A White Paper by Gregory Theyel, Ph.D, Director, Biomedical Manufacturing Network
Abstract – This paper examines biomedical traceability and its importance for improving development, production, and use of drugs and medical devices. Biomedical traceability means that the flow of material and information within a biomedical product manufacturing value chain can be followed from raw materials to patient outcomes. This paper uses data from a survey of biomedical manufacturing companies to show the gaps in the tracing of the flow of material and information within biomedical product manufacturing value chains, highlight the relationships between biomedical traceability and product and process innovation, and offer recommendations for research and advancing innovation.
Keywords – biomedical; manufacturing; traceability; value chain; innovation
Biomedical manufacturing traceability means that the flow of material and information within a biomedical product value chain can be followed from raw materials to patient outcomes. This is important because better traceability has the potential to help improve patient outcomes via innovation and optimize biomedical manufacturing in order to improve safety and quality and minimize waste. However, we are just beginning to use emerging technology to trace the flow of material and information within biomedical product value chains. Research is needed to improve our understanding of current practices and technologies for biomedical traceability and identify new opportunities for improvement and innovation. The following sections summarize background on biomedical traceability, present gaps in our understanding and ability to trace the flow of material and information within biomedical product manufacturing value chains, report findings from a survey of biomedical manufacturing companies’ traceability within their value chains, and offer recommendations for research and innovation for advancing our understanding.
Biomedical manufacturing traceability can save lives by helping identify which patients received a drug or medical device if a quality problem occurs. It can improve biomedical value chains by aiding production efficiency, quality assurance, and supply chain optimization. It can offer valuable information for efforts to address counterfeit products, sustainability, and product and process certification. In addition, biomedical traceability has the potential to enhance product and process innovation by enabling assessment and improvement of each link in drug or medical device value chains.
Biomedical manufacturing traceability entails several aspects, including a product, e.g. drug or medical device, and its recorded history, location, raw materials, processing, manufacturing, prescription, and customer/patient outcome, and all parties involved. It is also implied that this information is recorded and accessible. Traceability consists of the following elements: 1) the type, origin, and sequences of activities of a firm’s value chain, 2) the physical location of a product (tracking), and 3) measurements/data on the recorded history of the product value chain (tracing).
The value chain used in this research is developed based on discussions with biomedical industry executives and includes raw materials, processed components, production, prescription, and patient outcomes of the product (See Figure 1).
Biomedical Value Chain Activities
One of the earliest descriptions of traceability was offered by the International Organization for Standardization (ISO) as the ‘…ability to trace the history, application or location of an entity by means of recorded identifications’ . This definition of traceability is valuable because it emphasizes how traceability can be achieved ‘…by means of recorded identifications’ . This is critical because traceability is only possible if product and process information is systematically recorded. In addition, ‘…information received by a company on the raw material must be recorded and linked to the production batch, which in turn must be linked to the shipped products’ . This is necessary in order to retrieve information from raw materials, to processed components, to finished products, to patient outcomes.
Additional detail for understanding traceability includes that traceable units ‘…must be uniquely identified, that additional information must be linked to these units via the unique identification number, and that all transformations (split and joins) must be recorded’ . Transformations are points where the resources are mixed, transferred, added, and/or split up . The key to tracing a product internally and/or in value chains is identifying traceable units and recording transformation relationships .
Adding to the ISO definition and greater detail on recording detailed information is Cheng and Simmons  presenting traceability as ‘…the ability to retrace steps and verify that certain events have taken place’. Opara and Mazaud  go further and present traceability as: ‘…the collection, documentation, maintenance and application of information related to all processes in the supply chain in a manner that provides a guarantee to the consumer on the origin and life history of a product’. This paper uses the biomedical manufacturing traceability definition as the ability to follow the flow of material and information within a biomedical product value chain from raw materials to processed components, to production, to prescription, and to patient outcomes.
The objectives and benefits of biomedical traceability are clear, but there are distinct limitations of the available technology for implementing a traceability system that spans the value chain and addresses the elements described above. The traceability systems currently in use lack end-to-end, value chain data, are wrought with errors in records and overall inaccuracy, and suffer delays in getting essential data . An effective biomedical traceability system needs to focus on item-level traceability and continuously follow raw materials, processed components, production output, prescribed drugs and devices, and patient outcomes . One example of promising information technology for item-level traceability of medical devices is wireless transmitters operating in the so-called ISM band – Industrial Scientific and Medical). However, in order to accomplish better information specificity and breadth, technologies such as RFID, GPS, isotope analysis, and block chains need to be advanced further.
III. Study Methods
This paper uses data from a survey of biomedical manufacturing companies to identify gaps in the tracing of the flow of material and information within biomedical product value chains, analyze the relationships between biomedical traceability and product and process innovation, and offer recommendations for research and innovation for advancing our understanding. The population for the survey was 290 biomedical manufacturing companies in the San Francisco Bay Area including 93 biotechnology, 48 pharmaceutical, 67 medical device, and 82 medical equipment companies. This entire population was included in the study, reducing the possibility of sampling error. A mailed and online questionnaire had structured and closed-end questions. The survey questions were co-designed and pre-tested with academic and biomedical manufacturing people to minimize misunderstandings. The data gathering process started in October 2015 and was completed in December 2015. General managers or production directors at the 290 companies received a mailed questionnaire and two emails, resulting in 63 completed and useable questionnaires or a response rate of 21.7 percent.
Probability tests comparing the means of known characteristics of the responding and non-responding groups were used to test for non-response bias. Using χ2 tests, the proportion of respondents vs. the non-respondents was compared by number of employees (using ranges of 1-50, 51-100, etc.) and industry sector (biotechnology, pharmaceuticals, medical devices, medical equipment). There was no difference between the respondents and the population at a significance level of 0.05, and therefore, there is no evidence that responding companies are different from the non-responders in terms of key variables including, firm size and industry sector, supporting the claim there is no selection bias in the data.
The innovation performance measures for this study are based on the survey questions about the number of new products introduced and new processes implemented over the past three years. These are continuous variables ranging from 0 to infinity. These are two straightforward measures of innovation performance, though other measures that could be used in future studies include revenue and return on investment from innovation projects. In addition, respondents rated the degree their company has adopted the following five biomedical traceability activities along a scale of 1 (Not at all), 2 (Slight degree), 3 (Moderate degree), 4 (Large degree), and 5 (Great degree):
- Monitor the quality of the raw materials used to make its products
- Monitor the quality of the processed inputs used in its products
- Measure the manufacturing quality of its products
- Track the prescription of its products to patients
- Track the health outcomes of patients using its products
The control variables include firm size measured by the number of employees and biomedical industry sector.
- Study Findings
The descriptive statistics for the traceability variables show that biomedical companies are engaged in different types of traceability activities (see Table 1). The most common traceability activities are measuring manufacturing quality (an average response of 4.50 on a five-point scale), monitoring the quality of the raw materials (an average response of 4.29 on a five-point scale), and monitoring the quality of the processed inputs (an average response of 4.00 on a five-point scale). These activities are done to a large to great degree and are either internal to the firm or closely connected to its manufacturing. However, tracking the prescription of biomedical products and tracking the health outcomes of patients occur beyond the walls of the companies. These two activities occur not at all or to a slight degree. This is an important finding because it indicates that two critical parts of the biomedical value chain are not well connected to companies hindering their opportunities for reaping the full benefits of traceability. However, there are some exceptional companies that undertake traceability activities throughout their value chain, i.e. from raw materials through patient outcomes.
Biomedical Traceability Adoption
The relationships between the adoption of traceability activities, company characteristics, and innovation performance offer insight on the value of biomedical traceability. Table 2 shows the Spearman correlation results assessing these relationships. The two measures of innovation performance for this research are the number of new products introduced and the number of new processes implemented over the past three years, and they are likely to tell different stories. New products indicate expansion of a company’s market share and/or its search for new opportunities. These indicators highlight the importance of new introductions in order to grow and survive in the biomedical industry. New processes often indicate the strengthening of market position as a company improves its efficiency and lowers its’ per unit costs. This is often important for improving a company’s profitability.
Biomedical Traceability and Innovation Performanc
Table 2 shows how the adoption of biomedical traceability is related to companies’ innovation performance. The most notable results are the correlations between the number of new products a company has introduced over the past three years and two of the five traceability activities. The strongest relationships are between new product introduction and monitoring the quality of the raw materials used to make its products (0.58 and significant at 0.10) and tracking the health outcomes of patients using its products (0.50 and significant at 0.10). Tracking patient outcomes is a relatively rare activity to be adopted by biomedical companies. Therefore, the adoption of this traceability activity may well offer the leading firms a significant competitive advantage.
The size of the companies (as measured by the number of employees) is significantly correlated with two of the traceability activities – monitoring the quality of the processed inputs used in products and tracking the prescription of products to patients. This seems to imply that these aspects of traceability are the domains of large companies, which is often the case with management practices due to large companies having more resources at their disposal. This may mean using some of the less common biomedical traceability activities is cost prohibitive for smaller companies. There were no differences in correlation that could be attributed to sector, showing that the four sectors (biotechnology, pharmaceuticals, medical devices, and medical equipment) of the biomedical industry are currently at similar levels of innovation for biomedical traceability.
Two additional findings are noteworthy because of their lack of statistical significance. First, process innovation (the number of new processes implemented over the past three years) is not significantly correlated with any of the traceability activities, which is a noteworthy result. While companies in this study have implemented an average of 9.05 new processes, these do not appear to be linked to their insight gained from adopting traceability measures. The standard deviation for the number of process innovations is high at 16.92. Therefore, this innovation measure was converted to log values. Rerunning the Spearman correlation with log values for the process innovation measure resulted in no change to the levels of significant correlation with the traceability activities. Therefore, process innovation is not significantly related (at the level of 0.10) to the adoption of the traceability activities. This is a surprising result because an important potential benefit of biomedical traceability is process improvement. As discussed above, traceability should optimize inventory and logistics activities, improve the accuracy and timeliness of production process information, optimize production planning in order to minimize waste, and improve the use of raw materials. It is possible the focus of traceability has been primarily on legal accountability, and many companies are not taking full advantage of the potential operational benefits of biomedical traceability.
Biomedical traceability is an important concept because better traceability has the potential to help improve patient outcomes via innovation and optimize biomedical manufacturing in order to improve safety and quality and minimize waste. This research offers insight on the adoption of biomedical traceability activities and their relationship to companies’ product and process innovation. This paper shows the early stage of development to trace the flow of material and information within biomedical product value chains and also reports the nature and extent of adoption of traceability activities and their relationship to companies’ innovation performance.
Biomedical companies that have been part of this study are engaged in traceability within their value chains, but their efforts usually end after the manufacturing of their drugs or medical devices. What is missing is tracking the prescription of drugs and medical devices and the health outcomes of patients using these products. This is an important finding because companies are likely to be missing out on opportunities for innovation via the use of traceability. The essence of product design and improvement is insight on how customers are using a product and the outcomes from the use of a product. This insight can help a company improve how a product is used (in this case how a product is prescribed) and improve the product if the outcomes are not meeting customers’ expectations.
This research’s data analysis supports the link between traceability throughout the biomedical value chain and product innovation. Companies leading in new product introduction are also leaders in traceability of raw materials and tracking the health outcomes of patients using its products. An important finding of this research is that traceability is related to product innovation for biomedical companies.
Biomedical traceability can be the key to innovation. Being able to assess patient outcomes as a dependent variable can enable the assessment of the other aspects of a traceability system facilitating an understanding of the weakest links and opportunities for enhancement. For example, if a particular source of raw material or more targeted prescription lead to better patient outcomes, then this insight can help companies improve their products and processes. Insight on how customers are using a drug or medical device and what are the outcomes from the use of a product can offer critical insight for product and process improvement.
Further study is needed on many aspects of biomedical traceability discussed in this research. A more technical review of available technologies, their current functionality, and their prospects for future development and use would be insightful. Finally, more in depth, qualitative research with company managers would likely offer better understanding of the hurdles, opportunities, and benefits of the implementation of biomedical traceability.
Gregory Theyel, Ph.D., is the Director of Biomedical Manufacturing Network, which offers biomedical manufacturing business assistance, technology transfer and education to grow the biomedical industry cluster. Learn more about the Biomedical Manufacturing Network at www.biomedmfg.org.
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