MTC is a medical equipment supplier facing a 2.3% tax impacting 10% of profits. To offset this, MTC aims to improve its supply chain strategy. Short term plans include increasing relationships with key hospital customers to become their strategic supplier. Mid term plans involve installing smart kiosks at hospitals to reduce inventory costs. Long term plans center around creating strategic relationships with distributors for product sterilization to save on transit time. The strategy aims to cut costs and negate the new tax.

1. MTC Supply Chain Management
Strategy
Indranil Das
About Client: MTC is a Pennsylvania based
medical equipment supplier
Client Challenge:
2.3% ACA tax has been imposed on their
revenue which is impacting 10% of the
profits.
MTC looking at ways to improve their
overall Supply chain strategy to save &
negate the newly imposed tax

2. Executive Summary
Proposed recommendations Intended Outcomes
Short Term Increased relationship with the key purchaser/hospitals to
become their strategic supplier
Larger and sustained sales volume
Application for hospitals for easy ordering of products/auto
replenishments.
Increased relationship with hospitals
Greater visibility of demand and thus cut down on
safety stocks
Use the distributors for product sterilization for fast moving
product
Save on transit time and faster revenue
recognition for fast moving products
Cut down on the 2-3 % of Sales Team who are not
performing
Put a pressure on the sales team to perform at
their top performance. Will also save on the salary
cost
Mid Term Install Smart kiosks at hospitals Stock safety products at hospitals itself and save
on further inventory costs
Review the “trunk stock” with sales team and align it with
demand data
Save on additional safety stocks. Distributors can
provide sales team with on-time products
Long Term Create strategic relationship with the distributors for
product sterilization for all products
Complete saving on transit time of 96 hours for all
supplies

3. Areas of Improvement
# Proposed recommendations Resource required
1 Increased relationship with the key
purchaser/hospitals to become their
strategic supplier
Sales team need to use the strength of their relationship with the hospitals and
position MTC as their strategic supplier. Bolster them with collaterals and
insights that will help them position MTC to increase their service levels
2 Application for hospitals for easy
ordering of products/auto
replenishments.
Strengthen the relationship with hospitals with easy ordering application. The
application will also be used to upsell and cross sell using data based insights.
Over time this will reduce overheads & inventory cost
3 Use the distributors for product
sterilization for fast moving product
This is already an industry practice where products are majorly commoditized.
For specialty products they may retain their existing off-site sterilization
4 Cut down on the 2-3 % of Sales Team
who are not performing
Performance evaluation to be done. Managed relationship Vs sales to be
mapped and the bottom 2-3% of Sales team should be cut down. This will lead
to ~ 3% cost savings.
5 Install Smart kiosks at hospitals This is the mid term action to strengthen the hospital relationship. The smart
kiosks at hospitals will lead to reverse logistics and better production planning
6 Review the “trunk stock” with sales team
and align it with demand data
The “trunk stock” need to be estimated based on actual demand data.
Unblocking of the unnecessary products will free up cash flow. Nearby
distributors may maintain a safety bin based on demand data
7 Create strategic relationship with the
distributors for product sterilization for
all products
In long run, create strategic relationship with distributors and shift the entire
offsite sterilization to them, Saving on the transit cost and inventory cost.
Entire range can be moved using the distributors or the 3PL

4. Risks and Contingencies
Theme Proposed Steps Risks Contingencies
Increased relationship with
Hospitals and doctors to
becomes a strategic supplier
Increased relationship with the
key purchaser/hospitals to
become their strategic supplier
Hospitals plan to continue buying
products using the GPO/networks
Increased relationship with GPO
Application for hospitals for
easy ordering of products/auto
replenishments.
Hospitals and doctors will not use the
application of a specific supplier
Install Smart kiosks at hospitals
Hospitals not letting MTC to give the
space to install the Smart Kiosks
Rationalizing the Sales Team
Cut down on the 2-3 % of Sales
Team who are not performing
Rest of the Sales team will get
demotivated
Introduce increase commissions for
top 2-3 % of sales team with
targets
Acquire complementary companies
from countries with low taxes like
Ireland
Review the “trunk stock” with
sales team and align it with
demand data
Sales team may not like the shifting of
responsibility
Optimizing Distribution
Use the distributors for product
sterilization for fast moving
product
Distributors not pushing the products
aggressively Reduce distribution office by 50%
to reduce on the inventory costs
and Overheads
Create strategic relationship
with the distributors for
Distributors not accepting the
sterilization proposal for specialty