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CASE STUDY
       OF
MEDITECH SURGICAL
               JOHN
             ASHOK
             S AT H I A
               NITHI
            KRISHNA
INTRO: MEDITECH SURGICAL
• 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
V.P. OPS

                         DIRECTOR   DIR PLG,
  PM 1       PM 2        SUPPLIER   DISTN &
                           MGMT        CS

                                    CENTRAL
  BU
                                    PLANNING

                                       CS &
  BU                                DISTRIBUTI
                                        ON

                                    INVENTOR
QUALITY
                                        Y

SUPPORT
                                      LOGISTICS
SERVICES


  MATERIAL
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 overview
 Supply chain
 Production planning – 6 weeks
   LT
 What’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

                                                   Hospitals


                                      Domestic
                                      Dealers



Part           Meditech   Meditech
suppliers      Assembly   Warehouse
                                                   Hospitals


                                      Int’l
                                      Meditech
                                      Affiliates
INTERNAL SUPPLY CHAIN

Parts Inventory   Assembly   Bulk Inventory   Packaging &
                                              Sterilization   FG Inventory




2 - 16                2                             1
weeks               weeks                          week
PRODUCTION PLANNING
Annual
Forecast

            Monthly
            Revision

                         Transfer
                       Requirements

                                        Monthly
                                         Plan


                                                    MRP




                                          Parts            Weekly
                                      Procurement         Assembly
                                          Plan            Schedule
Monthly        PRODUCTION PLANNING
    Plan

                             MRP

                                                   Order point;
 Material
                                                  Order quantity
  Plan




Parts Inventory   Assembly     Bulk Inventory   Packaging &        FG inventory
                                                Sterilization
WHAT IS GOING ON?

Demand is quite predictable
Usage in hospitals is quite stable
Market share moves slowly over time
With 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 systems
No one looked at demand
No one had responsibility for forecast errors
Tendency to shift the blame
Built-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 forecast
Eliminate planning delays and/or reduce time
  bucket
Alternatively, put assembly within pull system
  and eliminate bulk inventory
CASE DISCUSSION QUESTIONS

1. WHAT ARE
MEDI TECH’ S PROBLE MS
IN I NTRODUCI NG NEW
PRODUCTS ? IN
MANUFACTURI NG ALL
PRODUCTS ?
CASE DISCUSSION QUESTIONS

2. WHAT IS DRIVING
THESE PROBLE MS,
BOTH
SYSTEMATICALLY AND
ORGANIZATIO NALLY?
CASE DISCUSSION QUESTIONS

3. WHY IS THE
CUSTOME R SERVICE
MANAGE R THE FIRST
PERSON TO
RECOGNISE THE
MAJOR ISSUES?
CASE DISCUSSION QUESTIONS

4. HOW WOULD YOU
FIX THESE
PROBLEMS?
THANK
YOU

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Scm case 1

  • 1. CASE STUDY OF MEDITECH SURGICAL JOHN ASHOK S AT H I A NITHI KRISHNA
  • 2. INTRO: MEDITECH SURGICAL • 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
  • 3. V.P. OPS DIRECTOR DIR PLG, PM 1 PM 2 SUPPLIER DISTN & MGMT CS CENTRAL BU PLANNING CS & BU DISTRIBUTI ON INVENTOR QUALITY Y SUPPORT LOGISTICS SERVICES MATERIAL
  • 4. 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
  • 5. CASE: MEDITECH SURGICAL Intent – diagnosis of supply chain Business overview Supply chain Production planning – 6 weeks LT What’s wrong? How to fix it?
  • 6. 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
  • 7. EXTERNAL SUPPLY CHAIN Hospitals Domestic Dealers Part Meditech Meditech suppliers Assembly Warehouse Hospitals Int’l Meditech Affiliates
  • 8. INTERNAL SUPPLY CHAIN Parts Inventory Assembly Bulk Inventory Packaging & Sterilization FG Inventory 2 - 16 2 1 weeks weeks week
  • 9. PRODUCTION PLANNING Annual Forecast Monthly Revision Transfer Requirements Monthly Plan MRP Parts Weekly Procurement Assembly Plan Schedule
  • 10. Monthly PRODUCTION PLANNING Plan MRP Order point; Material Order quantity Plan Parts Inventory Assembly Bulk Inventory Packaging & FG inventory Sterilization
  • 11. WHAT IS GOING ON? Demand is quite predictable Usage in hospitals is quite stable Market share moves slowly over time With each new product, dealer must build inventory to fill pipeline
  • 12. WHAT’S WRONG? Poor service for new product introductions Poor forecasting? Panic ordering? And high FG inventory
  • 13. WHY DID MEDITECH THINK DEMAND WAS UNPREDICTABLE? Poor information systems No one looked at demand No one had responsibility for forecast errors Tendency to shift the blame Built-in delays and monthly buckets in planning system Amplifier in planning system
  • 14. WHAT TO DO? Recognize that demand is stable and predictable Establish accountability for forecast Eliminate planning delays and/or reduce time bucket Alternatively, put assembly within pull system and eliminate bulk inventory
  • 15. CASE DISCUSSION QUESTIONS 1. WHAT ARE MEDI TECH’ S PROBLE MS IN I NTRODUCI NG NEW PRODUCTS ? IN MANUFACTURI NG ALL PRODUCTS ?
  • 16. CASE DISCUSSION QUESTIONS 2. WHAT IS DRIVING THESE PROBLE MS, BOTH SYSTEMATICALLY AND ORGANIZATIO NALLY?
  • 17. CASE DISCUSSION QUESTIONS 3. WHY IS THE CUSTOME R SERVICE MANAGE R THE FIRST PERSON TO RECOGNISE THE MAJOR ISSUES?
  • 18. CASE DISCUSSION QUESTIONS 4. HOW WOULD YOU FIX THESE PROBLEMS?