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Optimizing Field Inventory Management in a Dynamic Orthopedic Implant Environment

Things to consider and tips for orthopedic implant manufacturers in navigating demand and supply, especially for implants used in elective surgeries.

By: Ethan Lauer

Founder and CEO of ImplantBase

The economic pressures in the implant industry have been steadily mounting and compounding. Overall, downward pricing pressure in healthcare as a result of ACA, along with media and political/activist attention, is a daily reality. Evolving sales models now force OEMs and distributors to juggle hybrid teams and complex global channels. Changes in surgical techniques and venues are forcing orthopedic implant companies to adapt inventory and supply-chain practices (e.g., less storage/sterilization space, tighter JIT demands, increased volumes, and pace, etc.).
 
In any economic climate, field inventory management poses significant challenges for any manufacturer. However, the stakes are particularly high for orthopedic implant manufacturers as they navigate the volatility of demand and supply, especially for implants used in elective surgeries.

The High Cost of Inventory Mismanagement

The repercussions of inventory mismanagement are not just theoretical. Annually, $163 billion worth of supply chain inventory goes to waste due to factors like expiry or overproduction. For orthopedic implant manufacturers, this isn’t just about financial losses; it’s about the sustainability of their operations and the responsibility they hold in supporting healthcare systems.

The Rise of Ambulatory Surgery Centers

30% of knee and hip replacements are now performed in hospital outpatient departments and ambulatory surgery centers (ASCs), and that number is growing, compared to just 1% before the pandemic. 
 
These ASCs have a much smaller footprint, so efficiently getting implants in and out is important to these facilities. Feeding manufacturers’ sales reps and operations people with the information on where things are and what needs to be moved in near real-time is a key aspect of working with these facilities to ensure just-in-time implant inventory management.

Customers/Distributors/OEMs are Scrutinizing Old Practices to Find New Efficiencies

The lessons from early adopters are clear, and the evidence in support of modernizing your inventory and sales management processes continues to mount. Real-time visibility is the key to giving all stakeholders the confidence they need to give up old systems and embrace change. A quick summary of the issues that plague today’s device OEMs and distributors reveals: the costs/dangers of poor visibility and the promises being delivered today by organizations that have transformed their business practices, including: keeping headcounts stable, improving cash flow, maximizing inventory efficiency, and improving strategic decision-making/agility.

Workforce Shortfalls will Favor Organizations that can Grow Without Increasing Headcount

The headlines in today’s HR and healthcare journals all point to the crisis in attracting and retaining great workers. The “sellers’ market” in hiring has driven up salaries and commissions and is being leveraged by top performers in device sales and distribution as well. They want to make their daily lives easier—while maximizing their earning potential through efficiencies. This younger, tech-native salesforce understands the benefits offered by today’s best solutions and stands ready to adopt the ones that truly suit their needs. The best solutions are provided by those who have taken a customer-centric approach to development. OEMs who rely on distributors may find that they already have a platform ready for you to coordinate with.

Preparing for the Future

To combat these challenges, implant manufacturers must prioritize enhancing their inventory visibility. Accurate visibility of inventory levels and usage patterns can help manufacturers anticipate sales trends and adjust production accordingly. This proactive approach reduces the reliance on guesswork and helps in making informed decisions that can save millions in potential losses.

Five Actionable Tips for Orthopedic Implant Manufacturers

  1. Leverage Technology: Implement advanced inventory management systems that provide real-time data and analytics. This technology can forecast demand more accurately, helping to adjust inventory levels preemptively.
  2. Regular Review Processes: Establish routine checks to assess inventory health, identifying items that are at risk of expiring or becoming obsolete. This can facilitate more timely redistribution or promotional strategies to mitigate losses.
  3. Collaborate with Healthcare Providers: Develop partnerships with hospitals and clinics to gain direct insights into their inventory needs and usage patterns. This collaboration can lead to more tailored inventory solutions that benefit both manufacturers and healthcare providers.
  4. Educate Sales and Distribution Teams: Ensure that all teams understand the financial and operational impacts of inventory mismanagement. Training in predictive analytics and market trends can empower these teams to make better decisions in the field.
  5. Sustainable Practices: Focus on sustainability by reducing overproduction and managing returns efficiently. These practices not only cut costs but also enhance the company’s reputation in an increasingly environmentally conscious market.

Conclusion

As the economic landscape continues to evolve, orthopedic implant manufacturers must stay vigilant and adaptable in their inventory management practices. Learning from past disruptions (the pandemic, the rise of ASCs, etc.), and employing advanced, data-driven tools and strategies can shield manufacturers from significant losses and position them for sustained success in a competitive market.

Ethan Lauer is the founder and CEO of ImplantBase, bringing 22 years of experience as a medical device sales and operations veteran to the company. He began his career as a U.S. Army logistics officer, where his interest in automation was sparked. Today, he focuses on ImplantBase’s company growth and product development. He is a 1993 graduate of Florida State University with a Bachelor of Science in Business Management.

 

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