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Frugal Engineering – Revitalizing the Medical Devices Life Cycle White Paper

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Frugal Engineering – Revitalizing the Medical Devices Life Cycle White Paper
Life Sciences
White Paper
Frugal Engineering –
Revitalizing the Medical Devices Life Cycle
About the Authors
Ashok Khanna
Global Head, Presales and Solutions, Engineering Industrial Services – Life Sciences
Ashok has over 19 years of industry experience, a significant majority of which involved
working in the fields of Healthcare, HiTech and Telecom in the USA. Ashok has built expertise
in management consulting, business development, developing strategic outsourcing
roadmaps, taking products from concept to commercialization, and process excellence.
Ashok has worked with leading medical device and pharmaceutical manufacturers in the
areas of New Product Development (NPD), Product Lifecycle Management, Manufacturing
Operations Management, R&D, Quality, Regulatory and Product Sustenance. Ashok has led
the development initiatives for multiple innovative product platform in the Healthcare
and Telecom industries, using best in class processes like stage gate method, VOC, QFD,
DFSS and PMBOK.
Souvik Sur
Offshore Delivery Manager, Engineering Industrial Services – Life Sciences
Souvik Sur has over seven years of industry experience in the field of medical device
product development. Souvik has proven expertise in New Product Development (NPD),
Value Engineering, Verification and Validation activities, and so on. He currently leads a
team involved in NPD, Engineering Analysis, Value Engineering, Sustenance Engineering,
CAPA Management and Resolution, Complaints Handling, Equipment Validation, CMM
programming and validation.
Raghavendra Rao H
Technology Lead - NPD & Sustenance, Engineering Industrial Services
Raghavendra has over 22 years of industry experience in Product Design, Design Methods,
Machine Design and CAD/CAM applications across the Heavy Engineering, Automotive,
Textile Machinery, Medical Device, Hi-Tech, Machine tools and Aerospace domains. He
works on NPD and leads the Value Engineering Center of Excellence.
In his current role, he supports business and delivery functions, mentors projects on
development and implementation best practices and guidelines related to NPD and
design methods, and supports several related business opportunities across engineering
domains. He also leads competency development initiatives in his areas of expertise.
Raghavendra has led several strategic projects at the onsite and offshore design centers of
various Automotive, Material Handling, Power generation systems and Life Sciences
clients of TCS
Recently published data from the National Health Interview Survey, 2012, revealed that while
over 26% of families in the United States experienced any financial burden of medical care,
16.5% struggled to pay their medical bills of which 8.9% were unable to pay at all.1
This is just one disturbing statistic in a case of many. The rising cost of healthcare across the
world has impacted not only individuals, but corporations offering healthcare benefits to
their employees as well. Contributing to this rising cost are the cost of developing new and
innovative products and providing care, as well as monitoring patients. The growing concern
on healthcare costs is frequently discussed even at the highest levels of national
governments. Cost effective medical devices are no longer a need for the bottom of the
pyramid. Integrating the Frugal Engineering mindset for new product development not only
in emerging markets, but also in developed economies, can help control costs and make
healthcare more affordable.
This white paper highlights why Frugal Engineering in the medical domain can be
instrumental in controlling healthcare expenses and addressing the numerous challenges
associated with taking products from developed countries to emerging markets. The paper
also explores the use of Frugal Engineering principles for marketed or existing products,
presents insights gained from experience and an example of surgical devices developed
based on this philosophy.
1 Centers for Disease Control and Prevention, http://www.cdc.gov/nchs/data/databriefs/db142.htm, Accessed Mar 2014
Contents
1. Introduction
7
1.1.
Reducing Costs Using Frugal Engineering
7
1.2.
Taking Products from Developed Countries to Emerging Markets
7
2. Optimizing the Product Lifecycle with Frugal Engineering
8
2.1.
Frugal Engineering for Marketed Products
8
2.2.
Frugal Engineering for New Product Development
9
3. Promote a Frugal Fngineering mindset
10
4. Case Study: Reusable Surgical Device for Emerging Markets
11
5. Conclusion
11
List of Abbreviations
FE
Frugal Engineering
VA
Value Analysis and/or Assessment
VE
Value Engineering
CTQ
Critical To Quality
NPD
New Product Development
VoC
Voice of Customers
LCC
Low Cost Country
OT
Operation Theatre
MNC
Multi-National Company
EU
European Union
DFM
Design for Manufacturability
BRIC
Brazil, Russia, India and China
COGS
Cost of Goods Sold
OEM
Original Equipment Manufacturer
GDP
Gross Domestic Product
BP
Blood Pressure
ECG
Electrocardiography
1. Introduction
The Frugal Engineering (FE) philosophy involves breaking up and rebuilding a cycle that culminates in a simpler,
more robust, easier-to-handle final process and cost-effective final product.
Rising costs have rendered healthcare less affordable even as new taxes on devices in the USA increase the Original
Equipment Manufacturers' (OEMs') cost of device development. To compensate for the increasing costs, system
inefficiencies need to be eliminated.
FE offers one such avenue for driving this improvement in healthcare. FE enables lower cost of product
development, lower Cost of Goods Sold (COGS) through Low Cost Country (LCC) sourcing, and a larger focus on the
unmet needs of the clients.
In the medical device industry, FE has been employed by manufacturers with far-reaching results, primarily
in emerging markets.
The patient bedside monitor is a classic example of the use of FE in device manufacturing. These monitors
are specially configured to cater to all the critical needs of patients. They are designed with modules for
multiple parameters (such as pulse rate, BP, ECG, and so on) that enable a well-managed monitoring system
in operation theatres and intensive care units. The key features of these devices are compact size, utility,
durability and good resolution, apart from their cost effectiveness and easy availability in the market.
Another example of the application of FE principles is the Jaipur Leg- low cost artificial leg that was
developed in Jaipur, India. The prosthetic is a rubber-based alternative to the composite carbon fiber variant.
It was designed to be inexpensive, water-resistant, and quick to manufacture and fit. The primary material
used was polyurethane, which is water-proof, increases the durability and enables convenience of use. The
choice of materials and mechanisms helped to mimic a real foot.
1.1 Reducing Costs Using Frugal Engineering
FE has been leveraged by several industries to reduce overheads and develop products that meet the critical-toquality requirements, by eliminating requirements that are not must-haves. High medical expenses have prompted
stakeholders to take a closer look at the opportunities to remove inefficiencies from the value chain and reduce the
cost of making medical devices available to the masses. It is time to bring in the Frugal mindset to product
development in the medical domain to make the best use of this practice, while serving the needs of patients
comprehensively.
1.2 Taking Products from Developed Countries to Emerging Markets
Most MNCs in the medical domain drive sharp business focus on developed regions such as the USA, the EU, and
Japan. Marketing teams from these organizations know these markets well, but are often unable to gain complete
understanding of emerging markets such as the BRIC nations. Attempting to sell products developed to meet the
7
needs of clients in the USA, the EU, and Japan to BRIC nations may fail if they are not correctly priced or fail to meet
the local patients' needs. Reducing prices erode the margins that MNCs enjoy while lower volumes, if the products
don't meet patients' need, could negatively affect profitability.
Medical device manufacturers face many challenges related to the increasing cost of medical devices, further
adding to the cost of healthcare. This cost of healthcare has become a significant portion of many countries' GDP.
Lowering the cost of medical devices can make advanced healthcare services more affordable to patients. Lower
device costs can be achieved by reducing the cost of existing products, as well as manufacturing low cost
alternatives. OEMs can continue to drive sustainable revenues in emerging markets as well as in developed regions.
Public health systems stand to benefit from this approach as well, since the optimal use of limited dollars can help
address the different medical needs of more patients, while containing overall healthcare expenses.
2. Optimizing the Product Lifecycle with Frugal Engineering
Frugal Engineering (FE) involves the breaking up and rebuilding cycle that culminates in a final product that equals
more expensive, complex equivalents. In recent times, Value Engineering (VE) has gained prominence as a
methodology adopted by manufacturers for developing innovative and cost-effective products. VE is a systematic
approach aimed at obtaining the desired functions of a product at minimum cost, providing maximum value while
maintaining or enhancing performance, quality, reliability, and safety, and adhering to environmental norms.
If one were to take a closer look, several similarities emerge between FE and VE. But then, there are also several vital
differences between them, which are manifested in the respective characteristics of each approach or
methodology. The combined synergies of both approaches should be harnessed to realize full benefits.
2.1. Frugal Engineering for Marketed Products
Given the synergies between FE and VE, the latter can serve as the ideal framework around which the ideas and
elements of FE can be built. It is indeed felt that this synergy can be exploited very effectively to re-engineer
existing or marketed products. Activities related to applying VE to marketed products that can be influenced by the
Frugal approach include:
n
Market segmentation, customer profiling, and target product costing
n
Material definitions and manufacturing processes consistent with the local needs
n
Estimation of Function Worth – the lowest cost of accomplishing a function
n
De-featuring by discontinuing a few related functions that may not be relevant to the target market
n
Identifying alternative means of function accomplishment based on highly innovative solutions from a frugal
standpoint
n
Evaluation of alternatives against parameters that promote the Frugal approach, while allotting higher
weightage to such parameters
8
VoC and Risk
Assessment
n
n
n
Part standardization and rationalization
LCC sourcing
Obsolescence
Management
Frugal Engineering approach based on
Value Engineering methodology
Ideation & Concept
Generation
Design and
Development
Post Market
Medical
Device
Lifecycle
Verification and
Validation
Launch
Manufacturing
Transfer
Regulatory and
Clinical Trials
Figure 1: Cost Reduction using Frugal Engineering for Marketed Products
2.2 Frugal Engineering for New Product Development
Earlier sections of this paper offer recommendations on how FE and VE can be synergized to enhance the value of
existing products. The benefits of following Frugal Engineering to develop products in emerging markets are well
acknowledged. Developed markets can also benefit by applying the Frugal approach to areas of development that
encompass the total product lifecycle, including initial investigation and planning, design, manufacturing, sourcing,
operation, and sustenance. Indeed, many of the approaches discussed in the ‘Value Engineering as the framework
for Frugal Engineering’ can also apply to a product development scenario.
VoC and Risk
Assessment
Obsolescence
Management
Ideation & Concept
Generation
n
n
n
n
Design and
Development
Post Market
Medical
Device
Lifecycle
n
n
n
n
Verification and
Validation
Launch
n
n
Manufacturing
Transfer
Regulatory and
Clinical Trials
n
Market segmentation
VoC analysis
Cost targets
Cost-effective materials (alternatives,
polymeric equivalents)
Decision on de-featuring
Manual method of product - functioning.
in place of automation / fuzzy logic
Part standardization and rationalization
feature re-use across product sub-systems
and families
”Not-so-popular” features as option/variant
Achieving comparable functionality with
least number of features.
Eliminate hi-costing but redundant features
Selection of “Frugal” attributes for validation
with higher weightage.
Figure 2: Optimizing Cost of New Product Development using Frugal Engineering
9
3. Promote a Frugal Engineering Mindset
Regardless of the product development scenario and the market to which it is applied, Frugal Engineering is the
key to creating value by controlling costs and developing innovative solutions.
Core teams should be formally trained or educated in the FE discipline. Starting at the front end of product
development, marketing should clearly identify Critical to Quality (CTQ) requirements while gathering important
Voice of Customers (VoC) insights. Linking this VoC learning to unmet customer needs ensures that customer wants
can be differentiated and addressed separately. Segmenting the market, selecting the target segments and
positioning Frugal Engineered products is the responsibility of marketing teams, and should be done before
product development commences.
At the very early stages of the product development itself, a decision needs to be made on implementing only those
features and functionality that are required and valued in the target market. 'Cost avoidance' being a key tenet of FE,
this would also preempt huge capital investments on the associated resource skills and specialized processes.
Design and development can be carried out at a low cost location that offers abundant talent with minimal language
and cultural barriers. During the design phase, the engineering team can look at adapting the design to the
manufacturing geography and also identify cost effective components and materials sourced extensively from LCC
Aggressive product cost targets, another key requirement of FE, can be met by the engineering teams focusing on
the principles of VE and DFM, through part and/or feature level standardizations, part cost revisits, and target costing.
Simplification of manufacturing and downstream processes can be achieved through simplified designs with
reduced part count, compacting design, and metal-plastic conversion which can also result in lower product
weight and space claim. Adopting principles of lean manufacturing can also promote FE through manufacturing
process optimization.
Core teams also need to assess manufacturing at the nearest low cost plant. The cost of logistics should be built
into the business case for the final choice of such a location.
10
4. Case Study: Reusable Surgical Device for
Emerging Markets
An innovative range of reusable surgical devices was designed and developed by a leading medical device
manufacturer for the Asia Pacific region and other developing markets. The aim was to develop a device for a
market segment which uses mostly low-cost, good-quality products due to cost pressure. This product was
designed to replicate the high performance and reliability standards that exist in the global market. Considerations
specific to this emerging market, such as decisions on reusability, limited reuse, firing mechanisms, adaptation to
local OTs, and human engineering for the Asian market, were accounted for in the design.
Frugal Engineering influenced this product development initiative on several counts:
n
Emerging markets were chosen as the target segment.
n
VoC insights were collected from emerging market customers.
n
Product requirement specifications were created to capture emerging market needs and avoid needless costs.
n
Innovative mechanisms were designed to make the products easy to clean and sterilize between reuses.
n
Ergonomic studies and human engineering tests were conducted for the emerging market
n
Cost reduction to meet local market's price point need while maintaining quality
n
Localize the product to meet Emerging market needs
This was not simply an attempt at low cost engineering. This range of products was designed and developed for
emerging markets specifically to address the billions of consumers at the bottom of the pyramid. Emerging market
customers have unique needs which are usually not fully addressed by developed market products.
The customized surgical devices were launched in emerging markets ahead of schedule, and ahead of the
competition. FE enabled the successful development of this cost effective and market-appropriate range of
reusable surgical devices without compromising performance, quality, or reliability. More than 90 percent savings
were achieved by using the FE-based devices, compared to the use of older products from developed countries.
5. Conclusion
Measured results indicate that up to 90 percent savings can be achieved using Frugal Engineering principles in the
medical domain. Although this may not be achievable for all medical products, significant savings can be realized for a
number of medical devices. Optimizing every step of the value chain helps reduce the burden of healthcare expenses
on patients, OEMS, governments, and tax payers. Frugal Engineering can significantly contribute towards this effort.
By adopting Frugal Engineering for product development, OEMs can benefit from lower product development
costs. The resulting savings can be used to compensate for other cost contributors such as inflation, labor cost,
government taxes and others, while boosting profitability and helping fund future programs. Part of the savings
can also be shared with patients and taxpayers to ease the burden of healthcare expenses.
11
About TCS Life Sciences
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customers have the tools and innovative solutions they need to solve complex business challenges.
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