Scm case 1

CASE STUDYOF

MEDITECH SURGICAL

JOHNASHOKSATHIA

NITHIKRISHNA

• LARGO HEALTH CARE COMPANY•MEDITECH SURGICAL – ENDOSCOPIC INSTRUMENTS

• STRATEGY FOLLOWED•AGGRESSIVE COMPETITION (NATIONAL MED CORP)•NEW INNOVATIVE INSTRUMENTS•FIRST CLASS SALES FORCE•RAPID PRODUCT DEVELOPMENT•FLAWLESS REPUTATION - VISION•MORE THAN 200 PRODUCTS

INTRO: MEDITECH SURGICAL

V.P. OPS

PM 1

BU

BU

QUALITY

SUPPORT SERVICES

MATERIAL

PM 2DIRECTOR SUPPLIER

MGMT

DIR PLG, DISTN &

CS

CENTRAL PLANNING

CS & DISTRIBUTI

ON

INVENTORY

LOGISTICS

ENDOSCOPIC SURGICAL INSTRUMENTS

Permits minimally invasive surgery

Market created in early 80’s, rapidly growing

Old products continually updated and replaced with new product introductions

CASE: MEDITECH SURGICAL

Intent – diagnosis of supply chain

Business overviewSupply chainProduction planning – 6

weeks LTWhat’s wrong?How to fix it?

BUSINESS OVERVIEW

National and Meditech split the market

Compete based on product innovations, customer service, cost

National sells to physicians; Meditech sells to material managers

Customer preferences change slowly

EXTERNAL SUPPLY CHAIN

Part suppliers

Meditech Assembly

MeditechWarehouse

Domestic Dealers

Int’l MeditechAffiliates

Hospitals

Hospitals

INTERNAL SUPPLY CHAIN

Parts Inventory Assembly Bulk Inventory FG InventoryPackaging &Sterilization

2 - 16weeks

2weeks

1 week

PRODUCTION PLANNING

Annual Forecast

Monthly Revision

TransferRequirements

MonthlyPlan

MRP

PartsProcurement

Plan

WeeklyAssemblySchedule

PRODUCTION PLANNING

Parts Inventory Assembly Bulk Inventory Packaging &Sterilization

FG inventory

MonthlyPlan

MRP

Order point;Order quantity

MaterialPlan

WHAT IS GOING ON?

Demand is quite predictableUsage in hospitals is quite stableMarket share moves slowly over timeWith each new product, dealer must

build inventory to fill pipeline

WHAT’S WRONG?

Poor service for new product introductions

Poor forecasting?Panic ordering?And high FG inventory

WHY DID MEDITECH THINK DEMAND WAS

UNPREDICTABLE?Poor information systemsNo one looked at demandNo one had responsibility for forecast

errorsTendency to shift the blameBuilt-in delays and monthly buckets in

planning system

Amplifier in planning system

WHAT TO DO?

Recognize that demand is stable and predictable

Establish accountability for forecastEliminate planning delays and/or

reduce time bucketAlternatively, put assembly within pull

system and eliminate bulk inventory

CASE DISCUSSION QUESTIONS

1. WHAT ARE MEDITECH’S PROBLEMS IN INTRODUCING NEW PRODUCTS? IN MANUFACTURING ALL PRODUCTS?


2. WHAT IS DRIVING THESE PROBLEMS, BOTH SYSTEMATICALLY AND ORGANIZATIONALLY?


3. WHY IS THE CUSTOMER SERVICE MANAGER THE FIRST PERSON TO RECOGNISE THE MAJOR ISSUES?


4. HOW WOULD YOU FIX THESE PROBLEMS?

THANK YOU