Smart technologies can turn disorganized and overwhelming data into valuable business insights.
Amid this uncertain macro environment, MedTech manufacturers face increased revenue management challenges stemming from supply chain disruptions, inflation, demand fluctuations, and pricing complexities. Dealing with these problems is challenging—relying on spreadsheets makes it nearly impossible. There are better ways to manage your pricing and optimize revenue. Digital and Cloud Technology solutions enable visibility, automation through the entire process, and improve profitability.
Forecasting demand and setting correct pricing require extensive data. Traditional record-keeping methods store data in many locations and varying formats with information that may be incomplete or may contain errors. This scenario creates a challenge for business analytics experts creating demand forecasts and sales and accounting teams dealing with pricing and accruals.
The solution lies in analytics. Analytics can provide the necessary business intelligence to optimize revenue. The most efficient way to generate these insights: technology and automation.
Consider the following use cases:
Forecasting Demand
Complex pricing structures, lengthy capital equipment sales cycles, and siloed data make demand forecasting especially difficult for MedTech manufacturers. The current macro and supply chain issues compound the challenge. These issues are not expected to relent any time soon—40% of MedTech executives say supply chain disruptions will be a top factor affecting revenue in 2023.
Evaluating all these variables requires countless data points from a multitude of sources. Converting units to revenue requires specifics from hundreds of individual contracts, information that is time-consuming and expensive to gather manually. The data quantity and complexity render spreadsheets ineffective.
How can technology help? Revenue optimization solutions collect and organize data for easy access and analyze the information to provide a holistic view of the selling environment. Analytics and dashboards produce day-to-day visibility on operations, sales, and supply chains and identify trends to inform demand forecasting and production capabilities. Technology automates much of the forecasting process to save time and hassle while also improving the foundation for business decisions.
Setting Prices
Pricing is the most important lever for revenue and margin growth. Setting prices incorporates numerous factors, including manufacturing costs, margin targets, customer size, and order volume. As competition grows, payers are requiring more from manufacturers. To meet customer expectations, manufacturers are structuring more complex contracts. For example, preferred buyers — those with a high number of patients and higher reimbursement rates — might be offered pricing and other commercial terms otherwise not available, assuming they meet stipulations like order volume or market share targets. Prices differ based on product, amount, and compliance. Another customer will have a different but equally complex contract driven by the business outcomes that they are striving for.
Medical device manufacturers must account for all variables to develop pricing guidelines, contract templates, and profitability requirements for their sales team. Intelligent contract management solutions can quickly gather customer and market data to set standards and expectations.
Technology can also reduce the work required to generate request-for-proposal (RFP) responses, negotiate contracts, and provide discount and incentives checks and approvals. Software solutions automate much of the paperwork while enabling better collaboration and providing better measurement tools.
The agile contract management and enforcement process allows teams to innovate with contract design, creating leverage that helps close deals.
Invoicing
Contract nuances can be hard to capture in a spreadsheet and even more onerous to discern manually. Complicated pricing structures contribute to inaccurate invoicing—77% of surveyed medtech executives report instances of incorrect pricing. Charging the wrong price at the time of sale creates cascading impacts for the manufacturer and the customer. Money could get tied up in unpaid invoices or collections. Staff spend time resolving this operational issue instead of working on more strategic priorities. Customer relationships could suffer.
An effective price management tool heads off these issues by managing sales agreements in a smart database. The solution monitors contract clauses and assesses client compliance to identify correct pricing. Sales teams can easily access the necessary information and provide appropriate documentation necessary before invoicing. With the advanced notice, the customer can flag any issues without requiring a credit rebill. The software also manages and calculates rebates, which is challenging to do with a spreadsheet or other traditional methods.
In the end, addressing pricing and forecasting challenges boils down to collecting and managing necessary data and applying intelligent analytics. Smart technologies can turn disorganized and overwhelming data into valuable business insights. Rather than spending hours sorting through documents and spreadsheets and possibly overlooking an important detail, employees can drive business value with strategic tasks, and MedTech manufacturers can feel assured the right price is charged and the forecasting is accurate.
Suresh Kannan is the Chief Product Officer at Model N. He has over 25 years of combined experience in product development, product management, and general management. Suresh brings a unique depth of knowledge in the life sciences software space and is adept at managing product portfolios at varying levels of technical maturity.
