Coursera Supply Chain Strategy week 6 assignment.

1. SUPPLY CHAIN STRATEGY
DEVELOPMENT FOR MEDICAL
TECHNOLOGIES
CORPORATION
Yadnesh kadulkar

2. INTRODUCTION TO MTC
 They are a medical device manufacturer located in
Pennsylvania.
 They are a Surgical Device Manufacturer and Seller.
Problem Faced:
• Implementation of the Affordable Care Act (ACA) which is Medical Device Excise.
• Tax is of 2.3% of Revenue.
• The newly introduced tax leads to a 10% reduction in Net Profits.
Objective:
• Find out cost savings in order to minimize the impact created by the new act which is
taking 2.3% tax on revenue.

3. Finance Overview
• The revenue growth was strong from 2010 to 2012 which is 12% annual avg.
• There was a steady growth from 2012 to 2014: 4% annual avg.
Revenue Growth:
Spending on SG&A compared to revenue growth:
• SG&A was approx 37% of revenue in 2010 which them jumped to 45% of revenue in
2014.
• The jump was quite drastic for a time span of 4 years.
Operating income erratic with negative growth:
• Grew approx 3% from 2010 to 2012 anually.
• Reversal to -12.3% negative growth from 2012 to 2014 anually.

4. Production/
Manufacturing
Off-Site
Sterilization
Storage of
MTC
Central
Distribution
Center
Loaner
Office
Branch
Office
Hospital
Storage
Sales
Representative
Hospital
Operation
Room
Transport 48 hrs Transport 48 hrs
UnusedequipmentbackforsterilizationOld Process Map

5. Short Term Improvement Plan
1. Change in the Infrastructure of Sterilization Site.
• Make the entire sterilization facility and its processes in-house.
• This will eliminate the additional 4 day lead time in the current operations layout.
• The cost spent in transportation of stock back and forth through the sterilization
site reduced.
• Having the process in-house MTC will have a better control over the process carried
over its stock.
2. Re-alignment of Sales Representative teams.
• The SG&A have shown a large percentage jump as well as cut out a large portion of
the revenue.
• One of the first steps would be to reduce the amount of trunk stock kept with the
sales representatives.
• The SG&A is almost 45% of revenue in 2014.
• The talent and resources of the sales representatives team can be focused elsewhere
where their high commissions are more justifiable as well as beneficial to the
company in terms of revenue generation.
• Short percentage of the Sales team can be directed towards getting the favor of
large GPO’s and their preferred Distributors and find ways to negotiate a win-win
deal for both the parties considering our own profit increment.

6. Mid Term Improvement Plan
Introduction of proposed Smart Kiosks.
• Implementation of the smart kiosks can be done for
better control over the entire product flow right from
production to its final destination.
• This will allow for the reduction in the trunk stock kept
with the sales representatives and also reduce the total
reliance on the Loaner and Branch offices.
• The kiosks can have an internal bill generation system
which can directly communicate the order to MTC branch
and hence the inventory can be properly managed.
• The sales representatives can be encouraged to use their
skills in getting majority of the hospitals onboard with this
idea.
• Its installation will provide speedy delivery of necessary
items to the operation room compared to a sales rep
delivering them.
• Automating this part of the process in the long term will
lead to better control and this aspect of the process wont be
a topic of subjective assessment anymore.
• These kiosks can also be outsourced to another medical
manufacturers can hence securing MTC a commission for
each sourced kiosk.

7. Long Term Improvement Plan.
1.Adopting the Lean Methodology :
• In the long run the Lean philosophy will be very helpful in streamlining the entire
process in order to the maximum out of every aspect.
• Lean along with six sigma can help in reducing waste/ elimination, and having
minimum defects per millions units produced.
• Automating many sectors of the operations process can lead to better integration
of all the functions in the process.
• Collaboration with existing medical device suppliers can be beneficial when it
comes to the competitive price negotiating between the suppliers and the GPO’s.
• Developing strong relations with the wide distributers and increasing the logistics
network is also an important aspect.
2. Inventory Management:
• Current product flow layout has a lot of stops where inventory is stacked and
rests for a period.
• Coming up with new initiatives and ways to minimize the inventory that takes up
resources like time, space and money.
• Working in harmony with hospitals and offices can pave the way for a better Just
In Time (JIT) approach.

8. Improved Layout: In-house Sterilization and Less offices
Benefits:
1. Time
• JIT Sterilization
• Less inventory
• Immediate response
2. Cost Control
• Savings overall in
transportation.
• Cost savings in
contractual services and
commission
3. Quality Control
• Proper and direct control
over the sterilization
process
• Ease of giving the priority
to products as and when
required

9. Sales representative team : Short Term
1. Structure for change:
• Diversion of sales teams in improving relations with surgeons. This includes
assisting them in the operating room until they get accustomed with the equipment
and its overall functionality.
• Working with the hospitals in order to get them into adopting the new smart kiosk
system for the procurement of devices and equipment from the hospital floor itself.
• The administration can on the other hand moniter the stock kept with sales
representatives and draft the figures where how much loss is subjected to the
company can be calculated.
• Diverting time and resources of sales reps to different strategies can benefit both
parties without cutting into anyone's pocket.

10. Explanation of Cost Savings:
In the last slide the revenue for the Year 2014 is kept in mind.
A 2.3% reduction on the revenue gets us a figure of 136$ million dollars.
This direct cut has a 10% impact on the company profits.
In order to offset the difference caused we need to reduce the percentage
funds going in the Selling, General and Administrative Expenses.
The corresponding percentage cut would be of 5.10% from the SG&A
expenses.
This 5.10% cut can be accrued by various ways by reducing the trunk stock
with the sales reps and diverting their time and skills to developing stronger
and better relationships over a wide base and hence boosting the reach and
sales across a large platform.

11. Contingencies to mitigate the Risks:
1. Entirely Outsourcing the Logistics
• One way of reducing the risk would be to initially relying on the 3PLS for the
entire supply chain and transport.
• The Transport route and delivery can be managed until the onset of Smart Kiosks
as majority of taskforce will be dedicated to getting the hospitals onboard with the
Kiosk idea.
2. Smart Kiosk temporary alternative:
• Instead of directly going all in on the installation of the smart kiosks the company
can assign a temporary Booth with a MTC employee to cater for the deliveries.

12. Summary:
1. Short Term:
• For the short term onset of sterilization in house and diverting of the sales
representative efforts to better customer relationship management would be the
goals.
• The majority of the cost recovery would happen in this phase.
2. Mid-Term:
• The introduction of Smart Kiosks will start and steadily grow to dominate the
industry and take its place instead of the sales representatives.
• In contrast the sales reps would be more focused towards growing their influence
and increasing the sales in other parts of the country.
3. Long Term:
• Adopting the Lean methodology and hence streamlining the entire process from
start to end with close control over the previous arbitrarily controlled process
modules.
• Using Six sigma to achieve least waste and JIT approach to every part of process.

13. THANKYOU !!
Yadnesh Kadulkar