5. âCustomer Focus Groupâ
National Medical Corporationfocus on surgeons
Meditech focus on surgeons and material managers
Product line consists of over 200 separate end-products
Poor delivery serviceâŚ
9. Internal Operations
Assembly
⢠Manually Intensive
⢠Component parts placed into inventory after QA
⢠Run by a cross-trained production workersâ team.
⢠The typical cycle time =2 weeks, lead time =2-16 weeks
10. Internal Operations
Packaging
⢠Several large packaging machines
⢠Capacity has no restricted output
⢠Ship immediately to the sterilizer
11. Internal Operations
Sterilization
⢠A large cobalt radiation sterilizer
⢠Turn on for about 1 hr & move into finished good inventory
⢠Capacity not be a problem
13. OperationOOrgpaneizartaiont Cihoarnt Organization
-Production Personnel
-Engineering technicians
-Quality assurance
-Support Service
-Material Supply
Meet 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.
14. Production Planning & Scheduling
Monthly Forecast
For Assembly &
Component part
ordering
Daily Scheduling
For Packaging &
Sterilization
15. Monthly
MK Finance
Q4 Forecast Annual
Forecast
Monthly
(Adjusted)
Forecast
Next Year Sales Estimation
âTransfer Requirementâ
MK Central Planning
16. âTransfer Requirementâ
FG level
Transfer Requirement (Bulk) = (monthâs demand + safety stock level) â Current FG
17. Monthly
Plan
1. Monthly
Forecast
Assembly
B.U.
Planner
Weekly
Production
Schedule
(Assembly )
3. Inventory of
Component Parts,
Bulk & FGs
2. Lead Time of Assembly,
Packaging & Sterilization
Component
Parts Orders
Demand
MRP
System
19. New Product Introductions
High Levels of Inventory and Poor Service Level
Background
ď Meditech has introduced dozens of new product.
ď 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.
20. New Product Introductions
High Levels of Inventory and Poor Service Level
Moreover, Finish goods inventory levels appeared to be remarkably high.
40% High FG
Inventory
A consultant had recently been hired to study Meditechâs inventory as detail
21. New Product Introductions
High Levels of Inventory and Poor Service Level
ď FG inventory high due to Panic Ordering
Meditech
900 1000
300 300
Dealer Dealer Affiliate Affiliate
H H Dealer
H H
100
Dealer
H H
100
300
Domestic International
300
100 100
22. New Product Introductions
High Levels of Inventory and Poor Service Level
By the way, Staff member to investigate the new product problem as below
High peak first
few weeks
Relatively Stable
ď The existing information in many different system
ď Different data format such as
Time term : Weekly , Monthly and Financial Calendar
After analyzed they found
27. CASE DISCUSSION QUESTION
How to fix Meditechâs delivery problems
1. What are Meditechâs 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?
31. CASE DISCUSSION QUESTION
1. What are Meditechâs problems in introducing
new products? In manufacturing All products?
New Introducing Product
Fail to serve of Initialing demand
All products
â˘Huge number of end-products
â˘Unexpected high Demand
â˘Delivery Delay
32. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
New Introducing Product
â˘Panic ordering --ď Bullwhip
â˘Long lead time of component part
â˘Variation of production schedules
â˘CV = SD/X
33. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
New Introducing Product
Problem of Demand
â˘Duplicate Order
â˘Redundant Order
â˘Panic Order
Problem of Supply
â˘Segregation Management
â˘Information and sharing
data format
â˘Bullwhip
34. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
All products
â˘Data collection system
â˘Data format
â˘Forecast methodology
â˘Transportation
â˘Production delay
35. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
Product
Development
Supplier
Supply Chain
Distributing
Production
Mkt. and Sale
Cus. Service
Purchasing
Customers
Outsource
36. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
⢠Organization
- Purchasing
- Distributing
President
- Marketing
- Sale
- Customer
Service
VP. Production
VP. Product
Development
VP. Financial
VP.
Marketing&Sales
VP. Supply Chain
VP. Human
Resources
Safety
37. 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 customerâs problems.
38. CASE DISCUSSION QUESTION
4. How would you fix these problems?
New Introducing Product
â˘Reduce slow moving products
â˘Demand Pooling Across Location
â˘Demand Pooling Across Product
â˘Selling system management
â˘Information sharing
39. CASE DISCUSSION QUESTION
4. How would you fix these problems?
All product
System
â˘Online ordering
Data format
â˘Time base standardize
Statistical method i.e. linear regression
Use Actual Ordering
Relocated Warehouses for the optimal distance to
customer
40. CASE DISCUSSION QUESTION
4. How would you fix these problems?
All product
â˘Outsourcing low margin products
â˘Obsolete non-value products
â˘Increase process capability