2. Problem Statement
Find ways to eliminate supply chain costs at MTC
to cover a new 2.3% medical device excise tax
called the Affordable Care Act.
3. Analysis
With current
revenues of
$5,953.86 and costs
of $3,160.08, the
operating costs will
need to be reduced
by $142.51 assuming
a 4.8% projected
revenue growth.
4. Current Situation
In the current state MTC sends produce to an
offsite sterilization process. Once complete
shipments move to branch offices and then
are delivered by sales representatives.
This operation when viewed on a value stream
map uncovers several wastes including:
Inventory, Waiting, Motion and
Overprocessing.
The current state also adds delays to the
process that could improve the customer’s
experience if they are improved upon.
6. Recommendations
• Stop outsourcing sterilization process
• Transition from branch offices to distribution centers
• Sell directly to the hospitals
• Lower unnecessary trunk inventories of sales
representatives
• Set up kaizen events with hospitals as strategic suppliers.
7. Benefits
• Faster transit resulting in less transportation cost
• Lower cost sterilization process
• Just in time inventories
• Lower inventory holding cost
• Strategic partnerships
9. Executive Summary
Eliminating costs out of the supply chain to cover a 2.3%
tax on revenue difficult take. However, are reviewing the
operation, evaluating the financials, estimating the
forecast for the coming year and using a value stream map
to identify opportunities for improvement. The outlined
solutions are expected to remove costs from the operation
that will cover the 2.3% tax.
