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Meditech Surgical Case Study
Meditech Surgical is a supplier of endoscopic surgical equipment. It was a spun off of its parent company Largo Healthcare, in order to focus on producing and selling endoscopic surgical instruments, as endoscopic surgery/procedures were becoming more commonplace and the demand for surgical instruments was on the rise. Meditech was able to achieve much success in a short period of time. But as the market grew and product selection grew, Meditech began to have issues with production and customer satisfaction. The case study takes a look at the production issues, the factors driving the production issues, why the issues need to be identified and how to fix the production issues and improve the customer satisfaction.
Meditech Products Problems
New Product Introduction
In order for Meditech Surgical to compete in the market with National Medical Corporation, its primary competitor, it was continuously producing new and innovative products and delivering it to the market. The new products seem to hit the market so rapidly, that is a least a dozen or more new products in a year. Though the rapid innovation was critical to Meditech's success, it started to create some problems. First problem was Meditech's inability to keep up with initial demand of new products from customers. There is a problem with forecasting which leads to new products shortages and Meditech's inability to fulfill orders on time. Due to customers' past experiences, they tend to place orders far more than needed, hoping that at least they would receive some of them. This eventually has a cascading effect on actual supply and demand of the products.
All Product Manufacturing
Meditech goes thru three main steps in its manufacturing process. The first is the assembly of component parts. This process involves component parts being inspected individually by Quality Assurance before they are place in inventory to be used on the assembly line. The problem with this process is that it is manually intensive and considering the vast number of products that Meditech produces every year, it eventually leads to loss of snags and delays. For example, it takes two weeks to assemble a batch of instruments that are already in the inventory. It can take up to 16 weeks lead time otherwise for components are needs to be placed. The second process is packaging which thankfully involves using several large packaging machines. This process is sufficient for now because the machines are large enough and therefore have not restricted product output. The third process is the sterilization of the package goods. This process is used to sterilize package product for any possible contaminants. There doesn't seem to be a particular issue at this third stage. Though the sterilizer capacity is not a problem, currently, the delays that have been experienced at the first stage can be assumed is preventing the capacity usage of the packaging and sterilizing machines since the delays from the first process will cascade into the other processes.
Systematic and Organizational Drivers of Product Problems
Systematic Drivers
The systematic drivers of the product problems experienced by Meditech Surgical stems mostly from its distribution systems. There are too many moving parts and having so many product turnover in a year seems to cause a lot of problems. Orders are hard to fill and in the effort to fix this, the customer aspect is suffering. I think Meditech needs to conduct a SWOT analysis to get a true picture of what is happening. SWOT Analysis is a tool used for strategic planning and strategic management in organizations. It can be used effectively to build organizational strategy and competitive strategy (Gürel, 2017, p. 995). Although Meditech's system of innovation and production has been working, it seems that as it has gotten bigger, it needs to be revamped.
Organizational Drivers
The organizational drivers of Meditech product problems can be attributed to its organizational structure and reporting structure. All functional managers report up to the VP of Operations. As depicted in the org chart, it doesn't seem that there is any much interaction between the department. Meditech needs to revisit its supply chain management system. According to Mentzer, Stank and Esper (2008), as inventory moves through an organization, however, it crosses functional boundaries and involves processes and resources from other areas within a firm (p. 39). It does not seem like Meditech operations organization is functioning cross sectionally and that process needs to be revisited. For example, decisions regarding ordering and availability of inventory to satisfy end customer demand while considering the impact on and from raw material/sub-component procurement and production to optimize firm level performance involves resources and processes owned by multiple functional areas (Mentzer, Stank, & Esper, 2008, p. 39).
Customer Service Manager Recognition
The customer service manager is very essential to the success of Meditech because the success of the company depends on ensuring that the customers who are the source of the success must be satisfied. The customer service manager serves as the eye of the company to the outside world and is able to determine the needs of the customer and communicate it to the decision makers.
Problem Solutions
There are two areas that Meditech needs to investigate to resolve its systematic and organizational problems contributing to its supply chain management. According to Verboncu and Condurache (2016), any complex process, aimed at the future, regardless of its nature - managerial, economic, technical or technological etc. - requires, in advance, a detailed analysis of the organization or its procedural components or structural levels on which it will occur (p.114). Meditech needs to look at its supply chain structure and how to reduce or eliminate delays of products to customers. This is necessary in order not to lose their customers to the competition, National Medical Corporation. Meditech also needs to reorganize its reporting structure so that there is constant communication and sharing of information between all functional areas. This will also help the VP of operations to make better strategic decisions on the direction of which Meditech should take in order to stay competitive.