1. Visual representation on MTC
By-Md: Raqibul hasan
Case Introduction- Industry & Deliverables
Industry Backdrop:
• United States is the largest medical device market in the world:
• Size: $110 billion in 2014. Expected to reach $133 billion by 2016.
• More than 6,500 medical device manufacturers
• The sector employs almost half a million people directly & indirectly 2 million more
• Top 4 organizations cover $ 23 billion ( 24%)
• Industry under consolidation ( -0.6% YoY reduction in no. of manufacturers)
2. • Overall Growth 4.8% by 2020 for Industry – Specifically Growth of 7.6% in Medical device
Distribution
Key Factors:
• Ageing Population in USA
• Increase in number of people coverage ( Due to Health Insurance Coverage Bill)
• Increasing of Process Innovation Requirements by Hospitals
Key Deliverables:
• Costs savings to cover Affordable Care Act (ACA) Medical Device Excise Tax of 2.3% of revenue
• Translates into over 10% reduction in MTC’s profits
Key Challenges
Key Challenges- MTC :
• Technological assistance in terms of Tracking & traceability
• Innovation in Supply chain management
• Innovative approach towards current Distribution Channels
3. • With Rationalized Costs
• Consolidation of channels
• Clarity on approach towards Focus Market Groups
• Regional Segmentation
• Management of Internal Dynamics
• Sales Agents’ Commission methodology
• Inventory Management
• Make-vs-Buy (Outsource) nodes in Supply Chain
Executive Summary – Proposals & Outcomes
Operations
Manufacturing strategy
• Manufacture based on
JIT ( Lean methodology)
• Inventory management
( Bulk & Niche
Manufacture)
• In-house Sterilization
facility
Logistics
• Using Own 3 PL service
providers
• Utilize existing Hospital
storage to keep basic
required
EquipmentInventory
• RFID Tagging ( Use of
technology in tracking /
traceability) of
equipment
Sales & Marketing
Strategy
• Establish Earnings vs
Returns for Sales
Representatives
• Rationalize Sales
Incentives- Keep
incentives limited to
New Product Sales
• Provide Incentives for
Special Cases
• Remaining all Products
to move through
DIRECT Channel to
Hospitals
Establish Long term
partnership with
Identified Hospital
Groups
• Provide Enhanced
exposure to Surgeons to
varied facets of Medical
technology
• Reduced Blocked
Capital
• Make to Order
scenario
• Reduction in Lead
times- 5 days
• Reduced Inventory in
entire Chain
• Enhanced Tracking
• Quicker Revenue
realization
4. • Collaborate with
hospitals in Research &
Development
• Conduct trials and
develop Innovative
Products in collaboration
with Hospital users
Possible Inorganic
Growth
• MTC must look out for
increase in Capacity &
Variety through-
• Merger & Acquisitions of
other firms
• Leverage upon
additional Volumes &
Varieties to provide
ROBUST Supplies &
ENTIRE DEMAND
VARIETY
Areas of improvement
Supply Risk------>
High Profit Impact
High Supply Risk
High Profit Impact
Strategic Suppliers
Low Supply Risk
Leverage Suppliers
Very close relationships,
Go for high bargain
Almost part of company
Best Quality
Not only cost,
Best Service
Innovative value products
Mitigate risks by Integration
Low Profit Impact
• Rationalize Sales
Commissions
• Establish Systemic
Sales Channel (Not
people
dependent)
• Build Strategic
Partnerships
• INNOVATIVE
Products
• Co-Creation of
Value
• Win-Win Solutions
• Provide Entire
Product Range
• Arrive at better
pricing & supply
model
5. Low Profit Impact
Low Supply Risk
High Supply Risk
Non- Critical Suppliers
Bottleneck Suppliers
Not to spend more time
Manage alternatives
Automate processes
Tight controls- Service lvl
Very limited trasactions don’t waste time
• MTC needs to move from Non-Critical Supplier position to
STRATEGIC Supplier position
• For Identified Key Hospital Groups
Areas for Improvement:
Offer Win-Win solutions to Hospital Groups
•R&D facilities
•Product Knowledge
•Wider Product base
•Enhanced Capacity
Align Operations constraints
•Manage Inventory Turn-Overs to reduce blockage of
capital
•Make-Vs-Buy situations
•Lean Operations
•Technological applications
Modify Sales model
•Systemic Direct sales to be prioritized
•Rationalize commissions system
6. Resources Required
• LEAN Manufacturing Consultancy
• Willingness from Top Management to drive Change
• Employee Orientation
Operations
• Identification of Target Hospital Segment
• Establishing Long term commitment Aspects:
• Co-Creation of Innovative Products
• Enhancing of Knowledge base of Surgeons
• Expenses on Research & development
• Consultants to Identify Key Mergers / Acquisitions
• Investment to install Inhouse Sterilization facility
Strategy
8. RISK:
Sales dip on account of Bonus
Rationalization
• MITIGATION
• Form Trained Specialist Team(s)
• Identify critical & New
Equipment & Train surgeons
accordingly
• Keep Trained Specialist Team
on stand-by in case of any
emergency assistance required
by Surgeons
• New Equipment marketing to
be done by Specialist
Teams
RISK:
Non-Fulfilment of Hospital
demands on-time due to
reduced Inventory
• MITIGATION
• Utilize Hospital Inventory to
keep Key stocks
• Scientifically Assess
Inventory levels to be
maintained
• Keep Adequate Safety Stock
for Identified Critical Kits
RISK:
Boycott by Existing
Distributors
• MITIGATION
• Build rapport with
Identified Hospital Groups
• Enter into Long-term
contracts
• Pass on Quantity & Long-
term Discounts to identified
strategic partners
RISK:
Inability to operate Inhouse-
Sterilization Unit
• MITIGATION
• Training of employees
• Hiring of trained employees
