Module 1 Problems Essay

Meditech Surgical Case Problems:
1.) What are Meditech’s problems in introducing new products? In manufacturing ALL products?

Meditech has taken a majority of the market in endoscopic surgical instruments. In order to stay ahead of the competition the company has taken on the business strategy of introducing new products that have been created based on existing products or enhancements. These new innovative “low-cost products” are introduced very quickly and have been “pushed by an aggressive sales force” (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008, pg. 18).

The main problem Meditech is facing is that its supply chain cannot simply keep up the customer demand of the new products that are being introduced. This in turn causes a serious concern causing the customer service levels to be low. It was soon realized by the Customer Service and Distribution Manager, Dan Frankin, that customers were getting quickly frustrated with the poor order deliveries.

The finished goods inventory levels seem to be high as well caused in part by poor forecasting compared to the actual demand. In the case study and external consultant studied the company’s inventory and discovered that the levels could be reduced by forty percent, not even effecting the customer service level (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). This in turn has caused a high inventory on hand and can’t fulfill its customer demands at the same time.

2.) What is driving these problems, both systemically and organizationally?

The short lead times combined with the aggressive sales antics of introducing new endoscopic surgical instruments has created large gaps between customer demand and Meditech’s supply resulting in constant shortages with each new product introduction. On the production side, the production level is always acting a week behind the forecasted schedule due to having to respond to the schedule changing policy. Coupled with that, the measure forecasting accuracy previously had not been tracked and readily available. Plans were not input into the IT system but rather was kept in hard copy form, making it a time consuming process to access old data.

When it comes to the high inventory levels Meditech management didn’t want to reduce the amount of inventory on hand in fear it would cause further damage to the poor customer services levels, as well as dealers and affiliates “panic ordering” (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008, pg. 23). This was done on the basis that Meditech had not been very good at its’ order fulfillment in the past so the dealers and affiliates increased their size of order in hopes that part of them would be delivered on time. This made it difficult to decipher if these orders were at all based on actual demand. The decentralization of the organization and how information was stored on various systems made it difficult to compare data and generate any helpful reports.

3.) Why is the customer service manager the first person to recognize the major issues?

The first person to recognize the major issues was the customer service manager because the forecasts hadn’t been compared to actual demand so naturally frustration increased with customers and they started to complain. The high level of inventory was not seen by management because it felt that there was never enough inventory to fulfill customer orders. So naturally, the one in which hears the customer feedback, the customer service manager, is the one in which would recognize the issue.

4.) How would you fix these problems?

There are three quick ways to initiate in order to fix these problems. First, the accuracy of forecasting needs to be addressed. There are two ways in which to address this; the first being to compare the actual demand to the forecast and adjust accordingly; secondly, study and review the pattern of orders for each new product. It seems that the pattern for demand of new products reaches a high point and then immediately afterwards it drops

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