The medical devices market in the US is expected to offer a wide range of opportunities for companies. However, companies need to integrate innovations, streamline their operations, and reduce costs to survive in the medical devices market. They also require category management process that would offer incremental category benefits and reduce costs.
The Business Problem
The client is one of the fastest growing medical devices companies in the United States with an annual revenue of over $5 billion. They were looking for opportunities to identify the typical levers that can be deployed to maximize the incremental value of the organization and support appropriate resourcing. However, the strong preference for a particular product category by buyers (doctors, nurses) was inhibiting the client’s capability to better understand the medical consumables category. The clinical difference and price difference were a few other reasons that were obstructing the organization’s growth prospects.
Improving the category management process is critical for companies to maximize the incremental value. Request a free proposal and access our service portfolio of category management solutions.
Solutions Offered and Client Journey
To compete with top companies and address concerns of stakeholders, the medical devices supplier decided to engage with SpendEdge. The team of analysts at SpendEdge conducted a continual analysis to keep the client ahead of trends, risks, demands and supply changes. They also gained in-depth insights into the demand structure for goods and services used by the company and recommended an 8 step category management process to avoid the wastage of money by the medical devices supplier. In addition, the experts also worked closely with suppliers to help the client continuously innovate and achieve better outcomes.
SpendEdge’s team focused on improving category management process and implementing cost down improvement initiatives to help the client achieve high profit margins. They enhanced supplier performance management and explored alternative mechanisms to verify current pricing against alternative suppliers. This helped them to create an environment that delivered the lowest long-term cost structure. The category managers further identified the lowest total cost procedures and centres of excellence for the medical devices supplier and helped them achieve the same outcome at lower costs.
Key Findings and Outcomes
The progression from the initial sourcing of the medical consumables category through various levels of category management helped the client to achieve savings of over 17% in a year. Furthermore, implementing an 8 step category management process helped the medical devices supplier to achieve an incremental cost reduction of 2-3 %. Also, the category management process ensured that savings are sustained and costs continue to reduce in the coming financial year.
Improved Visibility into Spending
The category management process enabled the medical devices supplier to establish a single point of contact within the organization and improved coordination. This helped the medical devices supplier to figure out the accuracy of the reported spend. Want to gain detailed insights, request for more information.
8 Step Category Management Process
The 8 step category management process is highly beneficial for firms and encompasses all important strategies. It helps businesses to establish their brand as a true leader in the category and differentiate from competitor companies.
Define Category: This step is the most crucial step as it defines the understanding of buyers. It identifies the criteria on which buyers make their decision while procuring medical devices.
Category Role: Role identifies the importance of the category to the buyers. There are nine commonly recognized categories in medical devices that can be identified according to their relevance in healthcare equipment.
Category Appraisal: Analyzing how these medical devices perform across different healthcare units is the next step in 8 the step category management process. It includes pricing and placement assessment apart from the affordability factor.
Category Scorecard: It assesses patient data and identifies devices critical for their health. Scorecard also helps companies in setting up measurable targets in terms of sales, volume, margins.
Category Strategies: Category strategies are outlined to meet the scorecard objectives. A framework suggesting for marketing is created and the supply of medical devices is ensured.
Category Tactics: Tactics involve specific actions needed to achieve the desired outcomes from set category strategies. Category tactics ensure that strategies are put on the right track.
Plan Implementation: The success of this 8 step category management process depends on the implementation of category plan as per the laid objectives. The plan involves a systematic schedule to achieve the objectives.
Performance Assessment: This is an on-going process that analyses, measures, and reviews the results. It helps medical companies refocus and improve existing electronic, surgical, and medical equipment.