meditech surgical case study
Post on 11-Jul-2015
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Presenting by Flex 26 Sec 3 Group 6Company Background
LMCEndoscopic surgical instrumentLeading share in the market- Spin off from Largo Health Company- Manufacturing minimally invasive endoscopic surgical products- Leading share in the endoscopic surgical instrument market2Company Background
Product Strategy- Old products continually updated and replaced with new product introductions
Company BackgroundCompetitionNational Medical Corporation- Primary competitor: National Medical Corporation- Compete based on (similar) - product innovations, (difference) cost, sales strategy
4National Medical Corporationfocus on surgeonsProduct line consists of over 200 separate end-productsMeditech focus on surgeons and material managersCompany Background
Customer Focus GroupPoor delivery serviceNational sells to surgeons focusing on featureMeditech sells to material managers as well as surgeons focusing on cost and delivery performancePoor delivery service customers wait over 6 weeks
510/23/14Meditech Central WarehousesDomesticInternationalMeditech DistributionMeditech Central WarehousesDomesticInternationalIndependent Domestic DealerHospitalHospitalOtherManufacturersLargo Healthcare'sInternational AffiliatesCountry Local DealerHospitalHospitalHospitalHospitalRegionalDealerWarehousesRegionalDealerWarehouses73 Major StepsInternal OperationsAssemblyPackagingSterilizationAssemblyPackagingSterilization
8Manually IntensiveComponent parts placed into inventory after QARun by a cross-trained production workers team.The typical cycle time =2 weeks, lead time =2-16 weeksInternal OperationsAssembly
Several large packaging machinesCapacity has no restricted outputShip immediately to the sterilizerInternal OperationsPackagingA large cobalt radiation sterilizer Turn on for about 1 hr & move into finished good inventoryCapacity not be a problemInternal OperationsSterilizationOperation Organization ChartOperation OrganizationPresidentV.P. Marketing & SalesV.P. Product DevelopmentV.P. OperationsV.P. FinanceOperation Organization Chart
Operation Organization-Production Personnel-Engineering technicians-Quality assurance -Support Service-Material SupplyMeet Production Scheduling every week.-Relationship with Suppliers-Purchasing Contracts-Find New Supplier
Ensure FG meet incoming ordersImprovement Poor Delivery Service/Customer complaintsDetermines FG parts and Bulk inventory target.Do everything to ensure customers receives product when needs.
Finish goodsMonthly Forecast
For Assembly & Component part orderingDaily Scheduling
For Packaging & SterilizationProduction Planning & Scheduling
Monthly ForecastQ4Annual ForecastMonthly (Adjusted) ForecastNext Year Sales EstimationMKFinance
MKCentral PlanningTransfer Requirement15Transfer Requirement
FG levelTransfer Requirement (Bulk) = (months demand + safety stock level) Current FG1. Monthly ForecastMonthly PlanAssembly B.U.Planner
3. Inventory of Component Parts, Bulk & FGsWeekly Production Schedule(Assembly )
2. Lead Time of Assembly, Packaging & SterilizationComponent Parts OrdersDemandMRP SystemCompleted monthly plan -------> Assembly business unit -------> Plugs forecasts into a Material Requirement System (MRP) -------> Weekly production schedules & component part orders*MRP system are based on 1. Monthly forecasts 2. Lead time for assembly 3. Current part, bulk and FGs inventory levels.
Daily SchedulingBased on as-needs replenishment of FGs inventory level (replnishes what was sold from FGs the day before).Order Point/ Order quantity (OP/OQ) basis Replenishment order : FGs inventory drops below OPSize of order = OQ
18New Product Introductions High Levels of Inventory and Poor Service LevelBackground
Meditech has introduced dozens of new product.Meditech continued to obsoleted product by constantly introducing innovation.
D.Franklin could not figure out why Meditech consistently had supply the shortage with each introduction. =>Due to Forecasting problem.
Data to measure forecast accuracy had not previously been tracked.Forecast and demand had not been kept.Data gathering requires a lengthy process of going back through hard copy.
40%High FG Inventory
Moreover, Finish goods inventory levels appeared to be remarkably high.A consultant had recently been hired to study Meditechs inventory as detail New Product Introductions High Levels of Inventory and Poor Service LevelFG inventory high due to Panic Ordering
DomesticInternationalNew Product Introductions High Levels of Inventory and Poor Service Level3009001000
High peak first few weeks
By the way, Staff member to investigate the new product problem as belowThe existing information in many different systemDifferent data format such as Time term : Weekly , Monthly and Financial CalendarAfter analyzed they foundNew Product Introductions High Levels of Inventory and Poor Service Level
New Product Introductions High Levels of Inventory and Poor Service Level
Unexpected DemandNew Product Introductions High Levels of Inventory and Poor Service LevelDan Franklin began thinking about How to fix delivery problem?New Product Introductions High Levels of Inventory and Poor Service Level
Meditech SurgicalCASE DISCUSSION QUESTION1. What are Meditechs 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?How to fix Meditechs delivery problemsCASE DISCUSSION QUESTIONSWhat are Meditechs problem in introducing new products ? In manufacturing ALL products ?CASE DISCUSSION QUESTIONS2. What is driving these problem, both systematically and organizationally ?CASE DISCUSSION QUESTIONS3. Why is the customer service manager the first person to recognize the major issues ?CASE DISCUSSION QUESTIONS4. How would you fix these problems ?
Meditech SurgicalSolution for Meditech SurgicalSolution for Meditech Surgical
CASE DISCUSSION QUESTION1. What are Meditechs problems in introducing new products? In manufacturing All products?New Introducing Product Fail to serve of Initialing demand
All productsHuge number of end-products Unexpected high Demand Delivery Delay
CASE DISCUSSION QUESTION2. What is driving these problems, both systemically and organizationally?New Introducing Product Panic ordering -- BullwhipLong lead time of component partVariation of production schedulesCV = SD/XCASE DISCUSSION QUESTION2. What is driving these problems, both systemically and organizationally?New Introducing Product Problem of DemandDuplicate OrderRedundant OrderPanic Order
Problem of SupplySegregation ManagementInformation and sharing data formatBullwhipCASE DISCUSSION QUESTION2. What is driving these problems, both systemically and organizationally?All productsData collection systemData formatForecast methodologyTransportationProduction delayCASE DISCUSSION QUESTIONProductDevelopmentSupplierSupply ChainDistributing2. What is driving these problems, both systemically and organizationally?
ProductionMkt. and SaleCus. ServicePurchasingCustomersOutsourceCASE DISCUSSION QUESTION- Purchasing- Distributing Marketing Sale Customer Service2. What is driving these problems, both systemically and organizationally? Organization40CASE DISCUSSION QUESTION3. 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 customers problems.
CASE DISCUSSION QUESTION4. How would you fix these problems?New Introducing Product Reduce slow moving productsDemand Pooling Across LocationDemand Pooling Across ProductSelling system managementInformation sharing
CASE DISCUSSION QUESTION4. How would you fix these problems?All productSystemOnline orderingData formatTime base standardizeStatistical method i.e. linear regressionUse Actual OrderingRelocated Warehouses for the optimal distance to customer
CASE DISCUSSION QUESTION4. How would you fix these problems?All productOutsourcing low margin productsObsolete non-value productsIncrease process capability