Supply Chain Design Name: Institution: Executive summary Meditech is one of the principal market leaders in the supply of endoscopic surgical instruments. The Company is responsible for manufacturing and supplying low cost surgical equipment, either to independent surgeons or hospitals…
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Customer service in the industry within which Meditech is operating is a crucial consideration, owing to the urgency of medical operations. Failure to deliver equipment in a timely manner, therefore, places the Company at a risk of incurring losses and losing its competitive advantage. For Meditech to retain its current share of the market, drastic supply chain management measures must be executed (Simchi-Levi et al., p. 18). Introduction Acute competition in the contemporary international markets, continuous introduction of commodities with short life spans, as well as, increased customer expectations are some of the factors that have prompted most businesses to focus extensively on management of supply chains. The mentioned aspects, coupled with constant progress in procurement and communications technologies, also motivate the uninterrupted development of supply chains and techniques for their effective management. In an ordinary chain of supply, manufacturers procure raw materials, produce commodities and ship them to warehouses for transitional storage, later shipping the products to customers or retailers. This is not any different from the procedure followed by Meditech. However, logistical problems are bound to occur in a supply chain, warranting better management of the interactions between suppliers, manufacturing departments, storage facilities, and retail outlets. Problems may also arise in management of raw materials, work-in-process (WIP) inventory, as well as, the inventory of finished products (Simchi-Levi, Kaminsky, and Simchi-Levi, 2003 p.1). This paper seeks to establish these problems in Meditech’s context and propose possible solutions. Problems in Introduction of new products The chain of development is a series of processes and activities linked to introduction of new products. This chain encompasses the design stage, the related abilities and information that must be developed within a company, sourcing decisions, as well as, plans for production. Meditech decided to adopt a unique development chain over the past few years. This strategy involves constant introduction of innovative products into the surgical instruments market, by primarily updating the existing ones. Even though the new products are generally accepted in the market, each introduction appeared to bring about a wide array of supply troubles (Simchi-Levi et al., p. 22). For instance, customers began to get tired of the low quality service accompanying each new product introduction. The Company also constantly suffered acute shortages with each product launch. Demand forecasting became increasingly difficult for Meditech, and to make matters worse, establishing the extent of damage was hard. Additionally, irrespective of the high inventory levels, the actual level of service declined sharply, largely undermining the Company’s objectives. Overall, the principal problems faced by Meditech include lack of communication between the marketing department and the procurement department, as well as, constant introduction of innovative products, which had a significant impact on the production line. Further, the supply chain management process jammed up, delaying the release of customers’ orders. Problem Drivers One of the potential causes of Meditech’s poor inventory management problem is “panic ordering” by affiliates and dealers. This is a phenomenon which occurs when a customer is not sure about timely delivery of products. As a result, the
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