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Meditech Surgical Intent diagnosis of supply chain Business overview Supply chain Production planning Whats wrong? How to fix it?
THE MARKET
National and Meditech split the market Compete based on product innovations, customer service, cost National sells to physicians; Meditech sells to material managers Customer preferences change slowly
PROBLEMS
New production introduction needs to be flawless Consistently fail to keep up with demand during initial order Customers wait over six weeks to have orders delivered
DISTRIBUTION
Central warehouse Two primary channels to hospitals
Domestic dealers
Order and receive products from multiple manufacturers Independent and autonomous entities
International affiliates
Subsidiaries of Largo Healthcare Similar to domestic dealers from Meditechs point of view
INTERNAL OPERATIONS
Assembly
Manually intensive Using component parts in inventory Assembly line with a tem of cross-trained production workers Cycle time for assembly of a batch of instruments
2 weeks
Packaging
Using machine
Sterilization
Cobalt radiation sterilizer, about 1 hour
OPERATION ORGANIZATION
Forecast
Annual: during the fourth quarter of each fiscal year Monthly: using annual forecast broken down proportionately
At the beginning of each month: adjustments of forecast
Planning of assembly
Using monthly demand forecasts transfer req. = month forecast finished goods inventory + safety stock Approved throughout the organization after 1 to 2 weeks
2 16 weeks
2 weeks
push
pull
1 week
PRODUCTION PLANNING
Annual Forecast Monthly Revision Transfer Requirements Monthly Plan MRP
Monthly Plan
PRODUCTION PLANNING
MRP
Material Plan
Parts Inventory
Assembly
Bulk Inventory
FG inventory
Domestic Dealers
Part suppliers
Meditech Assembly
Meditech Warehouse
Hospitals
2 - 16 weeks
2 weeks
1 week
WHATS WRONG?
Poor service for new product introductions Poor forecasting? Panic ordering? And high FG inventory
What to Do?
Recognize that demand is stable and predictable Establish accountability for forecast Eliminate planning delays and/or reduce time bucket Alternatively, put assembly within pull system and eliminate bulk inventory
Thank you