Meditech Surgical

Presenting by Flex 26 Sec 3 Group 6

“LMC”

“Endoscopic surgical instrument”

“Leading share in the market”

“Product Strategy”

“Competition”

“National Medical Corporation”

National Medical Corporationfocus on surgeons

Product line consists of over 200 separate end-products

Meditech focus on surgeons and material managers

“Customer Focus Group”

Poor delivery service…

10/23/14

Meditech Central Warehouses

Domestic

Meditech Distribution

Meditech Central Warehouses

Domestic

Independent Domestic

Dealer

Hospital

Hospital

OtherManufacturers

Hospital

Hospital

Hospital

Hospital

RegionalDealer

Warehouses

RegionalDealer

Warehouses

“3 Major Steps”

Internal Operations

Assembly

Packaging

Sterilization

• 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

Internal Operations

Assembly

• Several large packaging machines• Capacity has no restricted output• Ship immediately to the sterilizer

Internal Operations

Packaging

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

Internal Operations

Sterilization

Operation Organization ChartOperation Organization

President

V.P. Marketing &

Sales

V.P. Product

Development

V.P. Operations

V.P. Finance

Operation Organization ChartOperation 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 orders

Improvement Poor Delivery Service/Customer complaints

Determines FG parts and Bulk inventory target.

Do everything to ensure customers receives product when needs.

Monthly Forecast

For Assembly & Component part

ordering

Daily Scheduling

For Packaging & Sterilization

Production Planning & Scheduling

Monthly ForecastQ4 Annual

Forecast

Monthly (Adjusted) Forecast

Next Year Sales Estimation

MK Finance

MK Central Planning

“Transfer Requirement”

“Transfer Requirement”

FG level

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

1. Monthly ForecastMonthly

Plan

Assembly B.U.

Planner

3. Inventory of Component Parts,

Bulk & FGs

Weekly Production Schedule

(Assembly )

2. Lead Time of Assembly, Packaging & Sterilization

Component Parts Orders

Demand

MRP System

Pushed Pulled

Daily Scheduling

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.

40% High FG Inventory

Moreover, Finish goods inventory levels appeared to be remarkably high.A consultant had recently been hired to study Meditech’s inventory as detail

New Product Introductions High Levels of Inventory and Poor Service Level

FG inventory high due to Panic Ordering

Meditech

Dealer Dealer Affiliate Affiliate

H H Dealer

H H

100

Dealer

H H

100

300

Domestic International

New Product Introductions High Levels of Inventory and Poor Service Level

300

900 1000

100 100

300 300

High peak first few weeks

Relatively Stable

By the way, Staff member to investigate the new product problem as below The existing information in many different system Different data format such as

Time term : Weekly , Monthly and Financial CalendarAfter analyzed they found

New Product Introductions High Levels of Inventory and Poor Service Level

New Product Introductions High Levels of Inventory and Poor Service Level

Unexpected Demand

New Product Introductions High Levels of Inventory and Poor Service Level

Dan Franklin began thinking about “How to fix delivery problem?”

New Product Introductions High Levels of Inventory and Poor Service Level

Meditech Surgical

CASE DISCUSSION QUESTION

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?

How to fix Meditech’s delivery problems

Meditech Surgical

Solution for Meditech Surgical

Solution for Meditech Surgical

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

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

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

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

CASE DISCUSSION QUESTION

ProductDevelopment

Supplier

Supply Chain

Distributing

2. What is driving these problems, both systemically and organizationally?

ProductionMkt. and SaleCus. Service

Purchasing

Customers

Outsource

CASE DISCUSSION QUESTION

- Purchasing- Distributing

- Marketing- Sale- Customer Service

2. What is driving these problems, both systemically and organizationally?

• Organization

President

VP. ProductionVP. Product

DevelopmentVP. Financial

VP. Marketing&Sales

VP. Supply ChainVP. Human Resources

Safety

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.

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

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 regressionUse Actual OrderingRelocated Warehouses for the optimal distance to customer

CASE DISCUSSION QUESTION

4. How would you fix these problems?

All product

•Outsourcing low margin products•Obsolete non-value products•Increase process capability

Meditech Surgical