Institute of finance and international management

Institute of finance and international management

SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT

Debendra Dipayan KamalikaMoinakSandeepSuraj

CASE STUDY: MEDITECH SURGICALS

CASE STUDY: MEDITECH SURGICALS

What is Supply Chain Mgmt.?

Supply chain management is a set of approaches used to efficiently integrate suppliers, manufacturers, warehouses, and customers so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time in order to minimize system wide costs while satisfying service-level requirements.

3

CASE facts: Meditech Surgical

Intent – diagnosis of supply chainBusiness overviewSupply chainProduction planningWhat’s wrong?How to fix it?

Endoscopic Surgical Instruments

Permits minimally invasive surgeryMarket created in early 80’s, rapidly

growingOld products continually updated and

replaced with new product introductions

Business Overview

National and Meditech split the marketCompete based on product innovations,

customer service, costNational sells to physicians; Meditech sells

to material managersCustomer preferences change slowly

External Supply Chain

Part suppliers

Meditech Assembly

MeditechWarehouse

Domestic Dealers

Int’l MeditechAffiliates

Hospitals

Hospitals

Internal Supply Chain

Parts Inventory Assembly Bulk Inventory FG InventoryPackaging &Sterilization

2 - 16weeks

2weeks

1 week

Production PlanningAnnual Forecast

Monthly Revision

TransferRequirements

MonthlyPlan

MRP

PartsProcurement

Plan

WeeklyAssemblySchedule

Production Planning

Parts Inventory Assembly Bulk Inventory Packaging &Sterilization

FG inventory

MonthlyPlan

MRP

Order point;Order quantity

MaterialPlan

What’s Wrong?

Poor service for new product introductionsPoor forecasting?Panic ordering?And high FG inventory

What Is Going On?

Demand is quite predictableUsage in hospitals is quite stableMarket share moves slowly over timeWith each new product, dealer must build

inventory to fill pipeline

Why Did Meditech Think Demand Was Unpredictable?

Poor information systemsNo one looked at demandNo one had responsibility for forecast

errorsTendency to shift the blameBuilt-in delays and monthly buckets in

planning systemAmplifier in planning system

What to Do?

Recognize that demand is stable and predictable

Establish accountability for forecastEliminate planning delays and/or reduce

time bucketAlternatively, put assembly within pull

system and eliminate bulk inventory

15