Student’s name: 范仙莉
Student’s number: MA1N0241
Student’s name: 范仙莉
Student’s number: MA1N0241
Supply Chain Management
Assignment #1: Case: Meditech Surgical
Meditech is Largo Healthcare Company’s subsidiary that had captured the leading share in the
endoscopic surgical instrument market. The company manufactures and market low cost
endoscopy surgical equipment to hospitals and independent surgeons. The company's
distribution operation is arranged and managed from a central storage warehouse that ships its
products to domestic and international affiliates
Question 1. What are Meditech’s problems in introducing new products? In
manufacturing All products?
Below are some problems that I found:
1. New product introduction problem
2. High levels of inventory problem
3. The actual service level problem
4. “Panic ordering”
5. Forecast accuracy problem
Question 2. What is driving these problems, both systemically and organizationally
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New product introduction problem: Meditech has introduced dozens of new
products into the market, mostly by updating existing products. So Meditech
consistently had shortages with each new product introduction.
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High levels of inventory: Finished goods inventory levels appeared to be so high that
overall inventory could be reduced by at least 40 percent without an effect on the
delivery service level.
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The actual service level over the past year was disappointing and below corporate
objectives.
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Student’s name: 范仙莉
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Student’s number: MA1N0241
“Panic ordering”: Panic ordering occurs when a dealer or affiliate is unsure that
whether or not Meditech will deliver product in time. Therefore they over-oder to hope
that Meditech will deliver at least part of the order. That causes the problem that
demand exceeds supply.
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Forecast accuracy problem: Data to measure forecast had not been tracked and kept.
Data gathering requires a lengthy process. The information existed on many different
systems in several different areas of the organization. No data format: some data in
term of weeks, some in term of months or some in term of the corporate financial
calendar. So, no routine way to see incoming demand, inventory or production rates…
Question 3. Why is the 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.
Question 4. How would you fix these problems?
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Increase the accuracy of forecast by implementing an ERP System costing around
$100,000. This would help in better data storage & warehousing, analysis and
forecasting. We would reduce the frequency of new product launches. We would
prefer a leaner product portfolio. We would lay emphasis on better forecasts with a
shorter horizon of 1-2 months. We would maintain a safety stock so as to provide a
service level of 95%. We would work to reduce the assembly cycle time from the
current level of 2 weeks. We would look for new and better supplier relations to reduce
the supplier lead time from the current level of 2-16 weeks.
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Student’s name: 范仙莉
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Student’s number: MA1N0241
More contact with customers to increase the transparency along the supply chain. It is
obvious that Meditech’s reputation is damaged by its poor delivery. Meditech would
work with its customers to know what their real demands are.
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Work with Production Design department to design the instrument more flexible to
allow new design easier to be implemented on the existing products. Since Meditech’s
business strategy is to constantly introducing new products, the design of its product
should be agile so that an update on the existing design will not cause a lot of major
changes to its production and also to its supply chain.
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Apply the IT system for company and the whole supply chain. Therefore, data will be
kept in the particular place with the particular format.
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