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Supply Chain Management of Siemens Healthcare

Submitted to: Submitted By: Prof Maskhur Zafar Abhijeet Kumar Course In charge Dolly Kotak Kumar Anshuman Manish Kumar Manpreet Kaur Umashankar Singh

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Contents INTRODUCTION ............................................................................................................................................... 4

INDUSTRY ANALYSIS ........................................................................................................................................ 4

Medical Devices Definition ......................................................................................................................... 4

Medical Devices Industry Structure: ........................................................................................................... 4

Medical devices Markets ............................................................................................................................ 5

Indian Medical Device Industry: ..................................................................................................................... 5

MEDICAL EQUIPMENT PRODUCT LIFECYCLE MANAGEMENT ..................................................................... 6

THE QUALITY SYSTEM CYCLE OF MED ........................................................................................................ 7

Automating business processes with product lifecycle management ....................................................... 7

Management Reviews An Industry perspective ........................................................................................... 8

SIEMENS : A big league player of ME&D ...................................................................................................... 10

Supply Chain at Siemens ........................................................................................................................... 10

Global Procurement Management ........................................................................................................... 11

Global procurement & its management. .................................................................................................. 11

SUPPLY CHAIN MANAGEMENT & ITS CORPORATE FUNCTION ................................................................. 13

DOCUMENTATIONS & REGULATIONS ........................................................................................................... 13

Export Control and Foreign Trade Data & Data Regulations. ................................................................... 13

Export Control and Foreign Trade Data .................................................................................................... 14

Supply Chain Security Requirements ........................................................................................................ 15

Export Control Declaration of Siemens ..................................................................................................... 15

Documentation Requirements: Medical Equipment/Devices Imports .................................................... 15

Regulation Medical Equipment Market In India ....................................................................................... 16

Import procedure ...................................................................................................................................... 16

Procurement by Health care agencies ...................................................................................................... 17

Suppliers and OEM manufacturers ............................................................................................................... 18

Suppliers to Siemens and their suppliers .................................................................................................. 18

Cordys ................................................................................................................................................... 18

CICOIL .................................................................................................................................................... 19

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Key drivers on the basis of the porter`s five forces analysis ......................................................................... 20

Barriers to Entry: ....................................................................................................................................... 20

Bargaining power of buyers ...................................................................................................................... 20

Bargaining Power of Suppliers .................................................................................................................. 20

Threat of Substitutes................................................................................................................................. 20

DRIVERS OF SUPPLY CHAIN ....................................................................................................................... 20

1. Inventory: .......................................................................................................................................... 21

2. Transportation/Logistics: .................................................................................................................. 22

3. Facility: .............................................................................................................................................. 22

4. Information: ...................................................................................................................................... 23

Conclusion ..................................................................................................................................................... 24

Reference ...................................................................................................................................................... 25

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INTRODUCTION

This project aims to understand the Supply Chain Management in Production and Operations Management by using an industry. The main objective of the project is to explore the key aspects involved in managing the Supply Chain Management and ensuring that all processes involved from acquiring inputs from suppliers to delivering final products to end customers are executed smoothly within minimum resources. Supply chain management (SCM) is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain. SCM spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.

We as a team have tried to study the national regulations for the medical equipment

business, procurement and import export of devices across borders. We have assessed the

market for the MED and the market segregation from the perspective of POM. We have

studied the documentation required for the import/export of the devices and the supply chain

mechanism of the Siemens, a big league player of the MED across globe

INDUSTRY ANALYSIS

Medical Devices Definition

Medical devices are defined as any healthcare product that does not achieve its primary

intended purpose by chemical action or by being metabolized. Medical devices include

electro-medical equipment and related software, furniture, supplies and consumables,

orthopedic appliances, prosthetics and diagnostic kits, reagents, and equipment. Medical

devices are generally divided into class I, II and III, based on the level of risk to users/patients,

corresponding to logical risk evaluations conducted by the FDA. Class I devices are the

lowest risk classification and include general controls such as crutches and band aids, while

class II controls are more specialized, such as wheelchairs. Class III devices require pre-

market approval, as they are known to present hazards requiring clinical demonstration of

safety and effectiveness. Devices in this category include heart valves, catheters,

cardiopulmonary resuscitation (CPR) devices and various implants.

Medical Devices Industry Structure:

Medical devices are generally divided into class I, II and III, based on the level of risk to

users/patients, corresponding to logical risk evaluations conducted by the FDA. Class I

devices are the lowest risk classification and include general controls such as crutches and

band aids, while class II controls are more specialized, such as wheelchairs. Class III devices

require pre-market approval, as they are known to present hazards requiring clinical

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demonstration of safety and effectiveness. Devices in this category include heart valves,

catheters, cardiopulmonary resuscitation (CPR) devices and various implants.

Medical devices Markets

The medical devices industry has witnessed a rapid expansion and though the traditional

markets of US, EU and Japan contribute the major chunk of revenues, there has been a rapid

growth in most of the developing markets. The increasing prosperity and income across the

developing countries especially in Asia, easier access to healthcare coupled with the ageing

population, advances in the medical Technology and establishment of public health

insurance has resulted in a phenomenal growth in the medical devices industry. Marked

increases in the average age of U.S. and foreign populations has already influencing the

direction of the medical device industry through the changing health needs of senior citizens

and shifts in thinking on how and where they will be treated. As pressures mount to contain

costs, expensive and/or extended stays in healthcare facilities will be discouraged and

healthcare will be increasingly delivered in alternative settings such as nursing homes,

hospices, and, especially, the patients own home. Home healthcare is one of the fastest

growing segments of the industry, and is branching out into new areas. What used to be

limited to only the lowest technology products is now encompassing a proliferation of high

technology medical devices that are intended to be used by unskilled health care workers or

patients. In addition, demographics and technological advances will continue to increase

demand for advanced medical device products

Indian Medical Device Industry: India today on account of the rapid economic development, increasing trade liberalization, growing acceptance for advanced, technological products and an expanding healthcare segment is a lucrative market for medical devices industry. Most of the big players have established a permanent base in the country either through R&D facilities, manufacturing or trading offices. As of 2009 the size of Indian Medical Devices market stood at $2777.9 million and is expected to reach $6409.9 million by 2013, a CAGR of 23.2% over the period. The Indian Medical Devices Industry can primarily be divided into the following segments.

Medical Disposables Surgical Equipment Diagnostic Equipment Laboratory Devices and Diagnostics Dental Equipment Ophthalmic Equipment

Following are the other key opportunity areas for the Indian Medical devices market

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Growth in Indian Medical Devices Industry: Advancement in Research and Development India Growing as an Outsourcing Hub for Manufacturing: Growth in Healthcare Expenditure: Source: MGI India Consumer Model V1

MEDICAL EQUIPMENT PRODUCT LIFECYCLE MANAGEMENT

In the medical device industry, efficiently meeting U.S. Food and Drug Administration (FDA)

requirements is a key to business success. Product lifecycle management (PLM) technology

ensures FDA compliance integrity by providing comprehensive content to support

management decisions across the organization and individual functional groups. By uniting

product information with processes, people, and technology, PLM enables medical device

companies to effectively and economically assure compliance.

The FDA method for evaluating compliance is the Quality System Inspection Technique (QSIT). As part of the QSIT, the FDA targets six major quality systems that medical device companies must have in place. The agency also requires that management demonstrate knowledge of the interrelationships of activities across these systems:

Corrective and preventive action (CAPA)

Design controls

Records, documents, and change controls

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Material controls

Equipment and facility controls

Production and process controls

THE QUALITY SYSTEM CYCLE OF MED

As part of the QSIT, the FDA targets six major quality systems that medical device companies

must have in place.

Automating business processes with product lifecycle management

Most life sciences companies currently manage quality and address the QSIT requirements

by using a combination of manual, paper-based processes or discrete point solutions for

document authoring and change management, quality event management, program

management, and management reviews. Companies can automate each of the four vital

business processes by implementing PLM, thereby delivering dramatic improvements in

business performance and compliance with QSIT requirements.

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Management Reviews An Industry perspective Most medical device company faces the challenges of a communication disconnect between the QA and business organizations within the company.

1. The first obstacle is a language barrier between QA and operations. Reports created by QA are often not in a format or wording that is easily understood by management, nor are they presented in a compelling way that will call management to action. Consequently, management has difficulty interpreting the business impact of quality on the company and prioritizing appropriate resources to resolve quality issues.

2. The second challenge is getting the right information to management. Due to difficulty in synchronizing with other functional groups and aggregating data from multiple unconnected systems, QA cannot get the data it needs in a timely fashion. By the time quality information is presented to senior management, the content is already outdated. Additionally, the messaging aimed at management is incomplete because a disproportionate amount of time is spent gathering the information, leaving no time to analyze the data and make it actionable. As a result, management is reactive instead of proactive on quality, spending time mitigating risk instead of strategically leveraging the knowledge to improve the bottom line.

3. The third challenge is the lack of cross-functional communication flow. When QA and receive/acknowledge processes require cross-functional input with multiple QSIT systems, it often goes into a black holewith no visibility into status. The disconnect between groups impacts process performance and compliance integrity during audits. While manual processes make the problem worse, independent automated quality solutions that are not synchronized with enterprise systems used by other functional groups are not the solution either.

The combination of these challenges negatively impacts company performance, market

share, customer satisfaction, and staff morale. To solve the problems, the QA organization

needs to present management with a graphic representation of the financial impact of quality

illustrating the cost of recalls, CAPA, inventory, new product introduction, and knowledge

lost. Having an automated system with a common database for all quality information, QA

will be able to gather, share, and analyze quality data.

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In addition, PLM can provide the added advantage of analytics that process quality data and

translate it into actionable information. By providing visibility and insight to people across the

enterprise, PLM helps companies use quality data to make timely decisions that matter to the

business.

To support management reviews, PLM provides

Automated real-time reporting of all enterprise activities

Standard reports for document management, quality events, and projects

Custom dashboards to present critical information faster

Cross-functional analysis of all data in a graphical format

Content synchronization with other enterprise tools such as enterprise resource

planning and manufacturing execution systems

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SIEMENS : A big league player of ME&D

With reference to our project we are taking one of the big league player of the industry across

world the other major being the Phillips and GE

Supply Chain at Siemens

The aim of Supply Chain Management is to optimize the value added chain at Siemens globally in a coordinated manner on the basis of standardized processes. Apart from contributing value to operating results through savings in procurement, this also includes quality assurance as well as guaranteeing delivery reliability and dependable, efficient logistics. All this is tightly intermeshed with the Siemens objective of sustainability.

Until 2009, Supply Chain Management throughout the Group was organized almost exclusively vertically within the three sectors. When the SCM initiative was launched in April 2009, the idea was to leverage synergy potentials of the company as a whole more effectively. The objective is to achieve sustained optimization over the long term. Among other things this includes building close partnerships with suppliers, particularly in growth markets. The aim here is to establish good cooperation relationships that deliver lasting value to both parties. The selection process plays a vital role in this. Siemens is looking not just for the best suppliers, but also for those suppliers most closely living up to Siemens own objective of sustainability.

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Global Procurement Management

As a global enterprise, Siemens also purchases globally. Currently its purchasing units (on the corporate level only) purchase goods and services of more than 130 material fields.

Siemens procurement is organized as a network in order to take full advantage of its savings. These savings can be realized by taking up a joint, centrally coordinated approach within what basically remains a decentralized organization.

Market Information 3rd Party Purchasing Volume World 2009 (based on location nation) he Purchasing Volume World contains only 3rd party volume without intercompany purchases. The 3rd party volume consists of Sectors, Cross-Sector Businesses and Services as well as Corporate Units and Regional Organization

Global procurement & its management.

Global Value Sourcing and favorable prices are not a passing fad. It is the logical

consequence of developing markets worldwide. Six benefits stand for Global Value Sourcing

and will help keep Siemens one step ahead of the competition

The aim of Supply Chain Management is to optimize the value added chain at Siemens

globally in a coordinated manner on the basis of standardized processes. Apart from

contributing value to operating results through savings in procurement, this also includes

quality assurance as well as guaranteeing delivery reliability and dependable, efficient

logistics. All this is tightly intermeshed with the Siemens objective of sustainability. Until

2009, Supply Chain Management throughout the Group was organized almost exclusively

vertically within the three sectors. When the SCM initiative was launched in April 2009, the

idea was to leverage synergy potentials of the company as a whole more effectively. The

objective is to achieve sustained optimization over the long term. Among other things this

includes building close partnerships with suppliers, particularly in growth markets. The aim

here is to establish good cooperation relationships that deliver lasting value to both parties.

The selection process plays a vital role in this. Siemens is looking not just for the best

suppliers, but also for those suppliers most closely living up to Siemens own objective of

sustainability

The aim of Supply Chain Management is to optimize the value added chain at Siemens

globally in a coordinated manner on the basis of standardized processes. Apart from

contributing value to operating results through savings in procurement, this also includes

quality assurance as well as guaranteeing delivery reliability and dependable, efficient

logistics. All this is tightly intermeshed with the Siemens objective of sustainability. Until

2009, Supply Chain Management throughout the Group was organized almost exclusively

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vertically within the three sectors. When the SCM initiative was launched in April 2009, the

idea was to leverage synergy potentials of the company as a whole more effectively. The

objective is to achieve sustained optimization over the long term. Among other things this

includes building close partnerships with suppliers, particularly in growth markets. The aim

here is to establish good cooperation relationships that deliver lasting value to both parties.

The selection process plays a vital role in this. Siemens is looking not just for the best

suppliers, but also for those suppliers most closely living up to Siemens own objective of

sustainability.

Working Worldwide for Procurement

As a global enterprise, Siemens also purchases globally. Currently its purchasing units (on

the corporate level only) purchase goods and services of more than 130 material fields.

Siemens procurement is organized as a network in order to take full advantage of its savings.

These savings can be realized by taking up a joint, centrally coordinated approach within

what basically remains a decentralized organization.

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SUPPLY CHAIN MANAGEMENT & ITS CORPORATE FUNCTION

As a cross-sectional function, the Supply Chain Management (SCM) organization mirrors the

structure of Siemens as a whole. Accordingly, Supply Chain Management is made up

of corporate departments as well as of functions in the managerial sectors and in the

Regions.

MANAGEMENT

To highlight the importance of Supply Chain Management, but also to ensure SCM processes

are optimized across the enterprise, Siemens has created a separate seat on the Managing

Board specifically for this purpose. The SCM board reports directly to the Managing Board

member responsible, Barbara Kux. The board is structured into the functions financial

controlling, procurement of direct and indirect materials, strategy and programs, and global

value sourcing. Also parts of the picture are the responsible Chief Procurement Officers

(CPOs) in the sectors and at SIS. In line with the aim of optimizing supply chain management

across the entire enterprise based on integrated quality, logistics and manufacturing

processes, pooled bargaining power and a focused supplier base, the SCM board has

technical managerial authority in all of the companys SCM functions.

DOCUMENTATIONS & REGULATIONS

Siemens and its suppliers are obligated to comply at all times with the legal requirements for

export control and customs, and to ensure their correct and cost-effective implementation.

For this reason, Siemens expects its suppliers to provide export control and foreign trade

data in a professional and timely manner, and to implement appropriate standards for

security in the supply chain in the framework of global customs security programs.

In addition to these basic requirements, further requirements are to be taken into account,

e.g. due to national or product-specific requirements which must be evaluated on a case-by-

case basis.

Export Control and Foreign Trade Data & Data Regulations.

X.1 For all Products to be delivered and Services to be provided according to this Agreement

Supplier shall comply with all

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applicable export control, customs and foreign trade regulations (Foreign Trade

Regulations) and shall obtain all necessary export licenses, unless Buyer or any party other

than Supplier is required to apply for the export licenses pursuant to the applicable Foreign

Trade Regulations.

X.2 Supplier shall advise Buyer in writing as early as possible but not later than [weeks/days

prior to the] the Delivery Date of any information and data required by Buyer to comply with

all Foreign Trade Regulations for the Products and Services applicable in the countries of

export and import as well as re-export in case of resale. In any case Supplier shall provide

Buyer for each Product and Service

the Export Control Classification Number according to the U.S. Commerce Control

List (ECCN) if the Product is subject to the U.S. Export Administration Regulations; and

all applicable export list numbers; and

the statistical commodity code according to the current commodity classification for

foreign trade statistics and the HS (Harmonized System) coding; and

the country of origin (non-preferential origin); and

upon request of Buyer: Suppliers declaration for preferential origin (in case of

European suppliers) or preferential certificates (in case of non-European suppliers)

(Export Control and Foreign Trade Data)

X.3 In case of any alterations to origin and/or characteristics of the Products and Services

and/or to the applicable Foreign Trade Regulations Supplier shall update the Export Control

and Foreign Trade Data as early as possible but not later than [weeks/das prior to] the

Delivery Date. Supplier shall be liable for any expenses and/or damage incurred by Buyer due

to the lack of or inaccuracy of said Export Control and Foreign Trade Data.

Export Control and Foreign Trade Data

Siemens suppliers' undertake on a contractual basis to provide export control and

foreign trade data. Forms are available for providing this required data:

Letter Request for product specific data- Supplier EU

Letter Request for product specific data- Supplier NON-EU

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Supply Chain Security Requirements

Suppliers who are integrated into Siemens' supply chains take measures to guarantee security in the supply chain in accordance with the requirements of global customs security programs. X.1 On the basis of the World Customs Organizations SAFE Framework as well as national customs security programs aimed at averting dangers from terrorist attacks, Siemens involves its suppliers in the implementation of sufficient and appropriate standards of supply chain security. In this context, Siemens expects the willing cooperation of important participants in its supply chains, especially materials suppliers and logistics service providers. X.2 Requirements for goods suppliers and logistics service providers relate to necessary measures taken in particular in property protection, security of business partners, personnel and information, and packaging and transport to protect deliveries and services from unauthorized access. Detailed requirements can be found in the WCOs SAFE Framework or the respective national customs security program. X.3 The requirements can preferably be met by proof of participation in a national customs security program (e.g. AEO) or comparable security initiatives. Alternatively, a confirmation can be provided stating compliance with the required security standards.

Export Control Declaration of Siemens

The export control policy of Siemens prohibits from participating, directly or indirectly, in the development, manufacturing and distribution of weapons of mass destruction and missiles capable of delivering these weapons. All legal and internal measures are implemented in the Export Control and Customs Guidelines. These measures, in addition to German, European and U.S. regulations, also include other company internal restrictions concerning the above mentioned end-uses. Therefore, for each order, regardless of the country of destination, screening is completed for criteria contained on the EU and German "Export list" and the U.S. "Commerce Control List" including end-use and end-destination related restrictions, and if the required authorization is not obtained, then the order must be cancelled.

Documentation Requirements: Medical Equipment/Devices Imports

For the purchase of medical equipment/devices the government authorizes the government

owned and private hospitals to issue global tenders. These tenders are permitted even if a

product is manufactured domestically. Most of the government tenders follow two parts:

technical bid and commercial bid. All the government tenders are time consuming as public

hospitals often have extensive bureaucratic structures and decisions are sometimes hard to

reach. Generally the government decides on the lowest bidder. The registration requirement

and the standard procedure to import medical devices into India.

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Regulation Medical Equipment Market In India

Presently, the Indian market for medical devices is largely unregulated. Medical devices are freely imported into India. The purchaser (whether it is a government hospital, a private hospital or a doctor) evaluates the quality of the product being purchased. Normally, the FDA and CE approved products are preferred because of their better quality and performance. But, India being a price sensitive market, low priced medical devices find a big market.To ensure the quality of healthcare service, the Government of India is in the process of developing regulations for medical devices. According to industry contacts and the Ministry of Health officials, a notification is expected that would bring a select group of medical devices under the regulatory framework

Import procedure

The standard operating procedure for importing medical equipment/devices into India consists of the following steps. The U.S. exporter provides the proforma invoice stating the offer price, which is inclusive of the insurance and freight cost. On reaching an agreement on the mode of payment, which can be a letter of credit or wire transfer of funds; the Indian importer places the order for the product. The exporter either ships the consignment or uses the airfreight. At the port of entry the importer or its customs clearing agent is responsible to clear the goods for home consumption after the payment of duties. The following documents are required along with the bill of entry.

Signed invoice Packing list Bill of Lading or Delivery Order/Airway Bill GATT declaration form duly filled in Importers/Clearing House (agents) declaration License wherever necessary Letter of Credit/Bank Draft/wherever necessary Insurance document Import license Industrial License, if required Test report in case of chemicals Catalogue, Technical write up, Literature in case of machineries, spares or chemicals

as may be applicable Separately split up value of spares, components machineries Certificate of Origin, if preferential rate of duty is claimed

All imported goods are required to be examined for verification of correctness of the description given in the bill of entry. However, only a part of the consignment is selected on a random basis and examined. After the assessment of the duty liability, the importer has to deposit the duty calculated with the treasury or the nominated banks, and then seek delivery of the goods from the Custodians.

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Procurement by Health care agencies

Problems that effective procurement could avoid Resulting waste you could save

Policy/planning:

lack of standardization

purchase of sophisticated equipment for which operating and maintenance staff have no skills

30-50% additional cost for extra spare parts and extra

maintenance workload 20-40% of equipment remains

underutilized or unused

Procurement:

impact on equipment and buildings during installation, unforeseen at the initial tender stage

inability to correctly specify and foresee

total needs when tendering and procuring equipment

extra modifications or additions required for 10-30%

of equipment 10-30% additional unplanned

costs

Training:

improper use of equipment by operating and maintenance staff

loss of 30-80% of the

potential lifetime of equipment

Operation and maintenance:

excessive equipment down-time due to absence of preventive maintenance, inability to repair, and lack of spare parts

25-35% of equipment out of service

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Suppliers and OEM manufacturers

The concern with medical suppliers and vendors has grown in significance in recent years.

From tainted heparin, to melamine used as an ingredient in pet food and toothpaste, to

unknown ingredients introduced into medical supplies through ghost suppliers and vendors,

the resulting patient deaths, crippling injuries and acute patient trauma have grown in

complexity. We have witnessed extraordinary ignorance and carelessness regarding the

nations medical supply chain. In most of these instances, unidentified foreign material has

been introduced into the supply chain without manufacturers and consumers being aware of

it. Further, incoming inspection often is weak and lacking in sufficient depth to detect alien

material in time to stop the product from reaching the market

Suppliers to Siemens and their suppliers

Cordys

Cordys improves core logistics processes for Siemens Healthcare

The Cordys solution at Siemens Healthcare automates key logistics processes as part of the

global material logistic process. The material logistics comprises supply chain solutions over

the whole product life cycle within the business unit UPTIME Services. It enables spare parts

to be delivered to customers fast and efficiently, in more than 98 percent worldwide within 24

hours.

The Cordys solution automates the following processes:

critical parts deliveries

returns of spare parts

customer feedback

The solution also provides the tools for continuous process improvement in order to

maintain Siemens high levels of customer satisfaction and high quality standards throughout

the global logistics network.

Suppliers to cordys

Nibana Solutions

Nibana Solutions is one of the first companies globally, to deliver integrated Manufacturing

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centric Enterprise wide Business Process Applications and Dashboards (for effective

decisions) using world class BPM, SOA, SaaS and Cloud technologies.

CSC

CSC is a global leader in providing technology-enabled solutions and services through three

primary lines of business. These include Business Solutions & Services, Global Outsourcing

Services and the Public Sector. "Cordys Business Operations Platform allows organizations to change and innovate the way they do business with notable new speed and greater flexibility. This is a key business requirement in the current economic climate. These new solution elements provide a range of tools for business transformation and directly support our enterprise-wide cloud strategy. CSC and Cordys share a common purpose of strong business ethics, innovation and entrepreneurial spirit"

CICOIL

Cicoil Silicone Flat Cable and Cable Assemblies are used in a wide variety of medical

applications, including automated medical equipment, medical robotics, testing equipment,

and also human medical devices like hearing aids.

Customers

Cicoil supplies cables and cable assemblies to many leading medical equipment and device

manufacturers, including the following:

GE Medical

Siemens Medical

Sleep Apnea Device Manufacturers

Robotic Lab Testing Equipment Manufacturers

Hearing Device Manufacturers

Pharmacy Robot Manufacturer

CICOIL suppliers

DIGI-KEY

Raytheon Integrated Defense Systems

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Key drivers on the basis of the porter`s five forces analysis

Barriers to Entry:

The Medical Industry typically has high barriers to entry in the form of high research and development expenditures, regulatory restrictions, and legal obstacles

Bargaining power of buyers

Medical devices Market is primarily a Business to Business market and prices are primarily driven by buyer-supplier negotiations. Due to the price discrimination there is also lack of transparency among the market players as far as prices are concerned. This results in a predominance of the bargaining ability of the buyer in determining the price and the subsequent profitability for the supplier.

Bargaining Power of Suppliers

Powerful suppliers capture more of the value for themselves by charging higher prices, limiting quality or services, or shifting costs to industry participants. In case of Medical devices, the supplier group is highly focused on the medical industry and most of times on supplying for a particular product. Manufacturers tend to cluster in certain locations, depending on specialization.

Threat of Substitutes

The medical device Industry tends to evolve in fits and starts rather than in a slow, gradual fashion. Thus, a particular device market tends to chug along till it is replaced by a game changing technology that revolutionizes the market.. So, in general because of the lack of gradual and continuous innovation, the threat of substitutes is very low. Competitive Strategy Supply Chain Strategy Efficiency Responsiveness Facilities Inventory Transportation Information Supply chain structure Cross Functional Drivers Sourcing Pricing Logistical Drivers.

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DRIVERS OF SUPPLY CHAIN

1. Inventory:

Inventory "stockage" exists in all supply chains because of a mismatch between supply and demand. Mismatches are often intentional, such as the case when cost effectiveness dictates batch sizes or when future demand is unclear and immediate customer delivery is required. The spread of inventory throughout the supply chain includes raw materials, work in process, and finished goods by suppliers, manufacturers/repairers, distributors, and retailers. Inventory also has a significant impact on the material flow time of a supply chain. A major conclusion for those who manage inventory is that decreasing inventory (without increasing cost or decreasing responsiveness to the customer) can provide a significant flow time advantage in performance in the supply chain. Inventory also plays a significant role in a supply chain's ability to support a firm's competitive strategy. If a business requires a very high level of responsiveness, the company can use inventory to achieve this responsiveness by locating large stocks of inventory close to the customer. In a pull or just-in-time environment, suppliers may elect to locate inventories within a customer's stockroom with scheduled shipments on an hourly or minute-by-minute basis. An extreme case is a supplier co-locating their specialized manufacturing within the factory of their customer, providing instant responsiveness to the customer's demand. Conversely, a business

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can also use inventory to become more efficient by decreasing inventory through centralized stocking. The tradeoff is efficiency versus responsiveness. A supply chain manager must make routine decisions to create a more responsive and more efficient supply chain. These decisions typically focus on decreasing procurement, repair or delivery cycle inventory, safety inventory, and seasonal inventory.

2. Transportation/Logistics:

Transportation moves the product between different locations in a supply chain and significantly affects both responsiveness and efficiency. Quicker methods (modes of transport, different amounts) increase supply chain responsiveness but decrease efficiency. The type of transportation can also affect inventory and facility location. For example, international transactions are the current commercial trend, but the supply chain manager must plan for travel time and customs processing. Transportation is prominent in a company's competitive strategy when considering customer need. If a firm's competitive strategy targets a customer that demands high responsiveness and that customer is willing to pay for this level, then they can use transportation as a driver for increasing supply chain responsiveness. The fundamental trade-off for transportation is cost (efficiency) versus speed (responsiveness). A transportation cost analysis must consider the effects of speed on inventory required.

A number of decisions have to be taken in designing a supply chain regarding transportation like:

Route and Network selection: Network is a set of facilities or destinations which can be used for transportation of goods. Route is a specific selection of facilities or destinations through which goods move.

Own transport or outsourced transport

3. Facility:

A facility is a place where inventory is stored, manufactured or assembled. Hence facilities can be categorised into production facilities and storage facilities.

Process: A collection of interrelated: the process steps must relate to each other interrelationship is through sequence and flow...the completion of one step leads to

(flows into) the initiation of the next step also interrelated by dealing with the same work item steps related by being traceable back to the same initiation event Capacity: Efficiency and Effectiveness for capacity: Capacity efficiency minimal excess capacity with the ability to produce only what is

required Capacity effectiveness large amounts of excess capacity which can handle wide

swings in demand Layout: Efficiency and Effectiveness for layout:

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Operational layout efficiency product focus design allows the facility to become

highly efficient at producing one single product, increasing efficiency Operational layout effectiveness functional focus design allows the facility to

perform a specific function on many different types of products, increasing effectiveness

Location: Efficiency and Effectiveness for location: Location efficiency centralize the location to gain economies of scale, which

increases efficiency Location effectiveness decentralize the locations to be closer to the customers,

which increases effectiveness Whatever the function, decisions regarding location, capacity, and flexibility of facilities significantly affect supply chain performance. For example, a company can increase responsiveness by setting up warehouses near its customers instead of creating only one remote stock facility. This usually decreases cost while increasing responsiveness. Since facilities are a key driver of supply chain performance, factors such as location, capacity, manufacture/repair methodology, and warehousing methodology also affect supply chain performance by way of the facilities component.

4. Information:

Even though information does not have a physical presence, it is still a major supply chain driver. Information deeply affects every part of the supply chain in several ways. Information serves as the connection between the supply chain's various stages, allowing them to coordinate their actions and bring about many of the benefits of maximizing total supply chain profitability. Information is also crucial to the daily operations of each stage in a supply chain, such as the case for production scheduling, order status, and inventory status. A growing trend is the importance of information and information systems in balancing responsiveness versus efficiency. The tremendous growth of information technology as a functional discipline and a science is testimony to the impact that information has on the effective and efficient operation of a business. Similar to all other drivers, businesses must trade-off between efficiency and responsiveness when trying to include more supply chain information. A key decision regarding information is determining what information is most valuable in decreasing cost and increasing responsiveness within a supply chain. This decision depends on the supply chain structure and market segments served. For example, some companies target customers who require costly customized products. These companies might find that an investment in information helps them to respond more quickly to their customers' needs. Issues related to information:

Push process information and pull process information Coordination and information sharing across various facilities in the supply chain Forecasting Aggregate planning Enabling technologies

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So the key drivers for the industry that comes out above discussion are evaluated as follows in the metric below for demand uncertainty and can be met by POM.

Conclusion

India is a relatively small market but one of the fastest growing.

Siemens Med India is market leader in most segments.

Broad market coverage and competitive product lines allow them to take advantage

of future growth opportunities in India.

Siemens Med India is an integral part of our worldwide cost .

Optimization strategy. Siemens generates a substantial share of our cost advantages

from LCC in India.

Competitive advantage for continuous profitable growth.

Value added in India and exports from India continue to grow.

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Reference http://www.siemens.co.in

http://www.technicalprospects.com

http://www.medical.siemens.com/webapp

http://www.siemens.com/

http://www.cordys.com/

Supply Chain Management by (5th Edition) By Sunil Chopra & Peter Meindl