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Week 6 Assignment

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  2. 2. MTC CURRENT FINANCIAL SITUATION • MTC is a company with a significant growth rate over the years. • The company’s net profit decreased due to newly enforced taxes. • The company’s Supply Chain is required to cut some costs. • In the following slides I will highlight some areas of improvement in the Supply Chain that can have some cost saving effect.
  3. 3. MTC CURRENT LOGISTICS SITUATION • MTC uses off-site sterilization for its products. • 3PL distributors are used to transfer the product from and to the off-site sterilization base. • The products get delivered to hospitals through distributors or 3PLs (2 main downstream distribution channels).
  4. 4. FIRST COST SAVING APPROACH: STERILIZATION • I think that the first approach MTC should pursue is doing something about the off-site sterilization, by either moving it inhouse or partnering up with the sterilization provider. • This will benefit MTC as follows: A. Reducing the lead time of delivery to customers (time is cost). B. Reduce cost of 3PL transportation from and to the sterilization site.
  5. 5. SECOND COST SAVING APPROACH: DISTRIBUTORS • I think MTC needs to eliminates the distributors downstream channel and mainly depend on 3PLs in distributing their products. • This will benefit MTC in the following: A. Increase MTC’s visibility over its stock movement and turnover (better stock visibility will lead to higher turnover and less cost in holding inventory). B. Make the sales forecast more indicative and reliable, hence no over/out of stock situations (both are cost effective).
  6. 6. THIRD COST SAVING APPROACH: WAREHOUSES • One of the most efficient Supply Chain approaches to cost saving is reducing the number of warehouses that operate. • This will have huge impact on MTC as follows: A. Reduced 3PL cost of transportation to different warehouses. B. Reduced overhead cost of workers and employees. C. Reduced operational and rental fees. D. Reduced inventory accumulation points.
  7. 7. CONCLUSION • To conclude, MTC has 3 major axis to work on for cost saving: 1) Sterilization. 2) Distributors. 3) Warehouses.