Discussion Replies: Meditech Surgical ? DISCUSSION ASSIGNMENT INSTRUCTIONS The student must post 2 replies of at least 250 words reviewed journal articles in current APA format. The t

Scott Johnson

1. What are Meditech’s problems in introducing new products? In manufacturing ALL products?

In order to meet consumer wants and stay competitive, it appears that Meditech principal business strategy entails the launch of new goods. In comparison to its competitors, the company's success is probably attributed to this strategy. Due to the fact that most of Meditech new offers were simply upgrades of older ones, the company had little difficulty marketing and selling new items. However, there was a definite deterioration in the caliber of customer service with each new product Meditech launched. Customers specifically voiced their discontent with order deliveries.

The company's supply chain was severely constrained, making it impossible for it to quickly satisfy early client demand. Ironically, the finished goods inventory remained unacceptably high, indicating the possibility of a 40% drop in stock levels. Despite this, Meditech found it difficult to meet customer requests for prompt deliveries and was unable to balance its inventories. The insufficient accuracy of their forecasting techniques was one of the main contributors to this problem. Given the lack of a systematic method for determining incoming demand, inventory levels, and production requirements for certain instruments, it might even be considered depressing. Their forecasting efforts were further hampered by the absence of standardized data formats.

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

The company's strategy of frequently releasing new items seems to have played a big role in the development of problems. The company has encountered serious issues as a result of failing to analyze client demand, which leads to inaccurate forecasts, and ignoring Meditech's supply chain, which causes shortages with each new launch. The requirement of one week's notice for scheduling changes within the manufacturing process has caused a delay in production activities, putting the production level one week below the anticipated timetable. Further complicating the issues and lengthening the forecasting process' execution time is the lack of a system to track or store data for accurate forecasting. Another noteworthy feature is the management of Meditech's disregard for the creation of fixed inventory level.

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

issues?

First and foremost, the customer service manager is directly in charge of getting in touch with consumers and making sure they are satisfied. As a result, this person is the subject of both favorable and unfavorable customer reviews. Because historical projections and actual demand had never been compared to evaluate accuracy, the corporation relied primarily on customer complaints to identify problems and provide inadequate service. Additionally, as consumers openly express the aspects that fall short of their expectations, the customer service manager receives firsthand knowledge of the main issues.

4. How would you fix these problems?

There are two strategies that need urgent fixation. Enhancing the forecast system would be the initial area of effort. The business must set up a reliable data tracking and storage system to enable comparisons between actual demand and estimates going back a few years in order to achieve exact forecasting. Accurate analysis will be possible by using simple statistical methods like linear regression in combination with past forecast data. Notably, the demand for new items typically shows a peak within the first week, then shifts to a more consistent pattern after that.

The company's IT infrastructure will be strengthened as part of the second strategic effort. By putting in place a centralized organizational structure, necessary information would be quickly accessible without the need to go through physical paperwork and hard copies.

Stanley Lomax

Discussion Thread: Meditech Surgical

          Meditech Surgical, an independent company of Largo Healthcare Company, was created to primarily produce and sell endoscopic surgical instruments. Meditech Surgical is well known in its market for its affordable and pioneering products. In addition, Meditech Surgical thrived on the mission of developing new products, however, they face several challenges that will be addressed in the discussion below.

Case Discussion Questions

Problems Meditech Surgical Are Facing

          One essential problem that Meditech Surgical is facing relates to its new products.  Due to an aggressive salesforce, Meditech Surgical created and introduced new products quickly without having a strategy and system in place to manage the supply and demand. Annually, Meditech Surgical would create up to a dozen new products. Often, former products would be enhanced and modified with new features and the product would appear on the market as being brand new.  Meditech Surgical' s primary customers were surgeons and hospital supply managers.

         A second issue that Meditech Surgical struggled with was forecasting and manufacturing as they constantly had shortages with each introduction of new products which resulted in supply chain difficulty.  Customers often complained about having to wait long periods to receive their orders.  By not having an efficient process in place to appropriately and effectively track supply, demand, production rates, demand patterns, and other factors, Meditech Surgical found itself to be overpromising and underdelivering its new products. The manufacturing process consists of three steps which are assembly, packaging, and sterilization.  

Systematic and Organizational Problems

             Due to the manual intensity of the assembly process, production starts slow for new products.  Two weeks is the average cycle time for the assembly of a batch of instruments if all inventory and parts are on-hand. If required to wait on specific items or parts the lead time can take up to 16 weeks.  The assembly process is a systematic and organizational issue that requires modification.  

              Another systematic and organizational problem that Meditech Surgical faces is the production planning and scheduling process.  Production planning should not be based only on monthly forecasts and forecasting and the actual demand can differ greatly. In addition, the delay in completing the packaging and sterilization process after all finished goods are properly assembled causes longer wait times for customers to receive the finished product.  The Push and Pull strategy is not effective when increased demand causes backorders.  

Customer Service Manager Recognition

            Meditech Surgical Customer Service and Distribution Manager, Dan Franklin, was concerned regarding the dissatisfaction of customers and decided to investigate. Keep in mind that Meditech Surgical’ s reputation was being jeopardized because of poor delivery of products to customers which is critical in the healthcare industry. Dan wanted to gain knowledge as to why customers complained about poor service related to new products through having meetings with one of Meditech Surgical’ s main clients. Due to each new production introduction becoming a supply chain complaint by customers and based on his position as manager of distribution and customer service, Dan would be the first person to report or recognize the huge problem areas within Meditech Surgical.

My Solutions to the Case

            To fix the two main concerns at Meditech Surgical one method is to provide training to the forecasters. Feiler and Tong (2022) suggest that new product forecasting should be broken into three main sections.  First, human interpretation of flawed prophetic information is critical to how accurate or inaccurate the forecast results are. The ability to make decisions without much certainty and consistency is required.  Second, the capability to evaluate multiple possibilities, features, and innovations, and make the best decision is challenging to most people but is key to an accurate and efficient forecast.  Third, understanding the impact of the operations based on the forecast of production for the new product.  Should Meditech Surgical assist its employees in gaining a deeper understanding of how to truly forecast and implement a change, it will help with the production and distribution of the finished product to the complaining customer.     

            In addition, Meditech Surgical needs to seek ways to implement effective supply chain practices through the use of information technology.  According to Zhou et al. (2014), successful supply chain practices involve both delivery practice and sourcing practice.  The delivery process entails processing the customer’s order and is marked completed once the customer is invoiced.  The sourcing process involves connecting suppliers with the manufacturers which truly impacts the production of the new product.  The use of information technology can assist with the organization, accuracy, and efficiency use of data, materials, customers, and other pertinent information.  Quality, timely, and concise data can be used to increase production factors and to make customers satisfied.

References

Feiler, D., & Tong, J. (2022). From noise to bias: Overconfidence in new product forecasting.  Management Science,  68(6), 4685-4702.  https://doi.org/10.1287/mnsc.2021.4102Links to an external site.

Zhou, H., Shou, Y., Zhi, X., Li, L., Wood, C., & Wu, X. (2014). Supply chain practice and information quality: A supply chain strategy study.  International Journal of Production Economics,  147(C), 624-633.  https://doi.org/10.1016/j.ijpe.2013.08.025Links to an external site.

Lisa Davidson

Meditech’s problems in introducing new products and all products.

Meditech has a problem with new product launches in under forecasting demand chronically across their launches and in an inadequate response time to changes in the demand both at launch and during established product demand changes. In their launches the data shows that actual demand upon launch is on average double the prediction. As mentioned in the Simchi-Levi et al. (2023) case information, there is a question about whether this is actual or panic-driven based on historical launches, however the response is the same either way. Additionally, data shows that for both launches and “normal” increases in demand, the response time lags by two to four months, causing major problems with customers and delivery levels (Simchi-Levi et al., 2023).

What is driving these problems, both systemically and organizationally.

Incorrect forecasting

The first problem driving these problems is the chronic under forecasting of initial demand. Systemically, the response is the same, however there could be two causes for this incorrect forecasting. First is an actual underestimate of how many customers are going to want to buy the new product and the levels they will require to build their initial inventory at the hospitals. As shown by the demand data, the sales level off shortly after launch indicating that initial purchases are higher (likely to create stock in the hospital supply rooms) and then steady out to replacement or actual usage quantities (Simchi-Levi et al., 2023). This type of supply build up is similar to establishing the base raw material levels for the manufacturing lines so should be clear to supply chain but may not be to the development team who may only be looking at steady state demand. This assumption is based on the initial forecast and production levels being roughly equivalent to the steady state levels after production has stabilized (Simchi-Levi et al., 2023).

The second potential cause of incorrect forecasting and possible exacerbating the situation is the “trained” panic buying of the distributors because of Meditech’s history of launching with insufficient inventory and production levels (Simchi-Levi et al., 2023).

Lack of data interconnectivity

As stated in the case information, there is no connection between the data streams of the supply, demand and inventory that is easy to utilize by the teams. While it is evident that the system is trying to maintain flexibility with its weekly schedule meetups, the demand seems to be invisible to this team, causing them to be reacting only to inventory and it’s lagging indicator (Simchi-Levi et al., 2023).

Response time and material availability

The response time to the doubled demand is lagging by almost four months in the new product launch scenario with production even decreasing at month two while demand is still increasing well beyond the production schedule (Simchi-Levi et al., 2023). There could be two reasons for this lagging response time. First, the invisibility of demand levels could be resulting in management making “guesses” about when the demand will level out based on history and being incorrect. Another could be that materials have a lead time of two-sixteen weeks. Without more data on what stocking levels of the raw materials are, this is assumptive, however weekly changes and that level of low forecasting implies this could be the case.

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

The lack of connection between the data streams makes the problems invisible to the supply chain management until the customers have been receiving back-order responses for some time (Simchi-Levi et al., 2023). The Customer service manager is on the frontlines to that customer dissatisfaction. It is not until after the customers do not receive their product chronically that the messages finally are getting back to earlier stages of the supply chain.

How to fix these problems.

Incorrect forecasting

The fix for both of the incorrect forecasting problems is the same because panic buying will naturally be addressed and minimize after the distributors are more confident in Meditech’s supply levels. For the root cause of both, a change needs to happen in the initial new product launch forecasting. Understanding buying patterns for the hospitals is crucial and can be found in the data from historical launches and recognizing why the buying patterns exist. Following that, the forecasts should be planned with double the amount required for steady state for at least the first three months of the launch. As this is not a static process, this strategy should be revisited with data on a regular basis.

Lack of data interconnectivity

Meditech has an ERP system that is dependent on manual entry of forecast. There is no connection with actual demand. In addition, with the introduction of big data and newer more technology driven planning/inventory systems, it has shown that uncertain demand can be responded to much faster (Dou et al., 2023). Research has also shown that forecasting, actual demand data and inventory levels at all parts of the system, including distributor channels, is critical to understand (Dou et al., 2023). This will allow for faster and more collaborative responses at any point of a product’s lifecycle and to an extent help minimize panic buying in the distributor channels if they can see the responses from the supply chain in real time (Dou et al., 2023). Utilizing this technology and big data along with the current collaborative meetings that Meditech has set up will allow anyone to see the gaps coming and trigger more accurate responses (Simchi-Levi et al., 2023).

Response time and material availability

Supply chain flexibility moderates the risk to the entire channel, especially in the response time to changes (Sreedevi & Saranga, 2017). While there is also a risk of too much response flexibility, the bigger risk is if there is not enough (Sreedevi & Saranga, 2017). With a better forecast and demand response as discussed above the response time of weekly is a good starting point for Meditech and could likely be sufficient. Raw material flexibility also plays a critical role in this. While the data is unclear in this report whether raw materials play a role in the problem, it is a likely scenario based on the stated lead times of two to sixteen weeks. Safety stock can mitigate that but forecasting fixes from above are also a key improvement avenue for raw materials as well. In addition, the data interconnectivity is now sometimes extending to suppliers, allowing them quicker visibility to possible demand changes as well (Dou et al., 2023). This may be something to consider for Meditech for select suppliers of more critical items.

References

Dou, L., Dai, Y., Song, H., Shen, L., & Li, H. (2023). Horizontal and vertical demand forecast information sharing in a distributive dual‐channel supply chain considering the manufacturer's product quality improvement.  Managerial and Decision Economics, 44(5), 2772-2797.  https://doi.org/10.1002/mde.3847Links to an external site.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2023).  Designing & Managing the Supply Chain. Concepts, Strategies, and Case Studies. McGraw-Hill Education.

Sreedevi, R., & Saranga, H. (2017). Uncertainty and supply chain risk: The moderating role of supply chain flexibility in risk mitigation.  International Journal of Production Economics, 193, 332-342. https://doi.org/10.1016/j.ijpe.2017.07.024

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