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ERP Still Going Strong for Medical Manufacturer

High demand for gastrointestinal (GI) screening and intervention procedures resulted in the market experiencing a high growth rate prior to the recession, according to a new report from iData Research Inc., Vancouver, Canada. In 2011, the U.S. market for GI endoscopic devices was valued at nearly $1.7 billion, the report cites. And market expansion will only continue to grow, driven by procedural growth and higher GI disease incidences—which will result in growth returning to pre-recession levels by 2018.

As such, medical products manufacturers need to be prepared with the right onslaught of software tools to fuse their business processes together into one intuitive dashboard for time-efficient management.

In the field

One way that some medical manufacturers manage their operations—including their databases, transactions, invoices and payments in real-time without the need for manual processes—is through Enterprise Resource Planning (ERP) systems. As software continues its shift to a services model, so too will a number of ERP systems transition to the cloud. And for EndoChoice, a medical manufacturer which provides devices, diagnostics and procedural support for specialists treating a wide range of GI diseases, the trend to cloud-based services and technologies will only continue.

“Bandwidth and data storage out in the cloud has become so inexpensive that the trend will head even more in that direction,” confirmed Lou Malice, Chief Operating Officer, EndoChoice Inc., Atlanta. “More and more software and capabilities will head out to where all you really need to own is the capability to access the Internet. There are still a lot of people that have some fear around the idea of doing this within healthcare industries. But as time passes and people move forward and get more comfortable with this concept, they will understand that owning a lot of infrastructure and servers in their buildings and all the associated people that are required to maintain all those pieces of hardware—that model is going to slowly go away,” said Malice.

Launched in 2008, the Inc. 500 company grew to be the sixth fastest-growing healthcare company in the U.S. (EndoChoice was recognized by Inc. magazine in 2010 and 2011). This comes as no surprise with industry veteran Malice on board, who prior to EndoChoice served in another successful startup— American Breast Care LP, which he founded in 2003. And while the immediate implementation of San Mateo, Calif.-based NetSuite’s ERP system—which Malice utilized for American Breast Care—might have seemed the obvious choice to many, the developments in application service providers at the time steered him to explore his market options.

“I knew that when I would get my own startup, I would implement a very cost-effective way to get a high level of usability for users at a cost that we could afford,” Malice explained. “So I did my research at the time. We looked at Great Plains, Peachtree and some smaller accounting packages—and a lot of systems back in 2008 were still Citrix-client based type systems—they weren’t browser based. And so the usability wasn’t as easy as with NetSuite, which we chose because of all the different modules available and its capabilities to have a more state-of-the-art ERP system for a small company at a reasonable price.”

A promise to its customers

For NetSuite, the commitment to their clientele’s success continues to serve as a key factor to their growth and client base.

“We are committed to our customer’s success because they are using us as their business grows,” said Roman Bukary, General Manager, Manufacturing & Wholesale Distribution, NetSuite. “This is not marketing fluff—it’s the reality. No 2., NetSuite’s purchase price is part of their operating expense. It is not a one-time purchase that they make. It continues as part of their business so the more they grow, NetSuite is right there with them supporting their business. No. 3, you use it and deploy it to your people as you grow your operations. You don’t need to buy now for what you think you will need in three years time. When you grow, you are already there.”

The need to have a solution that grows as their company does was vital for EndoChoice, which factors in a lot of business growth through acquisitions. In addition to this, the medical provider recently opened a West Coast facility for distribution and manufacturing in Reno, Nev. And earlier this year, EndoChoice expanded its headquarters in suburban Atlanta by 70 percent—the third time in two years that the company had increased its square footage to keep up with its growth.

“We are going to continue to make sure that our platform has the extensions and the abilities for our customers to customize our solution even further,” confirmed Bukary. “We want to make sure that when Lou Malice reaches $10 billion in revenue, we are right there with him, serving him and making sure that we have the functionality, the platform, the scalability and the ecosystem of partners that he needs.”

To better manage their multiple entities and subsidiaries, EndoChoice most recently implemented NetSuite OneWorld, which helps them accelerate financial consolidation and visibility within. It also seamlessly handles different currencies, taxation rules and reporting requirements.

“We have several other initiatives under way as well,” continued Malice. “We are enhancing our vision into the sales pipeline by enforcing some scripting changes and some customization of the system that will allow us to see how we are forecasting customer’s future recurring business. A lot of what we do is not a one-time sale—it’s ongoing. Those added features will allow us better visibility into forecasting that pipeline.”

The company also implemented a new module—Demand Planning—which features several methods of looking back at past trends to project where demand is headed in the future. “Once that demand is ironed out, it will create a purchasing plan for us that allows us to go back to the sub-component level and project what we need to buy,” Malice added.

Embrace a new approach and overcome healthcare obstacles

Hospitals, urgent care centers and other healthcare providers must all embrace the digitization of processes to uncover potential profit opportunities, decrease spend and create a seamless data system that is accessible by healthcare professionals. And even medical manufacturers can benefit from the use of such technologies to focus more on product development.

“One of the things inside healthcare that is always a problem is outcome data,” said Malice. “When you get down to the clinical level, there is a lot of information that is being held right now on a local server. It’s a situation where too many things are disseminated down to a small database that is not accessible. Someday, it will all come together and we will have a much better understanding of what works and what doesn’t work within medicine. And once that data can go into a system that can be accumulated over the whole country, it’s going to be a different world.”

Note: Reference in the story above, Great Plains is known today as Microsoft Dynamics GP

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