Since its debut in the late 1980s (Baxter Healthcare Corp.’s Sure-Med system dawned in 1989) automated supply cabinet technology has undergone quite a few makeovers, particularly on the marketing side.

The technology itself, by and large, remains relatively the same, save for a number of contemporary styling updates (among them, smoother lines and rounded edges) and functional additions. What began as a tool to manage and reduce drug theft and waste expanded into handling medical and surgical supplies within a few years. One company even launched a version of the technology sans the physical cabinets to enable cost-conscious customers to use their own existing storage products in an open-shelving format. While the competition scoffed, that company developed a loyal following that inspired the competition to unveil their own "open" formats within a decade.

During the healthcare reform-addled mid-1990s, manufacturers repositioned the technology as a cost efficiency tool, focused on inventory management. Then it became a data management tool and finally a patient safety tool.

Today, the handful of manufacturers in the automated supply cabinet market segment offer both closed technology (computer-equipped cabinets) and open technology (buttons, keypads and wands only) to facilitate PAR level inventory management, track data, reduce theft and waste and ensure patient safety. Because of this development the market segment may be better classified as "automated supply management technology."

When you call on customers what kinds of improvements do they suggest to you to make the product(s) more valuable? Some companies rely on this feedback for research and development and future product updates and upgrades. By the same token, when you call on potential customers, what causes them to hesitate and possibly resist becoming an actual customer? How do you answer their questions and/or counter their impressions?

Here’s what executives from the leading closed and open automated supply management systems had to say.

Although the main influence in all of our solutions has always been ‘ease of use,’ the hospitals still seek even easier solutions with the hope that, eventually, nursing will one day be completely out of the inventory replenishment and/or charging business. In addition, today’s progressive hospitals want solutions/technologies and equipment that capture and transmit data without the confines or limitations of walls or cabinets. They want the flexibility of a company to offer a semi-custom solution for every department in the hospital.

The other area of the supply chain in which materials managers are seeking improvement solutions (wish list) is the actual restocking or replenishment of the floors. Point-of-use solutions have greatly reduced the time spent on the reorder process and have all but eliminated the daily assessments of the par level areas. The hospitals now want to reduce the time spent by materials staff sorting and stocking the floors. The open bins have improved this process and the time required to replenish, but there are more improvements that can be made.

What causes hesitation or resistance? Besides the usual materials management roadblocks that include (but are not limited to) the timing of their budgets in relation to a possible implementation schedule; the hospital’s Information Systems department’s priorities and involvement; and the long-standing C-suite impression that materials management departments do not generate revenue, so why do they need new systems, the main hesitation by materials managers that is actually within their control is the gathering of accurate data and actual dollar savings that can be realized. This is the only data that should be used to support a decision, and it will provide them the confidence to move forward.

Materials managers need to be able to show dollars (FTE salary/fringe benefits eliminated, true inventory reductions, and elimination of other systems) not just a salesman’s pitch that ‘...a hospital your size should save ‘x’ amount and should reduce utilization by ‘x’ amount.’ What is the process costing now and what will it cost with the new system? If they can justify it with that number, the ‘what-if’ savings become value-added.

It is safe to say that over the past 10 years, hospitals and materials managers have become more savvy and have come to realize that in 90 percent of the hospital scenarios, the two schools of thought – locked cabinets or open bins – offer the same level of semi-restrictiveness. Put the bins behind a closed, supply room door with a code or card swipe, and there is no difference.

Existing closed-cabinet, point-of-use users have also come to the not so surprising realization that when their five-year rentals are up, they are facing another five-year commitment (never-ending cost).

They can make a big impression on their administration by reducing their next five-year supply chain automation costs by more than 50 percent, by switching to an ‘open bin behind closed doors’ technology. They maintain point-of-use automation and data collection with the same functionality and level of efficiency.

Michael Carpenter, spaceTRAX vice president, InnerSpace Corp., Grand Rapids, MI

Our customers want innovative solutions that not only lower costs and increase productivity – they want solutions that allow them to achieve these outcomes with virtually no effort. Fortunately for our customers, that is what we do. We go beyond the delivery of tools and solutions – we provide data and analysis that drive savings at every level. We are a partner, not a vendor.

If automated supply cabinets were new on the market today, we don’t believe they would gain the acceptance they currently enjoy. The market has shifted to lower-cost solutions that create greater value with significantly lower upfront and ongoing cost structures. It will be very difficult for the automated supply cabinet vendors to adopt a lower-cost delivery model. InnerSpace’s Datel cabinets are installed in over 70 percent of the hospitals in the U.S. That installed base, combined with spaceTRAX and our new RFID technology, represents the next generation of low-cost, high-value, supply management solutions.

Customer feedback is a critical prerequisite to our product development process. Feedback generally falls into two categories: System capabilities (connectivity, communication, etc.) and product improvement (i.e., user interface, features and benefits, etc.). Most feedback relates to software enhancements and a much
smaller percentage to the hardware. Many times our customers challenge us to help them expand their breadth of control over inventory.

The concept of controlling inventory through automation can be applied to many types of hospital resources. Some of our customers suggested that we look at managing scrubs, and we’ve built a portfolio of products designed to improve the customer’s workflow and reduce costs. Incremental improvements of the Pyxis ScrubStation products can be seen in the recently released functionality incorporating a paging function into the notification process. Now a customer can be instantly notified in the event that a stocking location for scrubs reaches a critical low or stockout.

Another example of this feedback in motion was seen in the collection and measurement of feedback surrounding open shelf products in 2000. While hospitals liked the high security of our Pyxis SupplyStation, they challenged us to further automate inventory management of items which were lower cost, bulky or non-chargeable. Examination of the market, the systems already in the space and feedback from clinical users of those systems made it clear that the users needed something less cumbersome to use. The result was the 2001 introduction of our clinically preferred Pyxis JITrBUD product; a small radio frequency device which, when attached to a shelf and assigned to a particular item, to electronically document use and reorder items simply through the touch of a button. This hybrid product works as either a standalone product or in conjunction with our secured Pyxis SupplyStation products and integrates both open shelf and secured storage capabilities onto one single platform saving numerous clinical steps.

Generally, potential customers seem to hesitate due to misperceptions regarding the technology offerings, a disbelief in the system’s capabilities to deliver the return on investment (ROI) results demonstrated or that the system is a luxury rather than a need. The supply dispensing systems introduced in the late ’80s were built using platforms designed for dispensing pharmaceuticals that used a higher than needed degree of security. By combining customer feedback with emerging technologies we’ve created new systems which improved inventory accessibility, the clinical experience and our ability to consistently demonstrate a sustainable and measurable ROI.

Overall we work closely to educate the industry regarding the ROI citing published studies and we link potential and existing customers who can confirm their results. Lastly, we give potential customers the ability to install the equipment and experience the results firsthand. Oftentimes our potential customers believe that they’re managing with optimal efficiency and without issues. Our goal continues to be to drive unnecessary cost out of the process and demonstrate to the industry that the systems will have the sustainable positive and measurable impact.

We continue to hear that the price of supply cabinets is an issue. More and more customers are inquiring about open and hybrid solutions. In areas where supplies are expensive and inventory control is of greater concern, we are asked about cutting-edge technologies such as RFID, biometrics and quicker barcode scanning.

If [customers] know they have a supply problem, then the problem is half solved. It comes down to issues of how well our solution can integrate with their operations and what is the cost. Working with the customer to fully understand their workflow helps to overcome challenges and delivers a robust solution that meets their specific needs.

It is critical to perform an ROI assessment and discuss the value of the solution that solves the overall problem rather than just focusing on specific features and functions. While features are important and are discussed prior to the conclusion of the sale, the customer must first understand the entire scope of the problem in order to choose the most efficient and cost-effective solution.

Ken Perez, vice president marketing,  Omnicell Inc., Mountain View, CA

Omnicell has been providing automated supply cabinets since its inception in 1992 and, based on our continuing dialogue with our customers, in recent years has expanded its supply automation portfolio to include open-shelf systems (utilizing bar code technology) as well as integrated solutions combining both closed-cabinet and open-shelf functionalities in a single system.

Pleased with the ease of use and cost-effectiveness of automated supply cabinets on nursing units, our cabinet customers have asked for assistance in extending our cabinet-based solutions into areas of the hospital where cabinets are less common. This has often required changes to hardware (e.g., new storage modules) and software. For certain areas of the hospital, cabinets have been seen as less practical, and this has driven demand for open systems.

Beyond the appropriateness issue, a higher-level dynamic has been at work. Since the Institute of Medicine’s publication of its seminal To Err is Human report in 1999, which focused the public’s attention on the issue of patient safety, we have perceived that in general, hospitals have given budgetary priority to medication-use process automation solutions over supply automation solutions, and furthermore, we have observed a shift in market demand in the supply automation market segment to lower-cost solutions, such as open systems.

Yet there are some signs that the pendulum may swing back in favor of supply automation solutions in general. Although patient safety will not go away as an important concern of hospital CEOs, a recent survey of these healthcare leaders reported that financial issues (i.e., the financial viability of the hospital) topped their list of concerns. Given the well-established return on investment for automated supply cabinets, the affordability of open systems, and the flexibility of integrated systems, we believe there could be a resurgence in demand for supply automation solutions. Not being wedded to a particular form factor or approach is the best way for Omnicell to communicate that we are all about delivering tailored solutions to our customers’ problems, solutions that are comprehensive, integrated and cost-effective.

Nancy Hedlund, MBA, R.Ph., product director, MedSelect line, Amerisource Bergen Technology Group, Amerisource Bergen Corp., Valley Forge, PA

A decade ago, safety wasn’t the driving force behind this industry. The initial ROI for cabinets was for electronic charge capture. Today, patient safety is paramount, and now the software running the cabinets has become a lot more sophisticated with interfacing to the patient pharmacy profile. We are also seeing increased utilization of clinical prompts, interactive messaging and drug reference databases.

As technology around us evolves, cabinets have to keep up. We are seeing the introduction of new high-tech scanners capable of reading 2-D barcode images. Biometrics has become the gold standard for password authentication and enhanced security. Simple and secure access have always been important, but the stakes are getting higher. Nursing staffs that are already working in a high-pressure environment demand a system that saves time and ensures accuracy on every shift – and they want proof that your cabinets can do it. I anticipate that cabinets will become increasingly intelligent and more heavily integrated with bedside charting and the electronic medical record.