Supply Chain Management

CASE 1: MEDITECH’S CASE

Question 1:

As can be seen from the case, Meditech introduces new products in a short period of time. However,
most of the new products are only upgrades of old products. This considerably reduces the life-cycle of
the products. Furthermore, the majority of Meditech customers are Material Managers whose primary
focus is on cost and delivery schedules but not on innovative product features. The catalogue of
products being offered by Meditech continues to grow and replacing current items, making obsolete old
products that are in their catalogue and current customer orders. Poor customer demands forecasting,
long assembly lead times, and changing products are the main reason why inventory levels are not
enough to satisfy customer’s demands.

Due to the nature of the industry, the delivery of surgical equipment ontime is extremely important. The
on time delivery of products to its customers has become the main problem for the firm. Currently,
Meditech’s customers are waiting over six weeks for products to be delivered to them. This current
practice is not acceptable and must be addressed by management immediately if Meditech wants to
stay competitive and keep its current market share.

Other problems that Meditech faced:

• Supply side shortages

• 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. Meditech organizational structure has a long scalar chain. Information dissemination
becomes difficult if there are too many products in the portfolio.

Therefore, there is not enough communication between main operations departments in the company;
this is causing information to become distorted as it makes its way through the supply chain line. The
lack of communication and information increases the firm’s lead to demand variation as orders or
demand is being process through the supply chain systems and departments. In consequence,
distributors are feeling the effect by long waiting periods of time, thus this also causes them to place
large rorders in an effort to help them compensate the waiting time.

Question 2: What is driving these problems, both systemically and organisationally?

As already been discussed in question 1, there are some reasons that cause those problems, that are:

- They just focused on creating new innovative products than improving delivery time and cost.
- Lack of communication
- Poor customer services

Question 3: Why is customer service manager the first person to recognize the major issues?

Clearly that, the scalar chain from Customer Service Manager to the Customer Service Representative is
only of two steps. Furthermore, the representatives work in direct contact with dealers and affiliates
and are often in direct contact with hospital personnel i.e. their consumers that helps representatives
can receive customers’ feedbacks and complaints. Therefore, this helped Customer service manager can
easily really the level of dissatisfaction amongst his customers, Meditech’s poor service levels and
improper delivery schedules.

Question 4: How to fix these problems

The most important tasks that Meditech should try to improve is the better customer service, shorter
delivery time and more accurate forecast. Therefore, what Meditech 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. Also, Meditech should rearrange
a leaner product portfolio. Meditech should maintain a safety stock so as to provide a higher service
level and reduce the assembly cycle time from the current level of 2 weeks.