GLOBAL SUPPLY CHAIN
THE MEDICAL DEVICES COMPANY (MDC)
MDC is a successful and innovative multinational company which manufactures anddistributes a range of sophisticated medical devices. Widely used medical devices havehigh unit
values and the cost begins at €2000. MDC has two plants in Europe, one at
Ireland and the other at Poland. From these plants, the devices are shipped to 15warehouses located across Europe. These 15 warehouses act as hubs and supply toanother 40 warehouses located across Europe. It is from these 40 warehouses, thesales representatives and distribution agents draw their inventory.
MDC faces a range of challenges. Many customers (i.e., hospitals) want improvedservice solutions centered on increased product availability combined with lower levelsof stock holding. Customers want a wide variety to select from, but are willing to pay only for the variety that suits their needs. The market is competitive. The inventory turnover of MDC has fallen to five turns per year instead of the norm of ten, and this
has resulted in high inventory at MDC. Outdated products are another of MDC’s
problems. In some situations, it is important to expedite inventory direct to users fromthe manufacturing plants.
Companies competing in today’s global
economy are challenged by two critical yetconflicting issues related to their supply chains. On one hand, they are under ongoingpressure to reduce operational and inventory costs, which requires keeping inventory levels low. On the other hand, they must achieve a high customer service level by having inventory available when and where the customer wants it. As the supply chains are constantly changing and evolving, a company needs to develop a number of logistics strategies for specific product lines, specific countries or specific customers. This allows a company to ensure flexibility in supply chain by identifying the impact of imminent changes and making organizational or functional changes to ensure servicelevels are not reduced. When developing a Logistic Strategy, a company has to look atfour distinct levels of their logistics organization. Firstly, the logistics strategy should
examine the company’s objectives and strategic supply chain decisions and review