Inventory Visibility: Driving the Evolution of theMedical Device Supply Chain

Stephen BradleyPresident and CEO

Medical Tracking Solutions Inc.

AGENDA

Dynamics Today’s supply chain The end state Why now? What do we get for our efforts Conclusion

Market Dynamics

BIG OPPORTUNITYSupply Chain is 40% the Cost of Sales in Medical Device

High Margin

High Growth

Low Pressure on Cost Structure

Historically

+=

Pricing Pressure

Increased Regulatory Pressure

Higher Customer Expectation

Increased Pressure on Cost Structure

Times have changed

++=

Inventory Deployment

Today’s Supply Chain

Sales recorded at usage or after by sales rep

Replenishment signaled with the hospital PO

Loaner systems support shortages and abnormal usage

Direct Sale

Trials and Medical Education

Consigned Model

Inventory Usage and Sale

Manufacturers Central Distribution Centers

Sales Rep CarsConsigned in Hospitals Distributor Offices

* Hospitalo Complex challenge for owned equipmento Consigned and case specific equipment is chaotic

Visibility

Today’s Supply Chain

* Control and visibility through finished goods warehouse with ERP* Very limited visibility past the doors of the warehouse

Today’s Supply Chain

“Where are we going?

Today’s Supply Chain

Product and Sales Information Flow

3PL

Selling

Supply Chain of the Future

Software Systems with End to End Connectivityo Manufacturer to hospital usageo Surgical scheduling that drives just in time deliveryo Consistent view of inventory usageo Data driven inventory stocking decision

Sales People Sell!

Inventory managed by supply chain professionalso Forward deployed inventory o Shared space warehouses – 3PLso Milk run replenishmento Loaner replenishment on the fly

Minimal Inventory in Hospitalso Inventory supports unplanned demand

Confluence of Market Needs and Capabilities

Cost pressures

More stringent regulatory environment

Hospitals under pressure to rationalize supply base and complexity

Software Now Supports the Business Needs

End to end field inventory visibility

Multi-level BOM’s

Integrated mobile technology/apps

Medical Device Companies are Opening to Outsourcing

3PLs are gaining knowledge of industry nuances

Companies are seeing reduction in complexity and cost

WHY NOW?

Visibility and Control =

Better Business

Safe and effective surgerieso Improved product traceabilityo Right product, right place, right

timeo Reduction of OR distractionso Less traffic in OR

Reduced costo Reduced inventory in the

systemo Reduced inventory write-offso Reduced cost of sellingo Reduced freight costs

Distractions/Issue reductiono Smoother product movemento Quicker replenishmento Reduction of surprises with clear

visibility

Increased revenueo Sales rep time freed up to sello Space taken by excess inventory can

be repurposed to generate revenueo Surgeons have fewer equipment

related cancelled surgeries, increased volume

We Want The Same

Thing!

Sales Rep

Hospitals

Medical Device MFG

Surgeons

Supply Chain Stakeholders

Conclusions

Medical device supply chain change is happening

These changes fundamentally improve our healthcare system

It supports the needs stakeholder from manufacturer to patient

Increased/focused capabilities of 3PL’s provides expert feet on the street

New software capability provides visibility ands connectivity across the supply chain

Any Questions?You can find me at

www.MedicalTracking.Com