Supply Chain Management
Assignment #1: Case: Meditech Surgical
Q1) Meditech’s problem in introducing new products. In manufacturing ALL products.
Dan Franklin felt that customers were beginning to tire of the poor service resulting from each
introduction. Another problem was that data to measure forecasting wasn’t being tracked, as well as
demand information, which led to product shortages with each introduction. Finished good inventory
levels were also very high. Another possible cause of the problem is “panic ordering” from dealers and
affiliates. Panic ordering occurs when a dealer or affiliate is unsure of whether or not product will be
received in time and therefore increases the size of its orders hoping that Meditech will deliver at least
part of the order. The increased orders would causes demand to temporarily rise, helping to explain
Meditech’s problems with demand consistently exceeding supply. Besides , 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:
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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
Q3) Why is customer service manager the first person to recognize the major issues?
Because the customer service department of a company will be the first department that receives the
complaints of the customers regarding a particular product or service, it is highly likely that the
customer service manager would be the first to know of major issues regarding the company’s products
and services. Since the customer service manager maintains direct contact with the customers, and it is
Mr. Dan Franklin’s responsibility as the manager for Customer Service and Distribution to come up with
a solution for Meditech’s problem with regards to deliveries arriving to the customers late.
Q4) How would you fix these problems?
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Recognizing the demand is predictable and create better forecasting systems and accountability
Learn to better planning system , planning to eliminate delays and reduce the size of the bucket
system time
In addition, the inner assembly and pull the system completely eliminates large inventories
Development and implementation of better information systems
Improve communication with customers