Thermage Inc. Case Study for Expandable ERP Software
About The Company
Thermage is a Hayward, California based medical device company dedicated to developing and commercializing advanced radio frequency (RF) based technologies for dermatology and plastic surgery applications, primarily removing facial wrinkles. Demand for their system is now skyrocketing – and Expandable’s software is hard at work making sure products are built and distributed smoothly and without interruption.
The company’s first product, the ThermaCool Tissue Contraction System™, is FDA cleared for the non-invasive treatment of periorbital rhytids. This device uses an advanced and unique form of radio frequency to tighten tissue and achieve a more youthful appearance. Since November 13, 2002, when Thermage received clearance for its ThermaCool TC ™ System from the U.S. Food and Drug Administration (FDA), orders for the product have soared. Bob Budris, Thermage Controller and the interim chief financial officer explained, “Our first sale came in July, 2002. One year later we processed 300 orders a month, and we’re geared up for 600 on a monthly basis. Since we anticipated heavy demand for ThermaCool TC™ upon FDA approval, we spent a good deal of time and effort selecting software to run the company, thereby making sure we could meet demand.”
Starting a high technology manufacturing company in today’s economic environment is not for the faint of heart. Along with securing scarce venture capital and then racing the clock to engineer product and find a willing marketplace prior to exhausting their funding, today’s startups also need to select and implement enterprise software (ERP). In the case of medical device manufacturers, many select and implement ERP prior to receiving FDA approval.
Most successful startups rely heavily on their venture capital partners experience and mentoring. Increasingly, their experienced management teams (the CFO and VP of Operations ) are turning their software focus to a 20-year proven formula for operational success, namely Expandable Software, Inc. Time and again, Expandable has proven indispensable at a company’s earliest stages, providing an operational framework for controlled business expansion, smoothing out the production wrinkles, and supporting the company’s growth from rollout through IPO and well beyond.
Starting a high technology manufacturing company in today’s economic environment is not for the faint of heart. Along with medical technology startup, Thermage, Inc., was expecting exponential growth and looking to install manufacturing software that would fit a limited budget and meet their long-term needs
“Our goal in selecting a software system was very ambitious,” Mr. Budris said. “We wanted the functionality, flexibility and potential for rapid growth offered by major manufacturing software vendors such as SAP and Oracle. Of course, as a startup company, we did not have the necessary budget for those vendors.”
“Consequently, we searched the lower tier systems for an affordable solution from a vendor offering functionality similar to the big players, who was experienced with quickgrowth startups, who had a track record of success, and whose software would keep pace with our growth,” he said. “It took almost nine months to finally find, evaluate and select a vendor,” Mr. Budris added. “Once we selected Expandable, our first objective was to obtain tight controls as we started to ramp up. We first installed the General Ledger, Accounts Payable and Purchasing, and were up and running in 30 days.” “At first, our goals were to have enough flexibility in the system so people wearing different hats could meet their goals,” commented Mr. Budris. “As we’ve grown, we’re finding that we need more control of users and we’ve sacrificed some flexibility. But we know that lack of controls can cause serious problems in a startup environment, and Expandable has the experience to not let growth get out of hand.”
Results & Benefits
Ardi Mahanpour, Accounting Manager, said, “After 90 days of being on-line with all financials, we were ready to integrate the manufacturing modules in advance of Doug Heigel, Vice President of Operations, coming on board. He is a former Expandable user, so he is right at home with the system, which from day one integrated inventory management, order fulfillment, and lot tracking capability.” According to Doug Heigel, Expandable helps maintaincontrol in a fast moving and rapidly growing environment.
“Right now, we’re able to ship orders for our complete system within 1 to 2 days of order receipt and routinely ship orders for our consumable products on the same day of order,” say Heigel. “ThermaCool features a sterile single patient use treatment tip and related supplies, so the software has to be able to handle repeat orders for consumables. In the future, of course, this will be a major part of Thermage business, expected to grow exponentially. It’s important that we have the tools in place to support that growth.”
“As a former Expandable user,” said Mr. Heigel, “I was pleased to know that the software was installed when I joined Thermage. I’ve come to rely on Expandable’s very high level of support, and I’m impressed with the enhancements that they have made to the software over time. At Thermage, we do not have the time or luxury to be a test site for software. It’s been working since we installed it, and I’m confident that it will grow right along with us as the company and ThermaCool revolutionize cosmetic surgery.”
“Integration with other systems is being handled quite comfortably by our Expandable system,” explained Mike Morales, Senior Director of Customer Service and Sales Administration. “As ThermaCool continues to be widely accepted and commercialized, the demands placed on customer service will continue to increase, commensurate with the growth of the business and demand for product fulfillment related activities.” “Our new challenge,” continued Mr. Morales, “is to maintain the flexibility to handle any customer service activity with the limited control that is more common in a smaller company and service environment.
As the business grows and adds more people, we will need to implement more controls, hopefully without sacrificing too much flexibility. With the volume of transactions we’re seeing now, Expandable has been able to keep pace, and we haven’t seen any problems interfacing with other systems.” “Since day one, we’ve integrated order fulfillment and lot tracking capability,” Mr. Morales said. “We place a high value on error checking in every transaction, so we are assured that the correct system components and/or consumable item goes with every order.
Physicians who use ThermaCool rely on us to get it right the first time.” “Speaking of customer service,” said Mr. Heigel, “we’re quite satisfied with Expandable’s service commitment and it’s important to note that the software comes out of the box ready to run, and implementation is straightforward. Larger enterprise systems might have had a little more processing horsepower, but they were too complex to implement. And as a former user, I know how dedicated the Expandable support staff is to their customers.”
Mr. Budris pointed out the importance of a startup’s decision to go with a software system that can be relied upon for years to come. “We do not want to wake up three or four years from now and find ourselves looking for a new enterprise-wide system. We need scalability to grow as well as the performance to get there.” “When a physician uses ThermaCool, the patient is interested in results, not the machinery. The same applies to our working with Expandable. The software has to be seamless, so that we can concentrate on satisfying our customers as we grow the company. Expandable’s software works, keeps us compliant with all federal regulations, and has taken the wrinkles out of our production system. It will be with us for the long haul,” concluded Mr. Budris.