Meditech Surgical Case Analysis

Meditech Surgical Case Analysis Paper

Strategic Supply Chain Management

Meditech is a leader 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. The organization have been experiencing a good customer service experience in the past, however, lately customers have expressed concerns with the time products are being delivered to them. Due to the nature of the industry, the delivery of surgical equipment on time 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.

Meditech's main problem is that a bullwhip effect was produced due to organizational and supply chain problems. The method used by Meditech to balance customer demands with planned production is not effectively serving its purpose. The catalog of products been offered by Medltech continues to grow and replacing current items, making obsolete old products that are in their catalog 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. While the assembly lines try to keep with demand and company's resources are getting exhausted trying to launch a new product, the distributors then will increase their product demand, which causes a bottle neck effect as it moves up the supply chain process. As the initial demand slows down there are still backup of high demand of inventory being produce. This cycle would repeat again as new products are being released to the market. Due to these problems, Meditech supply chain and management has created a poor customer service.

Another problem of Meditech is communications. There is not enough communications 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 larger orders in an effort to help them compensate the waiting time. The panic ordering by distributors are caused by lack of communications and in turn lead into the problem of the bullwhip effect. Meditech's current distribuition system is inefficient and obviously is causing an inflated demand of products. There is not enough information being shared among distributors and Medtech's operations. Each distributor receives orders from different regional warehouse, which makes it hard to see the bullwhip effect. The organization's forecasting system is also confronting serious problems. The current organization's forecast system is determined by marketing and finance departments on an annual basis. The annual forecast is then broken down into monthly and weekly forecasts and is frequently adjusted by Central Planners according to market trends. Meditech has realized that leads to forecasting problems when they try to introduce new products. The organization realizes that they are unable to effectively predict demand for new products, which causes large demand fluctuations and backorders.

Meditech can try few alternatives process to reduce demand variation and the possibility of panic ordering. The company should improve how customers ordering is processed, they should more effectively share demand information, and increase lead times on new products. The forecast methods needs to be upgraded to reflect current needs, the company should also introduce vendor managed inventory and an e-commerce web site to share information with its customers. All of these functions should be centralized and shared among all of the supply chain channels that are involve. Another alternative is to transform the finished goods inventory policy into a "push"

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