MTC- Cost Saving

1. MTC COST SAVING
PROPOSAL
BY NISHIT BADGUJAR
B.E. MECHANICAL ENGINEERING

2. CASE INTRODUCTION
Industry Context:
• 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 Recom

3. Key Elements:
• Ageing Population in USA
• Increase in number of people coverage (Due to Health Insurance Coverage Bill)
Increasing of Process Innovation Requirements by Hospitals
Key Challenge:
• Costs savings to cover Affordable Care Act (ACA) Medical Device Excise Tax
of 2.3% of revenue
• Translates into around 10% reduction into profit

4. Proposed Change:
Converting to an internal sterilization facility
Convert the current external sterilization facility to an inside one for improved
inventory and sterilization control.
Only use an external sterilizing facility if the internal capacity is exhausted.
Advantages for MTC
1. Having an in-house sterilization facility can cut the transportation time from
48+48 to 96 hours (4 days).
2. By eliminating the delivery of the product to an outside location, transportation
costs are eliminated.
3. Keep the sterilization fees that you paid the outsourced vendor.
4. Having complete control over the sterilization process can reduce danger.

5. Proposed Change:
Utilize distributors to ship the goods
Offer items directly to distributors, then send them to hospitals via regional and local
distribution hubs
The distributor is in charge of promptly delivering the items to the hospital. Distributor
arranges for transportation.
Advantages for MTC
1. Increase your revenue more quickly by selling to distributors directly.
2. improved inventory management and control
3. Avoid paying the overhead costs of maintaining the loaner and branch offices.
4. Reduce the expense of transportation from loaner or branch offices to the Hospitals

6. Proposed Change:
Better sales rep management
Discontinue the practice of sales representatives bringing product to hospitals in
"Truck Stock" containers.
Install smart kiosks in hospitals for improved inventory management.
Sales Representatives can do a more effective job of promoting MTC's products
to other hospitals and expanding to new locations since Distributors handle the
inventory handling and delivery.
.

7. Contd.
Advantages for MTC
1. By allocating additional money, the High Sales Rep's commissions are justified.To them, fruitful
work in terms of boosting market share.
2. Smart kiosks guarantee that the supply for surgeons is always enough.
3. MTC receives extra revenue when sales representatives bring in new clients

8. Proposed Change:
Be Hospital’s "Strategic Supplier"
Establish business relationships with hospitals by promising them cheaper per-unit
expenses in exchange for more business for MTC.
The MTC R&D team may collaborate closely with renowned doctors andcreate fresh
things for the market.
Build long-term commercial relationships with big hospital groups by creating a win-win
situation for all parties.
Advantages for MTC
1. Ensure that the hospitals will give you business.
2. Increased profits from the sale of new items.

9. Resources Required for Improvement
Upgrade the MTC factory's sterilizing equipment and infrastructure.
Hire new technical personnel to run the sterilizing device.
The search for and selection of new distributors for MTC's goods.
Potential R&D investments, should any new goods be created
Creation of the infrastructure needed for Smart Kiosk systems.

10. RISK
&
MITIGATION
.

11. RISK MITIGATION
Due to the realization of bonuses, sales
could be down.
Specialist Team with Formal Training
Choose new equipment that is essential and train surgeons properly.
Keep a trained specialist team on call in case the surgeons need
assistance right away.
Marketing for new equipment will be handled by specialised teams.
Boycott by existing distributor increase communication with identified hospital groups Engage in
long-term agreements. Give designated key partners the opportunity to
get quantity and long-term discounts.
Running an internal sterilisation unit Training of employees
Hiring of trained employees
Lack of timely fulfilment of hospital
obligations owing to low inventory
Use hospital inventory to maintain important supplies
Maintain enough safety stock for identified critical kits
Scientifically assess inventory levels to be maintained.

12. CONCLUSION
In order to achieve the goal of saving 2.3% revenue, MTC must consider implementing the
suggested adjustment, i.e. converting to an internal sterilization facility, being hospital’s strategic
supplier, better sales rep management and using distributors to ship goods.
The risks are not too serious, and the resources could be arranged.

13. THANK YOU!