1 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 lifecycle 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
lifecycle. Qualitative factors that have been identified as critical success drivers
for a new product launch are time-to-market relative to competition or product
.diffusion. 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
• Delayed deliveries (6 weeks)
• Low customer service
• Low customer satisfaction
• Inaccurate forecasts
• High FG inventory levels
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.
2) Cause of the problems, systematically and organizationally:
New introducing product
 Panic ordering..-> bullwhip
 Long lead time of component part
 Variation of production schedules
Problem of demand:
 Duplicate order
 Redundant order
 Panic order
Problem of supply :
 Segregation management
 Information and sharing data format
 Bullwhip
All products
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Data collection system
Data format
Forecast methodology
Transportation
Production delay
Product development
production
sale customer
service
customer
supplychain
purchasing
distributing
supplier
Organizationally:
Mangement :
 very long scalar chain
 slow information flow
 weak strategies
Manpower:
 focused on sales
 weak service levels
3.Why is customer service manager the first person to recognize the major
issues?
Because the customer SCM is the first person, who directly deal with the
customer problem.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.
4. How would you fix these problems?
The foremost thing we would do is implement 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.