Meditech Surgical faces problems with new product introductions and delivering all products on time. New products experience high initial demand that is difficult to forecast, resulting in delays. All products suffer from inconsistent data collection systems, long production lead times, and a siloed organizational structure. The customer service manager first recognized these issues as they directly interact with unhappy customers experiencing delays. To solve the problems, Meditech should reduce complexity, implement demand pooling, standardize data sharing between departments, outsource low-margin products, and improve forecasting methods.

1. Meditech Surgical
Presenting by Flex 26 Sec 3 Group 6

2. “LMC”
“Endoscopic surgical instrument”
“Leading share in the market”

3. “Product Strategy”

4. “Competition”
“National Medical Corporation”

5. “Customer Focus Group”
National Medical Corporationfocus on surgeons
Meditech focus on surgeons and material managers
Product line consists of over 200 separate end-products
Poor delivery service…

6. 10/23/14
Meditech Distribution
Meditech
Central Warehouses
Domestic

7. Meditech
Central Warehouses
Domestic
Independent
Domestic
Dealer
Hospital
Hospital
Other
Manufacturers
Hospital
Hospital
Hospital
Hospital
Regional
Dealer
Warehouses
Regional
Dealer
Warehouses

8. Internal Operations
“3 Major Steps”
Assembly
Packaging
Sterilization

9. Internal Operations
Assembly
• Manually Intensive
• Component parts placed into inventory after QA
• Run by a cross-trained production workers’ team.
• The typical cycle time =2 weeks, lead time =2-16 weeks

10. Internal Operations
Packaging
• Several large packaging machines
• Capacity has no restricted output
• Ship immediately to the sterilizer

11. Internal Operations
Sterilization
• A large cobalt radiation sterilizer
• Turn on for about 1 hr & move into finished good inventory
• Capacity not be a problem

12. OperationOOrgpaneizartaiont Cihoarnt Organization
President
V.P.
Marketing &
Sales
V.P.
Product
Development
V.P.
Operations
V.P.
Finance

13. OperationOOrgpaneizartaiont Cihoarnt Organization
-Production Personnel
-Engineering technicians
-Quality assurance
-Support Service
-Material Supply
Meet Production Scheduling every week.
-Relationship with Suppliers
-Purchasing Contracts
-Find New Supplier
Ensure FG meet incoming orders
Improvement Poor Delivery Service
/Customer complaints
Determines FG parts and Bulk
inventory target.
Do everything to ensure
customers receives
product when needs.

14. Production Planning & Scheduling
Monthly Forecast
For Assembly &
Component part
ordering
Daily Scheduling
For Packaging &
Sterilization

15. Monthly
MK Finance
Q4 Forecast Annual
Forecast
Monthly
(Adjusted)
Forecast
Next Year Sales Estimation
“Transfer Requirement”
MK Central Planning

16. “Transfer Requirement”
FG level
Transfer Requirement (Bulk) = (month’s demand + safety stock level) – Current FG

17. Monthly
Plan
1. Monthly
Forecast
Assembly
B.U.
Planner
Weekly
Production
Schedule
(Assembly )
3. Inventory of
Component Parts,
Bulk & FGs
2. Lead Time of Assembly,
Packaging & Sterilization
Component
Parts Orders
Demand
MRP
System

18. Daily Scheduling
Pushed Pulled

19. New Product Introductions
High Levels of Inventory and Poor Service Level
Background
 Meditech has introduced dozens of new product.
 Meditech continued to obsoleted product by constantly introducing innovation.
Problem
D.Franklin could not figure out why Meditech consistently had supply the shortage
with each introduction. =>Due to Forecasting problem.
1) Data to measure forecast accuracy had not previously been tracked.
2) Forecast and demand had not been kept.
3) Data gathering requires a lengthy process of going back through hard copy.

20. New Product Introductions
High Levels of Inventory and Poor Service Level
Moreover, Finish goods inventory levels appeared to be remarkably high.
40% High FG
Inventory
A consultant had recently been hired to study Meditech’s inventory as detail

21. New Product Introductions
High Levels of Inventory and Poor Service Level
 FG inventory high due to Panic Ordering
Meditech
900 1000
300 300
Dealer Dealer Affiliate Affiliate
H H Dealer
H H
100
Dealer
H H
100
300
Domestic International
300
100 100

22. New Product Introductions
High Levels of Inventory and Poor Service Level
By the way, Staff member to investigate the new product problem as below
High peak first
few weeks
Relatively Stable
 The existing information in many different system
 Different data format such as
Time term : Weekly , Monthly and Financial Calendar
After analyzed they found

23. New Product Introductions
High Levels of Inventory and Poor Service Level

24. New Product Introductions
High Levels of Inventory and Poor Service Level
Unexpected Demand

25. New Product Introductions
High Levels of Inventory and Poor Service Level
Dan Franklin began thinking about
“How to fix delivery problem?”

26. Meditech Surgical

27. CASE DISCUSSION QUESTION
How to fix Meditech’s delivery problems
1. What are Meditech’s problems in introducing
new products? In manufacturing All products?
2. What is driving these problems, both
systemically and organizationally?
3. Why is the customer service manager the first
person to recognize the major issues?
4. How would you fix these problems?

28. Meditech Surgical

29. Solution for Meditech Surgical

30. Solution for Meditech Surgical

31. CASE DISCUSSION QUESTION
1. What are Meditech’s problems in introducing
new products? In manufacturing All products?
New Introducing Product
Fail to serve of Initialing demand
All products
•Huge number of end-products
•Unexpected high Demand
•Delivery Delay

32. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
New Introducing Product
•Panic ordering -- Bullwhip
•Long lead time of component part
•Variation of production schedules
•CV = SD/X

33. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
New Introducing Product
Problem of Demand
•Duplicate Order
•Redundant Order
•Panic Order
Problem of Supply
•Segregation Management
•Information and sharing
data format
•Bullwhip

34. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
All products
•Data collection system
•Data format
•Forecast methodology
•Transportation
•Production delay

35. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
Product
Development
Supplier
Supply Chain
Distributing
Production
Mkt. and Sale
Cus. Service
Purchasing
Customers
Outsource

36. CASE DISCUSSION QUESTION
2. What is driving these problems, both
systemically and organizationally?
• Organization
- Purchasing
- Distributing
President
- Marketing
- Sale
- Customer
Service
VP. Production
VP. Product
Development
VP. Financial
VP.
Marketing&Sales
VP. Supply Chain
VP. Human
Resources
Safety

37. CASE DISCUSSION QUESTION
3. Why is the customer service manager the first
person to recognize the major issues?
Because the customer service manager
is the first person, who directly deal with
the customer’s problems.

38. CASE DISCUSSION QUESTION
4. How would you fix these problems?
New Introducing Product
•Reduce slow moving products
•Demand Pooling Across Location
•Demand Pooling Across Product
•Selling system management
•Information sharing

39. CASE DISCUSSION QUESTION
4. How would you fix these problems?
All product
System
•Online ordering
Data format
•Time base standardize
Statistical method i.e. linear regression
Use Actual Ordering
Relocated Warehouses for the optimal distance to
customer

40. CASE DISCUSSION QUESTION
4. How would you fix these problems?
All product
•Outsourcing low margin products
•Obsolete non-value products
•Increase process capability

41. Meditech Surgical