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CASE: Meditech Surgical. Intent – diagnosis of supply chain Business overview Supply chain Production planning What’s wrong? How to fix it?. Endoscopic Surgical Instruments. Permits minimally invasive surgery Market created in early 80’s, rapidly growing

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Presentation Transcript
case meditech surgical
CASE: Meditech Surgical
  • Intent – diagnosis of supply chain
  • Business overview
  • Supply chain
  • Production planning
  • What’s wrong?
  • How to fix it?
endoscopic surgical instruments
Endoscopic Surgical Instruments
  • Permits minimally invasive surgery
  • Market created in early 80’s, rapidly growing
  • Old products continually updated and replaced with new product introductions
business overview
Business Overview
  • National and Meditech split the market
  • Compete based on product innovations, customer service, cost
  • National sells to physicians; Meditech sells to material managers
  • Customer preferences change slowly
external supply chain
External Supply Chain

Hospitals

Domestic Dealers

Part suppliers

Meditech Assembly

Meditech

Warehouse

Hospitals

Int’l Meditech

Affiliates

internal supply chain
Internal Supply Chain

Packaging &

Sterilization

Parts Inventory

Assembly

Bulk Inventory

FG Inventory

1

week

2 - 16

weeks

2

weeks

production planning
Production Planning

Annual

Forecast

Monthly

Revision

Transfer

Requirements

Monthly

Plan

MRP

Parts

Procurement

Plan

Weekly

Assembly

Schedule

production planning7
Production Planning

Monthly

Plan

MRP

Order point;

Order quantity

Material

Plan

Packaging &

Sterilization

Parts Inventory

Assembly

Bulk Inventory

FG inventory

what s wrong
What’s Wrong?
  • Poor service for new product introductions
  • Poor forecasting?
  • Panic ordering?
  • And high FG inventory
what is going on
What Is Going On?
  • Demand is quite predictable
  • Usage in hospitals is quite stable
  • Market share moves slowly over time
  • With each new product, dealer must build inventory to fill pipeline
why did meditech think demand was unpredictable
Why Did Meditech Think Demand Was Unpredictable?
  • Poor information systems
  • No one looked at demand
  • No one had responsibility for forecast errors
  • Tendency to shift the blame
  • Built-in delays and monthly buckets in planning system
  • Amplifier in planning system
what to do
What to Do?
  • Recognize that demand is stable and predictable
  • Establish accountability for forecast
  • Eliminate planning delays and/or reduce time bucket
  • Alternatively, put assembly within pull system and eliminate bulk inventory