The famous meditech surgical case study on SCM

1. MEDITECH SURGICAL:
CASE STUDYANALYSIS
Rahul P. Dukale
Anand S. Thokal

2. About the Company
Parent Company
• Largo Health Company
• Spun off from Largo to avoid distractions from other Largo businesses and
acquire market share.
Product
• Endoscopic Surgical Instruments
• Fall under “Minimally Invasive” Category
Primary Competitor
• National Medical Corporation
• Created $800 million of Market over a decade.
• National Medical concentrated on selling to surgeons.

3. Strategy Followed by the Company
• Aggressive competition with National Medical Corporation
• Developing new, low cost innovative instruments
• Selling them through a first-class sales force.
• Old products were updated with innovative features and presented to
the market as new products.
• A dozen or more new products would typically be introduced by
Meditech in any given year.

4. Distribution
• Distribution through a Central Warehouse
• Primary Channels
 Domestic Dealers
 Primarily for domestic sales
 Order and receive products from multiple
manufacturers
 Independent and autonomous entities
 International Affiliates
 Wholly owned subsidiaries of Largo Healthcare
 Product shipping throughout the country
 International affiliates submit orders to
Meditech and Meditech fills them with available
product.
Part
Supplier
Meditech
Assembly
Company
Warehous
e
Domestic
Dealers
Affiliates
Hospitals
and
Surgeons

5. Internal Operations
Assembly
• Manually Intensive
• Components parts placed in Inventory after Quality
Assurance
• Run by a team of cross-trained production workers
• Typical cycle time – 2weeks
• Lead time – 2-16 weeks
Packaging
• Using several large packaging machines
• Enough capacity, has not restricted output
Sterilization
• Using a large cobalt radiation sterilizer
• Can sterilize as much product as will fit inside its four walls.
• Capacity limitations not a problem
Part
Inventory
Assembly
Bulk
Inventory
Packaging &
Sterilization
FG Inventory
2 to
16
wk
2 wk
1 wk

6. Production Scheduling and
Planning
Broken down into two parts
• Planning, based on monthly forecasts, of assembly and component parts
orders
• Daily scheduling of packaging and sterilization based on finished goods
inventory levels.
Forecast
• Annual forecast during fourth quarter of each fiscal year.
• Monthly forecast based on annual forecast
Assembly Planning
• Based on monthly forecast
• Determining “Transfer Requirement” by following equation –
• Transfer Req. = Demand forecast for the month + Safety Stock- Current
inventory level

7. Production Scheduling and
Planning
MRP System
• Monthly forecast
• Lead time for assembly, packaging & sterilization
• Current parts, bulk, and finished goods inventory levels.
Packaging & sterilization
• Scheduled based on needed replenishment of finished goods inventory.
• Packaging and sterilization operations are considered one operation
• Order point/order quantity (OP/OQ) basis.

8. Problems
• Problems with new product introduction
• Data to measure forecast accuracy had not previously been tracked
• Forecasts and demand information had not been kept.
• High finished goods inventory levels
• Despite the high levels of inventory, the actual service level over the
previous years were disappointing
• “Panic ordering” from dealers and affiliates.
• Decentralized nature of the regional warehouses
• Problems with data gathering

9. Q1. Problems in Introduction…
• Growing customer dissatisfaction
• Strained production capacity
• Meditech consistently failed to keep up with demand
during the flood of initial orders.
• Poor service Delivery - customers had to wait over six
week to have their orders delivered.

10. Driving Forces: Through IshikawaFishbone Diagram

11. Q3. Why is Customer Service Manager
the First to Know??
• Customer service deals with all the complaints and
feedback
• Prime motive is better and quick services
• Continuous strategy making in this direction
• They work with dealers and affiliates hence frequent
contact is there
• Also direct contact with hospital personnel

12. Steps in Fixing the Problems
• Centralization in Data storage : Uniting POS , Distribution
Channels and Production Channels. Role of technology.
• Leaner Product Portfolio.
• Need to keep high Service levels. Standardizing a certain
safety stock level in inventory.
• Focus in improving Supplier Lead time which is presently
2-16 weeks.
• CANNOT SURVIVE WITHOUT STATICTICS AND MIS

13. THANK YOU

14. Work Distribution
• Both of us did equal work 