Originally Published MDDI November 2002
NEWS & ANALYSIS
For Medical Manufacturers, Timing Is Right for RF Implementation |
| This RF-network productivity tool is part of PEAK's PDT 6800 series. |
Now is the time for medical device manufacturers to embrace wireless technology. So claims one industry executive whose firm recently made the switch to a radio-frequency (RF) network from a traditional paper-based system. Hollister Inc., an Illinois-based, employee-owned manufacturer of ostomy-care, continence-care, and other products, has seen a 6% reduction in distribution costs and a 9% reduction in labor costs since implementing an RF network developed by PEAK Technologies (Columbia, MD).
Craig Hourigan, manager of supply-chain logistics at Hollister, believes the time is right for smaller manufacturing companies to move from paper-based data collection and inventory management systems to automated, wireless ones. He admits the application of wireless or RF technology in a warehouse environment is not something new for large manufacturers of consumer goods. However, the technology is just now starting to trickle down to smaller companies and different industries. "It's pretty much a proven technology at this point, and for [Hollister] it was our first application of it," he says.
Hourigan believes paper-based data-management and distribution systems are still fairly common among medical device manufacturers, especially the smaller companies. "The impression that I have, at least about the market sector that Hollister participates in, is that the supply-chain practice is rather undeveloped," he says. "So I don't suspect that there are many companies using RF technology. Certainly, a lot of our customers aren't."
Connie Green, enterprise requirements planning product director for PEAK Technologies, agrees. "I would say the majority of manufacturers in the medical device industry are paper-based. They are lagging behind in the medical device industry—we see it as about a five-year lag." She adds, "It's a big movement for the medical suppliers and manufacturers to have more visibility through the supply chain, to reduce cost. We're seeing that in the medical device industry especially. That's why it's our largest-growing division right now." In fact, the healthcare industry—encompassing both device manufacturers and pharmaceutical companies—is PEAK's largest customer this year.
The specific network Hollister has purchased operates via handheld scanning terminals, bar coded "license plates" for pallets, and an automatic inventory-replenishment system. The company has seen an impressive 40% reduction in shippable backlog as a result of the improved speed of product receipt, put-away, and replenishment the RF system affords.
The new network isn't without its downsides, however. Hourigan points out that when a company makes the dramatic leap from paper to advanced technology, operations "become more and more reliant upon the technology." And of course, when a company becomes so reliant on a technology, trouble ensues when that technology fails. "We've had a couple of periods when we needed to go back and reevaluate some of the things we had done in terms of the way we set up the programming code," Hourigan says, "and how to tune it to make it a little more efficient. And during the times when response-time problems have popped up, we've had to go back to PEAK and collaborate on potential opportunities for 'de-bottling' the process to make it go a little quicker."
Despite these problems, Hollister is enthusiastic about its investment in wireless technology. The employees who are using the new system "love it," according to Hourigan. And the cost-reduction figures speak for themselves. Hourigan offers the following bit of advice to others considering moving from paper to RF technology: "It's time to embrace it. It's a stable, reliable hardware and software process, and it's proven. A lot of companies can get a lot of bang for their buck out of the investment."
Copyright ©2002 Medical Device & Diagnostic Industry
