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Case Study


Inside a Multi-Phased SAP Digitization Journey

Varian Medical Systems Takes Product Lifecycle Management to the Next Level

by Lauren Bonneau, Senior Editor, SAPinsider | insiderPROFILES, Volume 7, Issue 3

August 8, 2016

A series of colored x-ray images

In 2006, the European Union passed a new regulation that heralded dramatic changes for Varian Medical Systems, a producer of medical devices for oncology, imaging, and proton therapy. Under the Restriction of Hazardous Substances (RoHS) directive, Varian had to reengineer many of its products in order to make their chemical compositions environmentally compliant. This was a big task, and Varian needed a solution that could aid them along every step of the way, from efficient reengineering to transparent manufacturing. Learn how Varian adopted SAP Product Lifecycle Management (PLM) to meet complex compliance requirements and, in the process, streamline and improve its engineering and production departments.

Saving lives sounds like a lofty goal, but it’s one that Varian Medical Systems accomplishes every day. The company is a leading producer of medical devices for advancing cancer treatment, radio surgery, and X-ray imaging. With approximately 100,000 patients across 150 countries being treated on Varian equipment every day, it is crucial that these oncology, imaging, and radiation systems are functioning properly.

Just as important, however, is that these devices are engineered, manufactured, and maintained in a compliant manner. And in recent years, efforts to protect the environment from harmful chemical waste have complicated product compliance. For example, in July 2006, the European Union enforced a Restriction of Hazardous Substances (RoHS) directive, preventing companies from using six restricted substances (such as lead or mercury) while making or designing electrical or electronic products. Manufacturers of these products that want to carry out business in Europe must comply with this regulation. The directive also mandated specifically that medical device companies had to be RoHS-compliant by July 2014.

To ensure that Varian could continue to operate efficiently, profitably, and in accordance with regulations, the business needed to find a solution it could use for enterprise-wide management of regulatory requirements alongside product compliance. The RoHS directive, while not the only regulation of its kind, was the first driver to motivate Varian along a journey to transform its product manufacturing.

“Going forward from that point on, Varian products had to be designed with RoHS considerations in mind, and any existing legacy products that were designed without accounting for these regulations had to be reengineered for us to continue to sell the machines in the European Union,” says Arnab Mukherjee, IT Manager at Varian. “That’s when we first started evaluating solutions and how we discovered the gamut of solutions offered with SAP Product Lifecycle Management (SAP PLM).”

Varian Medical Systems, Inc.

Headquarters: Palo Alto, California

Industry: Medical device manufacturing

Employees: 6,800

Revenue: $3.1 billion (2015)

Company details:

  • Business units include oncology systems (close to 77% of revenues), imaging components (builds flat panels and X-ray cubes for other equipment manufacturers), and proton therapy (budding shift in radiation from electron-based cancer treatment)
  • 100,000 patients treated with Varian equipment daily
  • Manufacturing sites in North America, China, and Europe
  • 60 sales and support offices globally
  • Customers in 150 countries

SAP solutions:

  • SAP Business Suite powered by SAP HANA
  • SAP PLM (including SAP EnvironmentHealth and Safety Management, SAP Engineering Change Management, SAP Visual Enterprise, SAP Engineering Control Center, and SAP Product Lifecycle Costing)
  • SAP Manufacturing Execution
  • SAP ERP Financials
  • SAP BW
  • SAP Enterprise Portal
Entering the World of SAP PLM

Varian has been using SAP software since the 1990s, when the first SAP R/3 implementation took place. Since then, the company underwent a major upgrade to SAP ERP 6.0 in 2009. The SAP landscape is structured as one single instance, with business units sharing the IT and enterprise application infrastructure, and primary data centers located at company headquarters in Palo Alto, California, as well as Zurich, Switzerland.

Over the years, the SAP footprint evolved and increased in many different areas — such as the order-to-cash, purchase-to-pay, financial reconciliation, and supply chain processes. “Because we are deeply entrenched in the SAP world, whatever we build to meet our needs would require multiple SAP integration points,” says Mukherjee. “Therefore, going with an SAP-based offering to address the PLM requirements made the most sense. It would eliminate the integration question, we could take advantage of the enterprise SAP licenses already in place, and we wouldn’t need any additional infrastructure to support it.”

When deciding on SAP PLM, Varian identified and deployed the solution components that would most help on its transformation journey. The first was SAP Product and REACH Compliance 2.2, which the company selected to manage its adherence to global product compliance regulations; this solution was implemented in 2011 to help meet the RoHS directive. (Varian used this product for several years before upgrading to SAP Environment Health and Safety Management 5.0 during the second quarter of 2015 — shortly after Varian updated its core systems again in 2014 by moving to SAP Business Suite on SAP HANA.)

“When you design and manufacture medical devices, you have to keep a detailed log of information — the raw materials used, who the manufacturers are, any components you buy from other equipment manufacturers, and whether the components are compliant or not,” says Mukherjee. “With SAP Environment Health and Safety Management, you enter and manage all this information in one module. By having a central log of all this data, you can then perform a compliance roll-up for any product you manufacture. And you can configure the solution to manage adherence to any environmental compliance regulation globally, not just RoHS.”

Even though the RoHS directive was the impetus for exploring SAP PLM functionality, there were other drivers, such as the need to adopt an electronic process for the reengineering effort required to continue to manufacture and sell the legacy products that were engineered pre-RoHS.

Arnab Mukherjee

Arnab Mukherjee, IT Manager, Varian Medical Systems, Inc.

You can configure SAP Environment Health and Safety Management to manage adherence to any environmental compliance regulation globally.

— Arnab Mukherjee, IT Manager, Varian Medical Systems, Inc.

Engineering Change Management

In the third quarter of 2011, Varian implemented another central SAP PLM component, SAP Engineering Change Management, which would revamp and automate the engineering change process. “Because this is a regulated industry, whatever we do has to be traceable,” says Mukherjee. “We have to document any kind of engineering change that happens, and we have to make sure the necessary approvals and signatures are in place, showing that the person who carried out the approval is actually the final signing authority.”

The documentation and approval process was previously paper-based, with documents being manually distributed, stored, and archived for future reference. “Considering the large scale of reengineering work and the number of engineering changes that had to happen to become RoHS compliant, the inefficient, paper-based process would just not work,” he says. “We needed a solution that would allow us to address these traceability requirements and replace handmade signatures with digital signatures that we could look back at during an audit, for example.” This would allow Varian to meet newly enacted requirements regarding digital signatures and comply with various agency regulations.

Another key piece of the implementation involved digital data collaboration in the area of computer-aided design (CAD) models.

Breaking Down Data Silos with CAD Integration

Prior to 2011, engineers worked with their own toolsets, and there was little-to-no scope for collaboration between different departments. When an engineer designed a product for a specific project, which involved building a CAD model and creating a bill of materials (BoM) for the product, the CAD data for the design stayed in engineering and was not available to the rest of the enterprise. There was no link to the SAP system and no single source of truth. So when the design components were ready for assembly, the production department had to manually enter the SAP data from the engineering BoM to create the manufacturing BoM.

“The CAD data was in a silo, and all that came out of the engineering world was a drawing, which became the basis for entering the BoMs and contacting suppliers or subcontracted manufacturers,” says Mukherjee. “That one drawing — nothing but a two-dimensional PDF that showed the components for the assembly — was the only thing that went out to the rest of the enterprise.”

Once Varian moved onto a single common SAP PLM platform with CAD integration, engineering work no longer happened in a vacuum. With CAD models integrated with SAP PLM, engineers began collaborating with teams across the enterprise. Now, SAP PLM automatically captures whatever CAD structure is defined as an electronic engineering BoM in the SAP system so there is a single source of truth for the product. The manufacturing BoM is then synchronized automatically from this global BoM so there is no longer an arduous process and duplicated effort of then entering the manufacturing BoM into the system manually. This provides greater flexibility because it means Varian can now create a CAD model and generate a global engineering BoM at a certain location, and then decide to make the product at a different location.

Every day, doctors are treating 100,000 patients across 150 countries with Varian Medical Systems equipment, including systems for oncology, imaging, and radiation therapy

“Because the SAP PLM toolset can create a manufacturing BoM automatically for a specific product, it removes the manual data-entry element, eliminates the errors that come with it, and keeps the automation intact between the CAD design engineering BoM and the manufacturing BoM,” says Mukherjee. “And this model is not restricted to the medical device industry. Any manufacturer can leverage these very same concepts to manufacture any discrete piece of equipment.”

With the CAD integration, enterprise departments outside of engineering could begin to reap the benefits of having that CAD data available in SAP PLM for the first time. As a result, the user experience started vastly improving.

Cashing In on the Benefits

Out of its 6,800 employees, Varian has roughly 1,000 workers using SAP PLM in some way. “While we have different sets of users for CAD design, engineering changes, and product compliance, when you look at the overall landscape, the improved and intuitive browser-based interface helped improve the user experience for everyone,” says Mukherjee.

Now that Varian has achieved SAP and CAD design integration, there’s a new set of users that leverage the SAP Visual Enterprise solution, which comes under the umbrella of SAP PLM. The solution builds lightweight three-dimensional (3D) files from the CAD data, creating multi-purpose animations that can serve as documentation for technical instructions or manufacturing manuals. The solution effectively reduces the reliance on paper-based training materials that require text to be translated into multiple languages. Training for building and servicing Varian products now can be performed more efficiently and effectively. “SAP Visual Enterprise removes the need for verbose physical documents and replaces them with visual manuals, which are animated 3D videos that visually explain entire processes end to end, erasing any language barriers,” Mukherjee says.

Along with efficiency gains, Varian is also benefiting from newfound application speed. The upgrade to SAP Business Suite powered by SAP HANA made any slow-running custom programs on SAP PLM much faster. Now that the business has completed the initial implementation phase of its digitization journey, it is focused on how it can further optimize the SAP platform and improve processes based on what it learned so far.

One process improvement, for example, came from revamping the engineering change process workflow. Previously, if an activity in the sequential workflow was rejected at a certain stage, the entire workflow would reset back to the starting point. Much time was wasted while waiting for a previous task to be completed. “We went back to the drawing board and altered the workflow to allow for parallel processing of multiple tasks wherever it was applicable,” Mukherjee says. “We started to see the parallel processing expedite workflows, which ultimately reduced the dwell time of the engineering change cycle.” The approval rates of the engineering change notice increased as the majority of changes were receiving final approval on the first attempt. And the workflow had fewer bottlenecks because fewer “owners” were stalling urgent changes.

As a whole, Varian users had minimal complaints or adoption issues operating the new toolset. “Everybody goes through a learning curve, and then, once they pass the curve, it is business as usual,” he says. “We are past that learning curve now.”

Planning for the Future

Varian is in the process of implementing SAP Engineering Control Center (SAP ECTR), which includes a Java-based interface that provides users with an experience not typical of a traditional SAP interface. It integrates with SAP Visual Enterprise by default, offering a complete 360-degree view of the product being designed while displaying all the necessary thumbnails, metadata, and structural data. “The control center will change the CAD integration experience in a big way,” Mukherjee says. “It abstracts users from the SAP world and ushers in more productivity and efficiency simply by virtue of the fact that users get the information they need presented in one place, without having to click five or six extra buttons.”

The business is also deploying SAP Product Lifecycle Costing, which lets users estimate the cost of a new product based off the CAD structure during a project’s design stage. This ability did not exist previously for Varian, and the business couldn’t determine what a product might cost until it progressed to the manufacturing stage. “We are currently transitioning to these latest solutions in the SAP PLM toolset, in a sense, to gear up for a seamless migration when we move to SAP S/4HANA,” he says. “That is where we are headed, and we know these tools will be compatible and supported by SAP going forward.”

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