Services for Life
Competing on service excellence in the medical device industry
Confronted by increasing customer demands for quality, faster response, higher service levels, stricter government regulations, and the escalating complexity of their global supply chains, medical device manufacturers that overlook the competitive potential and investment needs of their service business do so at their own peril. As the basis of competition in medical device manufacturing continues its shift towards service excellence – the ability to drive business performance through excellence in services – their competitiveness will increasingly be at risk. While aging demographics and emerging markets are creating a growing demand for more and better health care solutions, and technological advances create new innovation opportunities, mergers and acquisitions, cost pressures, and ever-more vigilant regulatory compliance requirements are forcing medical device manufacturers to rethink their overall business models and the impact of the service revolution. Our research suggests that to survive and prosper, medical device manufacturers must focus on effectively integrating and evolving corporate and service strategies and operations management to design and optimize the service business – supported by well-established business processes and maturing technologies. While the demands on the service business are great, the rewards for service excellence are even greater.
“None of the companies we have benchmarked so far indicated that they have been effective at building global tax efficiency into service network modeling.”
In developing a service strategy and business design, many companies struggle to build the foundation for service excellence. Few have sufficient insight into the barriers and opportunities for driving profitable growth through services, which makes it difficult, at best, to develop the right strategies, identify the right priorities and invest sufficiently in the service business.
Services have a special significance for medical device companies. With rapidly evolving technologies for improving medical device capabilities for sensing and communication, the potential for facilitating service (higher levels and lower cost) through better product design is becoming more and more important. Many of the medical device companies we benchmarked, however, are struggling to effectively integrate their servicing models with product design and lifecycle management.
Our research within the global medical device industry, and across other global manufacturing industries, suggests that the most forward-thinking companies – the service champions – are making strategic and operational investments in processes and technologies to differentiate them from their competition. These investments are driving continuous improvement in the operational and financial performance of their global service businesses.
Not all of this is trailblazing: companies can now adopt collaborative processes across the service supply chain, from suppliers to customers, which are well-documented, proven, and ready for implementation. In addition, information systems and tools for managing and executing the service and parts business are maturing rapidly and can now support most of the requirements of even the world’s largest and most complex service businesses. These systems are no longer the bottlenecks on the road to service excellence that they were just five or ten years ago. In fact, without sufficient technology support it will be increasingly difficult, if not impossible, to manage and optimize the service business as healthcare customer requirements increase and the service business grows more complex.
Continue reading about the global medical device industry in full-text report attached below.
About the research
Deloitte’s Services for Life research study delivers ideas, fact driven insights and innovations designed to improve organizational performance. The Global Life Sciences and Health Care Industry Practice of the member firms of Deloitte Touche Tohmatsu benchmarked the service businesses of more than 80 global manufacturers. In medical device manufacturing we have conducted in-depth benchmark case studies of the strategies, operations, tools and technologies being adopted to drive service excellence of some of the world’s largest medical device companies.
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