Meditech Surgical Case Analysis - Term Paper Example

Meditech Surgical case study (pp. 18-25 The main problems faced by Meditech Surgical Meditech Surgical has been dealing increasing customer dissatisfaction since its consumer demands are not being attended to at the stipulated time. This is a clear indication that the production and planning and supply chain of the company has been quite inefficient (Leeman, 100). The production line of Meditech has been behind schedule due to underestimation in sales, and this has led to a drop in its finished goods (FG) inventory. As a result, major chaos has been created as product orders were delayed for more than four months. A customer may understand if their orders are delayed by few weeks, but if this delay becomes repetitive, then the situation becomes unexplainable. From all indications, it is clear that Meditech used cost-effective supply chain instead of using a responsive supply chain as it would have more useful when it comes to high innovative products considerations. The supply chain used by the company was customer service oriented and hence the delay. The company has also been facing problems in poor service quality due to strain in its production capacity. The strain in its production capacity made the company experience constant shortage in the introduction of new improved products. It also had problems with high finished goods inventory. It is important for the company to plan on the introduction of a new cycle through the three phases of manufacturing and this should be done two months before the products is marketed to avoid any shortages in the market (Leeman, 150). 2. Identification of six causes of the problems faced by Meditech Surgical a. The introduction of new products in Meditech Surgical were totally unplanned for and was done without properly strategizing on it supply chain and production schedules. This was the reason why the arrival of net order in the company was more than its finished goods (FG) inventory. Lack of proper strategies in the introduction of new products led to underestimated productions hence delayed delivery of orders. b. Faulty forecasting and mechanical techniques in the company resulted into a wrong prediction which then resulted in faulty targets (Leeman, 150). The company has had a poor ability to forecast the demand for its new products which then led to underestimation in the new product production. c. Finished goods inventory in the company is almost 40% above the desired levels. High level of finished goods inventory is a clear indication that the goods are not moving in the required rate and that customer orders are not being processed within the stipulated time. d. Meditech Surgical has long organizational structure which includes many level hierarchies. This results in large time taken in the movement of orders between these hierarchies. This is the main reason why there have been delays in the delivery of customer orders. e. Meditech Surgical Company has faced poor service quality and reputation in the fulfillment of the customer demand, and as a result, the company has to deal with “Panic Ordering”. The poor service quality is responsible for the delayed customer orders, and this has negative impacts as the company may end up losing its existing and potential customers. f. Long cycle time and processing time at each stage results into a long throughput time. With this long throughput productivity was highly affected which led to inefficient production of the orders demanded (Leeman, 200) For example, the time taken between finished goods and new product orders is at least eight weeks on a good cycle, and this leads to a delayed delivery of ordered goods. 3. Solutions towards the problems faced by Meditech Surgical The solutions towards the problems faced by Meditech Surgical are those that which will help the company to manage better its problems of meeting supply and demand needs hence improving its service qualities and these solutions are: a. The company should improve its forecasting methods through the help of an introduction of a more efficient software based forecasting modules to ensure accurate forecasting. Accurate forecasting will lead to the production of the required volume of production hence avoiding any underestimation. b. Before a new product is introduced in the market, Meditech Surgical should strategize properly on its supply chain and production plan schedules (Leeman, 200). The production plan schedules will ensure that the net orders equal the finished goods inventory and the supply chain schedules will ensure timely delivery of orders. The strategy on production plan will solve the problem of negative finished goods inventory recorded by the company. c. Order point (OP) or order quantity (OQ) should be changed. Increasing the order quantity and order point is very crucial to ensure the large demands are met within the stipulated time frame. With the increase in Order point (OP) or order quantity (OQ), the customers will not have to wait for four to five months before receiving their products after ordering. d. The finished goods inventory for the company should be kept as low as around 25-40% and not above 40%. Low percentage of finished goods inventory means that goods are moving, or the customer orders are being processed within the stipulated time. e. The time of production at each stage should be reduced, and the company should make the structure of the operation organization in the company more flat in order to reduce the time consumed for the movement from one department to the other. Making organizational structure flat will reduce the time taken in the movement of goods and will reduce the time taken in processing of customer order hence reducing the delay. f. The company should ensure its customer service representative works more efficiently in getting the customer demands right time. Efficient customer service will help the planning team in assessing the correct predictions of demand in order to ensure the accurate production of new products in accordance to the forecasted demand. This will also help in preventing under production of products and ensure that the customer orders are processed in time since the finished goods will be enough to cater for the customer orders (Leeman, 200). Work Cited Joris Leeman. Supply Chain Management: Fast, Flexible Supply Chains in Manufacturing and Retailing. BoD – Books on Demand, 2010, pg 100-200 Read More