Medical Device Link.

Originally Published MX May/June 2006

BUSINESS NEWS

Medical equipment manufacturers are outpacing other industry sectors in targeting improved customer satisfaction and overall profitability through their postsales service operations, according to new research from consulting firm Aberdeen Group (Boston). Additionally, the study finds that medical manufacturers are leading other sectors in their adoption of technology, including deploying service parts planning and execution systems, performance reporting and analytics solutions, and mobile field service solutions.

The report, Industry Traction of Strategic Service Management, is based on surveys and interviews with executives at more than 600 enterprises in the high-tech, discrete and process manufacturing, telecommunications, utilities, and other industries. According to the report, 93% of medical equipment manufacturers surveyed are targeting improved customer satisfaction and retention through strategic service management. Also, 86% are looking to service management as a source of increased profits.

Taylor

"A well-coordinated service program assures customer satisfaction, which will drive customer equity and long-term retention," says Troy Taylor, vice president for worldwide customer technical services at Ortho-Clinical Diagnostics (Raritan, NJ), a Johnson & Johnson company. "Without the benefit of a well-coordinated program, such companies will struggle to do well. In companies where the capital sale is joined with some form of consumable, the financial outcome of highly effective service is less visible but equally important. In such cases, excellent service offerings and delivery may not drive operating profit as directly, but they certainly support the sale of the all-important consumable for customer lifetime value."

Gitt

"An effective aftermarket service program can add incremental service revenue, as well as identify product deficiencies, which in turn may help contain overall costs," says Warren M. Gitt, executive director of Hill-Rom Biomedical Services (Phoenix). Hill-Rom offers service for its own manufactured and rented products, and also operates as a third-party repair entity for companies that outsource their service functions. "End-users demand that critical medical equipment meet performance expectations, and both lives and financial performance may hang in the balance," says Gitt. "All else being equal, customers will buy from those companies that routinely provide dependable service."

According to the report, 38% of high-tech manufacturers, including medical device companies, have service executives at the senior vice president level or higher. The report finds that one area where leading service organizations are leveraging emerging technology is in the implementation of machine-to-machine systems, which enable companies to remotely monitor the status of equipment and determine when it will need servicing. The systems can also allow companies to conduct remote repairs, deploy technicians, and trigger parts orders. Commonly used among utility firms, machine-to-machine technology is increasingly being implemented by healthcare, life sciences, high-technology, manufacturing, and other sectors to improve postsales service operations, according to the report.

Wells

Such technological systems, however, can be expensive. "It is true that many of these capabilities involve large, multiyear investments in people and systems that simply aren't financially practical for a small company," says Stephanie Wells, vice president of marketing for the clinical laboratory division of Ortho-Clinical Diagnostics. "In these cases, the company must rely upon superior individual performances rather than technology. The unfortunate aspect of superior individual performances is that they tend to be less repeatable. With the technology investments available to a larger company, the superior results become more consistent."

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