Cook Medical became the first medical device company in Korea to implement RFID (Radio Frequency Identification) technology for all consigned products to achieve greater efficiency and traceability in inventory management.
RFID (Radio Frequency Identification) technology, which is a wireless non-contact use of radio frequency to read and capture information stored in a tag, has become increasingly common in commercial use. The advancement in tag design and associated decrease in cost have fuelled more companies into adopting this powerful technology into different stages of production.
In Korea, most of the medical device companies enter into consignment arrangements with hospitals. Also known as a ‘loan closet’, consignment rooms within hospitals are filled up with medical devices supplied by different medical device companies. Consignment arrangements offer hospitals great flexibility and are effective in controlling product supply, since it allows hospital to take physical possession of the products but does not legally purchase it until it is used in an operation.
Hospitals will then provide suppliers with an inventory balance on a monthly basis. The balance is drawn based on number of used products, which are usually categorized under a broad product family name, making it impossible to track the size of products being used. Unless, an employee is sent to the hospital to manually count and record products left in the consignment room.
‘Managing consigned inventory is a real challenge for us’, said Yongkwan Kim, currently distribution channel management manager in Cook Medical Korea. ‘It was not uncommon for instances such as product mix-up, discrepancy in number of products between manual count and system record, and sometimes product loss, to occur’.
Before the adoption of RFID technology, Cook Korea used the conventional method of scanning product barcodes one by one when performing manual counts. They soon discovered that this labour-intensive process was time consuming and unsustainable.
‘Some hospitals we serve have more than 20 consignment rooms, scanning the barcode of each product on the shelves can take more than 2 hours’, said Yongkwan. ‘When an emergency operation cuts in, our people might have to run amidst the scanning, and all previous efforts were wasted’.
In the face of these deep-rooted problems, Cook Medical Korea took a proactive approach. Initiated by Ross Harvey, the vice president of global customer support and delivery department, Cook Medical Korea partnered with Korea-based Hanmi Healthcare, who is experienced in automating production and supply chain processes with RFID technology, to tailor a RFID solution to meet challenges faced by medical device companies in consignment stock management.
Watch this video to see how the solution delivered higher visibility, accuracy and efficiency in Cook’s inventory taking:
‘Many other companies in the healthcare industry are still on the fence about RFID, but Cook Medical already took the leap’, said Yongkwan. ‘We are willing to invest a seemingly big chunk of time and effort during the initial solution development stage, in exchange for a more competitive and streamlined inventory management process that will benefit our company for many years to come’.
The increased reliability and traceability of stocks and the complete elimination of manual counting have together proved that: the effort was worth it.
Technology is always evolving. Cook Medical Korea will continue its cooperation with Hanmi Healthcare to improve and deliver an agile RFID solution that optimizes both companies’ supply chain efficiency when serving hospitals, and hence physicians and patients.