SOLUTIONS TO

MEDITECH SURGICAL CASE

SUBMITTED BY

RAVI JAIN

1226109240

TO

Prof. Dr. P.R.S.Sarma

IN PARTIAL FULFILLMENT OF THE COURSE

SUPPLY CHAIN MANAGEMENT

13th February, 2010 GIIB, Visakhapatnam

Q1) Meditech’s problem in introducing new products. In manufacturing ALL products.

Meditech introduces 1 new product per month on an average. Most of the new products
are only upgrades of old products. This considerably reduces the life-cycle of the products.
Majority of Meditech customers are Material Managers whose primary focus is on cost and
delivery schedules but not on innovative product features.

Though no major problems arise from assembly line perspective, signs of cognitive
dissonance may arise in customers. No attempt is made by Meditech to understand the
Demand Dynamics along the product life-cycle. Qualitative factors that have been identified
as critical success drivers for a new product launch are time-to-market relative to
competition (Porter 1985, Kailash and Lilien 1986) or product diffusion (Bass 1969, Krishnan
2000). But Meditech does not launch new products relative to competition and by
constantly pushing new innovations into the market it does not allow its products to diffuse
effectively into the market.

Every new product launch requires a lead time of around 5-19 weeks (excluding design
phase lead time) which is very high. With every product launch, pushing the product into
the market becomes the primary consideration of the sales force thereby neglecting
customer service for older products.

These constant launches have led to:

 Supply side shortages (Fig. 1-10)

 Delayed deliveries (6 weeks)
 Low customer service
 Low customer satisfaction
 Inaccurate forecasts
 High FG inventory levels (Fig. 1-8 & Fig. 1-10)

The product portfolio of Meditech comprises about 200 separate end-products and the
number is increasing. These wide ranges of products make Meditech rely heavily on
suppliers wherein the lead time is 2-16 weeks. So practising JIT, which would be very
effective for Meditech, becomes impossible in this case. Meditech organizational structure
has a long scalar chain. Information dissemination becomes difficult here if there are too
many products in the portfolio.
 Q2) Cause of the problems, systematically and organizationally

ISHIKAWA FISH-BONE DIAGRAM WAS USED TO DISSECT THE CAUSE AND EFFECT

Management Machinery Manpower

 Frequent changes  Focussed on Sales

 Very long scalar chain in process flow  Weak Service Levels
 Slow information Flow  High lead time of 2
 Weak Strategies weeks

Problems
discussed
in Q1

 Too dependent on Suppliers

 No data collection
 High lead times of 2-16 weeks
 Incorrect Forecasting
 High FG Inventory levels
 Very long forecasting horizon
 High Safety Stock levels
of 1year
 Short Product Life Cycle
 Panic Ordering
 Ineffective delivery schedules
 No Risk pooling
Materials Methods
Q3) Why is customer service manager the first person to recognize the major issues?

The scalar chain from Customer Service Manager to the Customer Service Representative is
only of two steps. The representatives work in direct contact with dealers and affiliates and
are often in direct contact with hospital personnel i.e. their consumers. A general rule of
thumb is “If you want the best feedback, ask your consumers”. This network would have
proved effective for feedback-information flow.

Mr. Dan Franklin himself held many meetings with hospital material managers. This brought
forth the level of dissatisfaction amongst his customers, Meditech’s poor service levels and
improper delivery schedules.

Q4) How would you fix these problems?

The foremost thing I would do is implement an ERP System costing around $100,000. This
would help in better data storage & warehousing, analysis and forecasting.

I would reduce the frequency of new product launches. I would prefer a leaner product
portfolio with PULL strategy.

I would lay emphasis on better forecasts with a shorter horizon of 1-2 months. I would
maintain a safety stock so as to provide a service level of 95%.

I would work to reduce the assembly cycle time from the current level of 2 weeks.

I would look for new and better supplier relations to reduce the supplier lead time from the
current level of 2-16 weeks.

Q5) Give a similar example of Supply Chain Management

FLY-ASH Supply Chain at BMM ISPAT 25MW Captive Power Plant

 BOILER Air Pre Heater Electro Static
Precipitator

COMPRESSOR

TANKERS SILO

CUSTOMERS

Fig.1 Fly Ash Flow

The fly ash coming out from the APH flows into the ESP for precipitation and then into the
Silo Tank. Its temperature is around 150 deg. C and un-burnt carbon is around 40%. So in
the present supply chain, this high energy fly ash gets wasted.

A consultant was hired to study this and he suggested a modified supply chain given below.

BOILER Air Pre Heater Electro Static

Precipitator

COMPRESSOR

TANKERS SILO

CUSTOMERS

Fig.2 Modified Fly Ash Flow