7 Reasons You Need More Than an ERP To Look After Your Kits

by Nicolas Orrego (Sales Engineer) & Pearl Wu (ERP Solutions Architect)

 

 

Sometimes, having kits is a lot like parenting—it isn’t easy—and the struggle is real! Kits can misbehave (like when they aren’t acting exactly how you expect them to). Don’t blame the kits, they just aren’t being properly managed.

 

Most of the time, your ERP is attempting to manage your kits. Has that ever turned out well for anyone yet?

Of course, you need your ERP, it’s the final source of truth. But it’s unfair to expect ERPs to handle the complexities of kit management when it’s not what they were designed to do. Even when functionality is custom-built into ERP’s, it doesn’t solve the root problem because it is built on the foundation of the ERP architecture—which still has all the foundational system constraints.

Before diving into the 7 reasons, you probably relate to what most medical device leaders experience when managing kits within an ERP:

No ifs, ands, or buts.

Any tool can maintain a BOM—but actual kits rarely operate in a perfect world. In reality, even when kits lose things, or they have something they shouldn’t, they never stop being your kits. Yet ERP-based kit management systems fail to recognize that kits can be imperfect. A true kitting solution will effectively manage exceptions.

No time, no energy. Sound familiar?

It’s easy to think you’ve got a good system when everything is going smoothly. But when the exceptions start coming, your ERP becomes overburdened with unnecessary transactions, and all your time and effort is spent trying to resolve issues introduced by ineffective kit management, rather than allowing most of the heavy lifting to be done through efficient functions and automated system actions that match your business processes.

Keep your kits from getting out of hand.

True kit management means you understand your kits’ potential, and even when they have missing or lost items—you always know what’s going on inside them.

An effective kit management system ensures every transaction is meaningful and frees up valuable time by resolving each issue efficiently and automatically—before it becomes a crisis.

ERPs are just not good with kits.

Seven (7) reasons why you can’t solely trust ERPs with your kits.

ERP Systems are wonderful tools. They are always needed and when they are used as designed they are powerful. Yet, they have limitations.

ERP systems are designed for a variety of industries and use generic terminology and processes.

They may include the minimum required information, but they cannot drive true medical device industry-specific functionality.

Using bolt-on or built-in order processing software tools to book and manage case events and kitted inventory is cumbersome, risky, and contributes to a significant waste of resources. Below are 7 major pain points regularly encountered when using ERP tools like this:

  1. Reallocation
  2. Component-Level Kit Management
  3. Instrument Tray Replenishment
  4. Receiving / Usage from unexpected locations
  5. Outbound Kit Serial Swap
  6. Expiration Management
  7. New Technology

 

1. Reallocation

Stop giving in to every single demand. Everyone will get their turn.

Instead of allocating inventory on demand, a more strategic approach assigns allocation at the optimal time.

Ideally, the allocation of inventory is automated based on pre-set sourcing profiles. Shipments should be optimized based on advanced sourcing algorithms. An efficient inventory management system uses detailed and accurate visibility to the reservation period, the required (not desired) fulfillment date and customized business logic to swiftly resolve any request conflicts.

This ensures customer requirements are met in the most efficient way.

However, traditional ATP is a reactionary model. A first-come-first-served response means inventory is often allocated too early, so more urgent requests are unable to be fulfilled. ERP software tools reallocate inventory based on preset criteria (delivery date, customer priority, etc.), and then when inventory needs reallocation, the tool is forced to review all orders every time, which is risky and very resource-intensive.

Doing the right things at the right time could avoid the costly process of reallocation almost entirely, but ERPs are simply not designed to be able to manage the process efficiently.

 

2. Component-Level Kit Management

Get control of your kits.

A true kit management system tracks kits and components independently, as well as together. Once a kit number is scanned, the system automatically knows which individual components are within that kit at that time. And when the kit moves, all components belonging to that kit number move together with it, so the system reflects reality.

Usage of items within a kit trigger replenishments back to that specific kit, components removed from a kit become loose items, and all movement, usage and replenishment history is captured and stored.

But parent kits and their components are not strongly linked in ERPs. ERP systems manage inventory only at either the component level (in which case kits are just a logical grouping), or at the kit level (in which case components are not tracked). ERPs aren’t built to handle both kit-level and component-level management.

A common workaround involves using BOMs/Equipment Lists/Handling Units to represent kits, linking them to components through customized tables. While this may resemble a kit management solution, it is not efficient because:

  1. Transferring inventory around to build the kits requires excessive system transactions.
  2. Physical changes to the contents of kit stock are not dynamically tracked (e.g. when components are removed, replenished, or consumed).
  3. Kits and components require different system processes based on location or inventory type (e.g. The system loses visibility to the contents of a kit once it goes out to the field).
  4. Kit and component stock records are not visible in regular inventory overview transactions.

ERP systems’ basic structure design is not flexible enough to reflect a kit’s various dynamic states in real life.

 

3. Instrument Tray Replenishment

Recognize individual value.

An instrument tray is an asset. Instrument materials issued to trays are ‘expensed’, and their value is transferred to the tray asset. Instruments within a tray have different inventory values than loose instruments. So if you could simply manage instrument quantities, there would be no impact to the inventory’s value. Whether within a tray or loose, new or used/refurbished—all instruments would be managed as individual inventory items.

However, in ERP systems, new and refurbished/used instruments must be separated into different plants, so proper tracking of instrument tray components as normal inventory items is not possible. Therefore ERP-based inventory management systems have inherent limitations from a finance perspective:

  • Used/refurbished instruments and new instruments can’t both be placed within the same plant.
  • Instrument components within a tray cannot be tracked in the same way as loose, unused instruments.
  • When an instrument tray is missing components, it cannot be marked as incomplete (since tray components are not tracked).
  • Missing, blunt, or damaged instrument replenishments are managed through separate transactions, often outside the system, so the ERP doesn’t know which specific tray to assign the replenishment to.

Management of kitted inventory within an ERP System leads to significant waste: financially, timewise, and resources-wise.

 

4. Receiving / Usage from Unexpected Locations

Do you know where your kits are (and where they’ve been)?

Due to human fallibility, inventory movements don’t always get updated in the system. But usage still needs to be captured at the location it occurred, and items should be received at the location they are returned.

Serialized inventory, lot tracking, and configurable, automated transfers/replenishments can make usage capture and receiving quick and easy. By automatically transferring stock, or reconciling lost inventory with matching found items, accuracy increases and the transaction time is minimized, speeding up the receiving process.

This is one example of many exceptions that ERP systems are not equipped to handle. Because they record loan and consignment inventory as separate stock types each tied to respective customer numbers, usage cannot be captured and returns cannot be received until the inventory location matches. Without lot tracking, determining the origination location of items captured during usage is impossible. In an ERP system, this leads to uninformed guessing, inaccurate data, and extraneous transactions to correct the inaccuracies introduced.

 

5. Outbound Kit Serial Swapping

Pick a kit, any kit

When a kit is picked during request fulfillment, the ERP system expects that kit’s serial number to precisely match the serial number of the kit allocated during sourcing—even if the kit is incomplete, or the contents are unverified.

However, it doesn’t always make sense to do that.

If the system could determine that a matching kit has been scanned in, and it automatically swapped the serials in the system (again, to reflect reality), this would speed up the picking process. But ERP systems are not that smart, or flexible.

 

6. Expiration Management

They’ll be gone before you know it

To maximize asset utilization, true stock availability should be based on expiration cutoff dates. And consignment loans should actively manage expiring inventory through automated actions.

The inventory allocation process in ERP systems, however, is unable to automatically manage expiring stock, so available quantity levels are inaccurate. Periodic reviews of consignment stock are then needed to replace expired inventory. Even simply viewing the remaining shelf life of inventory requires multiple transactions.

 

7. New Technology

Kits these days…

Unlike solutions that are either out-of-the-box (limited), or highly customized (non-scalable), a flexible partnership solution will constantly add new technologies that improve medical device sales and operations processes. This allows your solution to expand as it grows your business and maximizes the leading edge of technology.

Integrating new technology (RFID, instrument recognition, mobile capabilities, etc.) into an ERP system, however, usually requires significant development resources, and any solutions may not apply to all transactions due to existing ERP structure limitations or restrictions.

 

Meet Movemedical

We care for your kits as if they were our own!

Movemedical helps you solve all of the kitting challenges you will ever face. (Along with every aspect of field inventory management: consignment, loaner, scheduling, billing, usage capture, RFID, and more)

Movemedical is an ERP-integrated solution specifically designed for the medical device industry.

Built for user adoption with intuitive screen layouts and efficient workflows that significantly reduce training time, prevent user errors, and promote rapid adoption of full functionality.

Movemedical is the only fully integrated sales force effectiveness and comprehensive inventory management tool on the planet.

Several of the world’s largest enterprise medical device manufacturers in the industry are benefiting from the growth that comes from coordinating 6 million+ surgeries with efficient inventory optimization and effective field sales tool.

Now, it’s your turn…

 


 

Ready to optimize your inventory? Call us. 

Contact us: 858.956.0219 or info@movemedical.com

WATCH DEMO NOW (you can personalize it to your needs/wants) 

A good sales & inventory solution is worth its weight in gold, a fully integrated medical device specific operations and sales force effectiveness platform is priceless.

A complete sales & inventory tool should be able to or have:

  • Surgery Scheduling (+ Calendar)
  • Surgeon Preferences / Preference Cards
  • CRM / Case & Opportunity Management
  • Inventory Control & Visibility (All Locations, All Buckets)
  • Active Order Visibility
  • Opportunity/Lead Management
  • Customer/Account Management
  • Sales Metrics / Data (Reps, Leaders, Corporate)
  • Shipping Coordination (FedEx, UPS Integration)
  • Directed Picking & Put-away (Bin Mapped)
  • Auto Product Replenishment
  • Commission Calculations
  • Expiration Notifications
  • Direct Orders
  • Send & Receive Tools (Rep to Rep etc.)
  • Contract & List Pricing (Real-time)
  • Audit/Cycle Counts
  • Reporting & Billing
  • Image & File Sharing
  • Secure HIPAA Compliant Communication
  • Mobile Usage Capture
  • UDI Compliance
  • Barcode Scanning
  • RFID Integration & RFID Reconciling (HF/UHF)
  • ERP/CRM/EMR Integrations
  • Demand Planning Tools
  • Consignment/Loaner Management
  • Pluggable Workflows (Programmatic Integrations, Integrated Prediction Models)
  • Sourcing Matrix Tool
  • HIPAA Compliant Communication Platform (Messages, Calendar, Usage, Notes, Files)
  • Sourcing Optimization
  • Future Stock (Virtual Inventory Assigned to Future Events)
  • Atomic Inventory (UDI Ready, Piece Level Tracking, Serialized or Not)
  • Hybrid Kitting (Skinny Kits, Kit Management, Kit Versioning, Tracking)
  • Cross Boundary Workflows
  • Lost & Found (Automatic Cycle Counting )
  • Merger/Acquisition Integration
  • Par Management
  • Multi-Catalog Management
  • Loan Optimization (1 Loan Per Day)
  • Separate or Combined Sales & Operations Alignment
  • Cost-to-Serve Metrics
  • Turn Ratio Dashboards

Need to talk with someone? We understand. Call anytime.

phone: 858.956.0208
email: mm@movemedical.com
or visit: www.movemedical.com/product