprises three core distribution hubs - the main one located close to Frankfurt Airport in Germany and complementary sites in Memphis, US, and Singapore - is split from the supply chain and transportation side.
"They are two separate processes, but both are on a global scale," says Ansorge. "We on the transport side very much rely on our warehouse colleagues who supply the pre-packaged components from the shelves of the warehouses.
"The service technicians on site in the hospital, who know exactly what is happening with the machines and what is required, inform their Siemens Healthcare country service centre very easily and directly via electronic PDA. From there, we receive the order directly at the warehouse, which then automatically gets processed until it is ready for dispatch. Therefore, probably around 90% of the business will not even touch the HQ order desk.
"Orders will often be routed via our electronic data interchange (EDI) system direct to the warehouse where the device or component is picked and packed," he continues. "One deliberate decision we have made is that the warehouse is not fully automated. If, for example, a part is far back on the shelf and you are reliant on a computerised or automated system, there may not be the same flexibility to pick the part, to know what to prioritise, and send it out via the next flight.
"You need to ensure that the picking process is flexible and responsive to the needs of the individual business, and then transport the part to the organisation in the fastest, most efficient way."
Speedy problem solving
A key innovation has been the Siemens Remote Service (SRS), which uses sophisticated medical engineering and information technology to ensure that services that formerly might have required on-site visits can now be offered via data transfer.
Through proactive monitoring of a hospital's system it is even possible to detect deviations before problems occur, rather than only reacting after the event when something has already gone wrong, explains Ansorge, although the SRS is, of course, backed by on-site service engineers.
"About 75% of the time, we can solve the problem within the first visit of the engineer on site," he says. "It just makes it that much easier to know which part is needed."
Along with increasing complexity, one growing supply chain challenge for components is the fact that devices are becoming more streamlined and often pre-engineered.
"What this means is that many components are becoming bigger," says Ansorge, "which, of course, from the perspective of the hospital is great because it is taking away the issue of having an array of small, individual devices. So it may be a question of simply changing or exchanging a complete computer unit.
"But from the transport perspective this can create a challenge in terms of weight and size. It may be that decisions have to be made on different transport measures."
Then there may be issues surrounding local regulation, and customs and excise requirements to consider, not to mention simply the robustness and viability of a country's transport and supply infrastructure, especially when transporting to or within developing economies.
"Shipment into one country may be easier than another because of the transport lines available," says Ansorge. "There may also be restrictions in terms of the flight networks available. Therefore, we have a dedicated team in place, which works out each individual network worldwide. We try to use a regional approach wherever possible, bundling volumes together and therefore getting economies of scale. It is also important to have people on the ground who know each area well.
"We have a very clear philosophy to look at transportation from an end-to-end perspective. It needs to be, where possible, end-to-end delivery, from the warehouse right through to the hospital's radiology department. In the UK, for example, we have recently finalised a transport network that does just this."
On top of this, there will normally be important security issues to consider, especially when it comes to transporting components via air. Whether or not the device or component is powered by lithium batteries - around which there are significant safety issues - is another important factor.
"Security is, of course, an issue and it gets more complex all the time," says Ansorge. "There is, in particular, an issue around the shipping of lithium batteries, especially in terms of shipping via air freight. This is becoming a real challenge. But it is simply about ensuring you are always meeting compliance in everything that is done around the world.
"Technology has transformed the supply chain. It has made everything so fast and seamless, and it allows us to look at things from end to end much more effectively. It gives much more visibility to the supply chain. We have multiple in-house systems that support the supply chain as well, of course, as the EDI system and the elements such as the Siemens Remote Service.
"There is also a 'track and trace' system that divides the supply chain into different milestones; for example when the order is forwarded to the picker, when it reaches the country hub and when it reaches the hospital itself," Ansorge continues. "We can monitor things extremely closely.
"Another important element when it comes to technology is the fact it allows us to make sure a part has arrived on time. With transportation and the supply chain, unexpected things can and do happen, but the least a customer should be able to expect is that we keep them informed, especially when something has gone wrong.
"We have delivery performing to expectation worldwide, which is a percentage in the high 90s and this is something we track closely. We have performance measures and systems that monitor delivery performance, the performance of the forwarders and so on. So if there is any reason for a delay or a failure, we can learn from it and get it right for next time."
A good impression
Dr Philipp Schiegg, director of material logistics business development for the service business at Siemens Healthcare, says the company is measured by how satisfied and loyal its customers are.
"We are just one piece in the whole process, but what we do can have a big influence on customer satisfaction. We need to provide a good service on the basis on what is required of us," he says. "Information, and how we provide customers with information, is therefore crucial. The only thing customers really want to know is when their system will be up and running again."
As to the future, security, communication, flexibility, and simply quality and reliability of service, are all likely to be key watchwords, argues Ansorge. "Security will, I expect, become an even bigger issue for the future," he says. "That is something we are going to have to deal with more and more. We are going to need to be prepared for additional screening processes and all other additional processes around air security - for example, for lithium batteries - and we will need to react to that.
"What can happen is that airport screening processes are not fully factored into the lead times for delivery to customers so that may well be something that becomes more of an issue going forward.
"Communication with customers is going to continue to be absolutely critical. We will need to continue to measure customer satisfaction very closely," he adds.
"The driver or the forwarder is often the last person the customer sees at the hospital, and that can colour their perception, so we need to ensure we continue to have high-quality and well-trained forwarders, suppliers and subcontractors."
This article was first published in our sister publication Medical Device Developments.