MTC is looking to optimize its supply chain to offset a new ACA tax through cost savings. It is considering short, mid, and long-term projects like developing a strategic partnership with a sterilization supplier, reducing sales force and branch offices, a mobile app for medical professionals, and moving to a distributor-only sales model. Financial analysis shows room for improving SG&A expenses relative to revenue growth. Proposed changes aim to reduce lead times, increase visibility, cut overhead costs, and lower inventory levels.

1. MTC SUPPLY CHAIN OPTIMIZATION
Presented By
Adarsh

2. 2
MEDICAL TECHNOLOGIES CORP
• Medical Technologies Corporation (MTC) headquarters in Collegeville, Pennsylvania.
• Chris Evert is the Chief Supply Chain Officer
• Introduction of excise tax – 2.3% on revenue
• 10% reduction in profits
• Determine cost saving opportunities to offset new ACA tax

3. 3
PROJECT PLAN
Starter
Mid term Long term
Short term
• Medical Technologies Corporation (MTC) supply chain optimization for cost
savings.
• Develop Sterlization supplier into strategic appliance
• Reassignment of 2% sales force
• Reduce number of branch offices by 50%
• Mobile application for medical professionals
• Tax inversion through acquisition of low tax bracket company
• Smart kiosk deployment
• Distributor only sales model implementation

4. PERFORMANCE INDICATORS
SUSTAINABLE
FEASIBLE
MATCH COMPANY
OBJECTIVES
COST SAVING

5. 5
FINANCIAL ANALYSIS
❑ Strong growth as shown in revenues with average growth rate of 7.03% from 2010.
❑ Steady growth rate of 4% from 2012
❑ Disproportional increase in SG&A expenses in relation to revenue growth.
❑ SG&A was 14.76% in 2014
❑ 2012 SG&A was 14% but revenue increased by 11.88%
❑ Large amounts in account recievable and financial goods 1017.06 million dollars and
743.7 million dollars respectively

6. 6
CURRENT TRANSPORTATION MODEL
❑ Reduces transportation time and distance
❑ Gain better visibility to product movement
❑ Is more sustainable and eco friendly
Supplier
Assembly MTC
MTC Production
Control
Hospital
Sterlizing warehousing

7. 7
SUPPLY CHAIN OPTIMIZATION
❑ Partner with sterilization partner
❑ Lead time reduction by 2days
❑ Phase out direct sales to hospitals
❑ Increased visibility
❑ Reduced varability
❑ Reduced branch office locations by 50%
❑ Reduced overhead costs
❑ Reduced inventory accumulation points.

8. 8
FINANCIAL IMPACT
Sales rep impact
Total SG&A in 2014 $2683.56
Expenses for reps $1341.78
Cut 2% of employees with base of
$300,000
$26.84
Move 2% into other role with base
of $150,000
$13.42
Total savings $40
Cost savings % 3

9. 9
SHORT TERM
❑ Sales force reduction
❑ Dedicated team
❑ Traditional sales representative
MID RANGE
❑ Mobile app for medical professionals
❑ Information sharing
❑ Support innovation
❑ Increase of collaboration

10. 10
OPTIMIZATION
❑ 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

11. 11
RISK MITIGATION
❑ 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
❑ 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 Training of employees • Hiring of trained employees RISK: Non-Fulfilment
of Hospital demands on-time due to reduced
❑ Scientifically Assess Inventory levels to be maintained
❑ Keep Adequate Safety Stock for Identified Critical Kits