This document summarizes a case study for a medical device company called MTC. It outlines the key challenges MTC faces, including technological assistance, supply chain innovation, distribution channel consolidation, and cost rationalization. It then proposes several strategies and operational changes for MTC, such as lean manufacturing, inventory management, sales and marketing changes, and evaluating mergers and acquisitions. The summary identifies the key resources, risks, and mitigation strategies required for implementing the proposed changes.

1. MTC- How to go about ?
Case Synopsis by Sumit Jauhari

2. Case Introduction- Industry & Deliverables
Industry Backdrop:
• United States is the largest medical device market in the world:
• Size: $110 billion in 2014. Expected to reach $133 billion by 2016.
• More than 6,500 medical device manufacturers
• The sector employs almost half a million people directly & indirectly 2 million more
• Top 4 organizations cover $ 23 billion ( 24%)
• Industry under consolidation ( -0.6% YoY reduction in no. of manufacturers)
• Overall Growth 4.8% by 2020 for Industry – Specifically Growth of 7.6% in Medical device Distribution
Key Factors:
• Ageing Population in USA
• Increase in number of people coverage ( Due to Health Insurance Coverage Bill)
• Increasing of Process Innovation Requirements by Hospitals
Key Deliverables:
• Costs savings to cover Affordable Care Act (ACA) Medical Device Excise Tax of 2.3% of revenue
• Translates into over 10% reduction in MTC’s profits

3. Key Challenges
Key Challenges- MTC :
• Technological assistance in terms of Tracking & traceability
• Innovation in Supply chain management
• Innovative approach towards current Distribution Channels
• With Rationalized Costs
• Consolidation of channels
• Clarity on approach towards Focus Market Groups
• Regional Segmentation
• Management of Internal Dynamics
• Sales Agents’ Commission methodology
• Inventory Management
• Make-vs-Buy (Outsource) nodes in Supply Chain

4. Operations -
Manufacturing strategy
• Manufacture based on
JIT ( Lean methodology)
• Inventory management
( Bulk & Niche
Manufacture)
• In-house Sterilization
facility
Logistics
• Using Own 3 PL service
providers
• Utilize existing Hospital
storage to keep basic
required Equipment-
Inventory
• RFID Tagging ( Use of
technology in tracking /
traceability) of
equipment
Sales & Marketing
Strategy
• Establish Earnings vs
Returns for Sales
Representatives
• Rationalize Sales
Incentives- Keep
incentives limited to
New Product Sales
• Provide Incentives for
Special Cases
• Remaining all Products
to move through
DIRECT Channel to
Hospitals
Establish Long term
partnership with
Identified Hospital Groups
• Provide Enhanced
exposure to Surgeons to
varied facets of Medical
technology
• Collaborate with
hospitals in Research &
Development
• Conduct trials and
develop Innovative
Products in collaboration
with Hospital users
Possible Inorganic Growth
• MTC must look out for
increase in Capacity &
Variety through-
• Merger & Acquisitions of
other firms
• Leverage upon additional
Volumes & Varieties to
provide ROBUST Supplies
& ENTIRE DEMAND
VARIETY
Executive Summary – Proposals & Outcomes
• Reduced Blocked
Capital
• Make to Order
scenario
• Reduction in Lead
times- 5 days
• Reduced Inventory in
entire Chain
• Enhanced Tracking
• Quicker Revenue
realization
• Rationalize Sales
Commissions
• Establish Systemic
Sales Channel (Not
people dependent)
• Build Strategic
Partnerships
• INNOVATIVE
Products
• Co-Creation of Value
• Win-Win Solutions
• Provide Entire
Product Range
• Arrive at better
pricing & supply
model

5. Areas of improvement
Supply Risk------>
ProfitImpact------->
High Profit Impact
Low Supply Risk
Leverage Suppliers
Go for high bargain
Best Quality
Best Service
High Profit Impact
High Supply Risk
Strategic Suppliers
Very close relationships,
Almost part of company
Not only cost,
Innovative value products
Mitigate risks by Integration
Low Profit Impact
Low Supply Risk
Non- Critical Suppliers
Not to spend more time
Automate processes
Very limited trasactions
don’t waste time
Low Profit Impact
High Supply Risk
Bottleneck Suppliers
Manage alternatives
Tight controls- Service lvl
• MTC needs to move from Non-Critical Supplier
position to STRATEGIC Supplier position
• For Identified Key Hospital Groups
Areas for Improvement:
Offer Win-Win solutions to Hospital Groups
•R&D facilities
•Product Knowledge
•Wider Product base
•Enhanced Capacity
Align Operations constraints
•Manage Inventory Turn-Overs to reduce blockage of
capital
•Make-Vs-Buy situations
•Lean Operations
•Technological applications
Modify Sales model
•Systemic Direct sales to be prioritized
•Rationalize commissions system

6. Resources Required
• LEAN Manufacturing Consultancy
• Willingness from Top Management to drive Change
• Employee Orientation
Operations
• Identification of Target Hospital Segment
• Establishing Long term commitment Aspects:
• Co-Creation of Innovative Products
• Enhancing of Knowledge base of Surgeons
• Expenses on Research & development
• Consultants to Identify Key Mergers / Acquisitions
• Investment to install Inhouse Sterilization facility
Strategy

7. Risks & Mitigation
RISK:
Sales dip on account of
Bonus Rationalization
• MITIGATION
• Form Trained Specialist
Team(s)
• Identify critical & New
Equipment & Train
surgeons accordingly
• Keep Trained Specialist
Team on stand-by in case of
any emergency assistance
required by Surgeons
• New Equipment marketing
to be done by Specialist
Teams
RISK:
Boycott by Existing
Distributors
• MITIGATION
• Build rapport with
Identified Hospital Groups
• Enter into Long-term
contracts
• Pass on Quantity & Long-
term Discounts to identified
strategic partners
RISK:
Inability to operate Inhouse-
Sterilization Unit
• MITIGATION
• Training of employees
• Hiring of trained employees
RISK:
Non-Fulfilment of Hospital
demands on-time due to
reduced Inventory
• MITIGATION
• Utilize Hospital Inventory to
keep Key stocks
• Scientifically Assess
Inventory levels to be
maintained
• Keep Adequate Safety Stock
for Identified Critical Kits

8. Wishing MTC all the Luck !!!
ALL THE BEST !!!!!!!!!