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Meditech Surgical
Presenting by Flex 26 Sec 3 Group 6
“LMC”
“Endoscopic surgical instrument”
“Leading share in the market”
“Product Strategy”
“Competition”
“National Medical Corporation”
National Medical Corporationfocus on surgeons
Product line consists of over 200 separate end-products
Meditech focus on surgeons and material managers
“Customer Focus Group”
Poor delivery service…
10/23/14
Meditech Central Warehouses
Domestic
Meditech Distribution
Meditech Central Warehouses
Domestic
Independent Domestic
Dealer
Hospital
Hospital
OtherManufacturers
Hospital
Hospital
Hospital
Hospital
RegionalDealer
Warehouses
RegionalDealer
Warehouses
“3 Major Steps”
Internal Operations
Assembly
Packaging
Sterilization
• Manually Intensive• Component parts placed into inventory after QA• Run by a cross-trained production workers’ team.• The typical cycle time =2 weeks, lead time =2-16 weeks
Internal Operations
Assembly
• Several large packaging machines• Capacity has no restricted output• Ship immediately to the sterilizer
Internal Operations
Packaging
• A large cobalt radiation sterilizer • Turn on for about 1 hr & move into finished good inventory• Capacity not be a problem
Internal Operations
Sterilization
Operation Organization ChartOperation Organization
President
V.P. Marketing &
Sales
V.P. Product
Development
V.P. Operations
V.P. Finance
Operation Organization ChartOperation Organization-Production Personnel-Engineering technicians-Quality assurance -Support Service-Material SupplyMeet Production Scheduling every week.
-Relationship with Suppliers-Purchasing Contracts-Find New Supplier
Ensure FG meet incoming orders
Improvement Poor Delivery Service/Customer complaints
Determines FG parts and Bulk inventory target.
Do everything to ensure customers receives product when needs.
Monthly Forecast
For Assembly & Component part
ordering
Daily Scheduling
For Packaging & Sterilization
Production Planning & Scheduling
Monthly ForecastQ4 Annual
Forecast
Monthly (Adjusted) Forecast
Next Year Sales Estimation
MK Finance
MK Central Planning
“Transfer Requirement”
“Transfer Requirement”
FG level
Transfer Requirement (Bulk) = (month’s demand + safety stock level) – Current FG
1. Monthly ForecastMonthly
Plan
Assembly B.U.
Planner
3. Inventory of Component Parts,
Bulk & FGs
Weekly Production Schedule
(Assembly )
2. Lead Time of Assembly, Packaging & Sterilization
Component Parts Orders
Demand
MRP System
Pushed Pulled
Daily Scheduling
New Product Introductions High Levels of Inventory and Poor Service Level
Background
Meditech has introduced dozens of new product. Meditech continued to obsoleted product by constantly introducing innovation.
Problem
D.Franklin could not figure out why Meditech consistently had supply the shortage with each introduction. =>Due to Forecasting problem.
1) Data to measure forecast accuracy had not previously been tracked.2) Forecast and demand had not been kept.3) Data gathering requires a lengthy process of going back through hard copy.
40% High FG Inventory
Moreover, Finish goods inventory levels appeared to be remarkably high.A consultant had recently been hired to study Meditech’s inventory as detail
New Product Introductions High Levels of Inventory and Poor Service Level
FG inventory high due to Panic Ordering
Meditech
Dealer Dealer Affiliate Affiliate
H H Dealer
H H
100
Dealer
H H
100
300
Domestic International
New Product Introductions High Levels of Inventory and Poor Service Level
300
900 1000
100 100
300 300
High peak first few weeks
Relatively Stable
By the way, Staff member to investigate the new product problem as below The existing information in many different system Different data format such as
Time term : Weekly , Monthly and Financial CalendarAfter analyzed they found
New Product Introductions High Levels of Inventory and Poor Service Level
New Product Introductions High Levels of Inventory and Poor Service Level
Unexpected Demand
New Product Introductions High Levels of Inventory and Poor Service Level
Dan Franklin began thinking about “How to fix delivery problem?”
New Product Introductions High Levels of Inventory and Poor Service Level
Meditech Surgical
CASE DISCUSSION QUESTION
1. What are Meditech’s problems in introducing new products? In manufacturing All products?
2. What is driving these problems, both systemically and organizationally?
3. Why is the customer service manager the first person to recognize the major issues?
4. How would you fix these problems?
How to fix Meditech’s delivery problems
Meditech Surgical
Solution for Meditech Surgical
Solution for Meditech Surgical
CASE DISCUSSION QUESTION
1. What are Meditech’s problems in introducing new products? In manufacturing All products?
New Introducing Product
Fail to serve of Initialing demand
All products
•Huge number of end-products •Unexpected high Demand •Delivery Delay
CASE DISCUSSION QUESTION
2. What is driving these problems, both systemically and organizationally?
New Introducing Product
•Panic ordering -- Bullwhip•Long lead time of component part•Variation of production schedules
•CV = SD/X
CASE DISCUSSION QUESTION
2. What is driving these problems, both systemically and organizationally?
New Introducing Product
Problem of Demand•Duplicate Order•Redundant Order•Panic Order
Problem of Supply•Segregation Management•Information and sharing
data format•Bullwhip
CASE DISCUSSION QUESTION
2. What is driving these problems, both systemically and organizationally?
All products
•Data collection system•Data format•Forecast methodology•Transportation•Production delay
CASE DISCUSSION QUESTION
ProductDevelopment
Supplier
Supply Chain
Distributing
2. What is driving these problems, both systemically and organizationally?
ProductionMkt. and SaleCus. Service
Purchasing
Customers
Outsource
CASE DISCUSSION QUESTION
- Purchasing- Distributing
- Marketing- Sale- Customer Service
2. What is driving these problems, both systemically and organizationally?
• Organization
President
VP. ProductionVP. Product
DevelopmentVP. Financial
VP. Marketing&Sales
VP. Supply ChainVP. Human Resources
Safety
CASE DISCUSSION QUESTION
3. Why is the customer service manager the first person to recognize the major issues?
Because the customer service manager is the first person, who directly deal with the customer’s problems.
CASE DISCUSSION QUESTION
4. How would you fix these problems?
New Introducing Product
•Reduce slow moving products•Demand Pooling Across Location•Demand Pooling Across Product•Selling system management•Information sharing
CASE DISCUSSION QUESTION
4. How would you fix these problems?
All product
System•Online ordering
Data format•Time base standardize
Statistical method i.e. linear regressionUse Actual OrderingRelocated Warehouses for the optimal distance to customer
CASE DISCUSSION QUESTION
4. How would you fix these problems?
All product
•Outsourcing low margin products•Obsolete non-value products•Increase process capability
Meditech Surgical