Medical Technologies Corporation - MTC

Supply Chain Management Strategy

Presented by:
Swapnajit Chakraborty
This is Swapnajit Chakraborty. I am an analytics professional. Here in this MTC case study persuasive presentation, I am
trying to showcase some of those effective approaches which is very essential to address for Medical Technologies Corporation
(MTC) in that certain state of affairs.

Background

US Senate permanently repeals medical device excise tax

As a part of the Affordable Care Act (ACA) in 2013, the medical device tax imposes a 2.3% tax on the
domestic sales of medical devices, to be paid by the device manufacturer or importer.

Company needs to optimize their Supply Chain Strategy to fill the gap which taken over by new
implemented tax system

Existing supply chain strategy @ MTC need to be reviewed. This will balance the revenue which is effected by
new tax implementation
Objective
 Planning to re-design some part of the supply chain @ MTC
 Need to evaluate the outbound network in order to make it more efficient
 Planning to achieve better sourcing techniques.

Executive Summary – Proposals and the projected outcome.

A. Processes need to be study thoroughly, when some of those existing may need to be removed

B. Need to evaluate the outbound network where product running through various process and channels,
while reaching to actual customer.

C. Focusing on cutting additional cost which is not necessary and have better idea of implementation. One of
them here we are considering on-site sterilization and second to improve relationships with the suppliers.
Outbound Product Flow @ MTC
Sales
Operating Room
Representatives

Branch Offices
Hospital Central Central
For Re-Sterilization Distribution
Supply
Centre
Loaner Offices

Transport
using third Party
Manufacturing Unit Logistic Company

Unit A

Unit B
Outbound Sterilization Centre Storage Facility
Production Unit Product Assembly Door
(Vendor) (Manufacturer)
Unit C
Unit D
 When I plotted graph (below, left) on existing demand and production in MTC, I have observed that lots of prediction gap.

 Then when I try with exponential smoothing forecast technique, I found this is very useful technique to predict the demand
(shipped). Here demand has seasonality, which I have to tackle with exponential smoothing.

50,000
45,000
40,000 Forecast Using Exponential Smoothing where Alpha =0.9
35,000
60,000
30,000
25,000 50,000
20,000
40,000
15,000
10,000 30,000
5,000
- 20,000
1 2 3 4 5 6 7 8 9 10 11 12
10,000
2013 Shipped Production
-
13 13 13 13 13 13 13 13 13 13 13 13 14 14 14 14 14 14 14 14 14 14 14 14
60,000 a n- eb- ar- pr- ay- un- Jul- ug- ep- ct- ov- ec- an- eb- ar- pr- ay- un- Jul- ug- ep- ct- ov- ec-
J F M A M J A S O N D J F M A M J A S O N D
50,000
Demand ForeCast(ExpSmooth)
40,000

30,000 MTC has to adopt robust forecasting technique (like

20,000 showcased here in above picture) to predict demand so
10,000 they can manage inventory very effectively
-
1 2 3 4 5 6 7 8 9 10 11 12

2014 Shipped Production

In an industry that often requires speedy shipping and delivery, it’s important you have the necessary equipment and
capabilities to move inventory as quickly as possible. Other hand MTC is currently sending out every surgical kit to an offsite
sterilization center, bringing them back in before they're ready to be shipped out to customers. There's a possibility to save
money if that process is improved. The other area is around the kiosks that are proposed to be at the hospital locations to store
some of the inventory.

Areas of improvement
• Revise Sourcing Strategy and expanding supplier relationships
• Implementing digital demand planning and robust forecasting techniques
• Designing and implementing updated risk mitigation strategies
Starting early in the design phase, medical device manufacturers should look at various strategies to qualify
suppliers, especially because of the complex quality tests, verification requirements and regulatory approvals
involved. Using suppliers that are closer to their markets is an important option for medical device manufacturers
to reduce shipping costs and achieve better control.

Communication and collaboration throughout the supply chain is critical and contributes to the avoidance of
disruptions. It works both ways between manufacturers and their suppliers.

The final step in shipping medical equipment and supplies is to track your shipments to ensure they’ve arrived at
their destination on time and in one piece. Be sure your 3PL can offer you up-to-date tracking information so you
can monitor the conditions of your freight.
Production forecasting helps to maintain optimal inventory levels. Because forecasting impacts the production cycle from start to
finish. A more efficient and cost-effective production platform means a more efficient and cost-effective manufacturing company.
Here my forecasting tool can alert manufacturers when demand decreases, allowing them to slow production and minimize stock
levels.

Resources needed for the improvement

Review of Locations and Offshoring/Nearshoring Opportunity – We will evaluate current supply chain and
sourcing processes, and document minimum quality standards and capacity specifications that alternative
suppliers must comply with. In order to get inventory accuracy and increased user adoption, the proposed tool
must be easier to use than any other means. There are advanced features that device manufacturers can take
advantage of to solve the problem of trunk stock visibility while gaining full tool adoption.

Every year millions of dollars are expended to equip and maintain the hospital sterilization centers, and our
country is not an exception of this matter. According to this, it is important to use more effective technologies
and methods in health system in order to reach more effectiveness and saving in costs. According to the revealed
evidences and also cost analysis, due to shortage of necessary substructures and economical aspect, installing the
off-site sterilization health technology in hospitals is not a good idea. But this method can be used to provide
sterilization services for clinics and outpatients centers.
Risks and likelihoods to mitigate
While the process of risk assessment could seem daunting, a well-established analysis can help operationalize it.
To manage risks that are classified as more likely to occur and to be of higher severity, a multilayer risk-mitigation process can
be deployed, following a set of guiding principles.

Focus on root-cause challenges—not just symptoms. When developing and enacting risk-mitigation levers,
identifying the root-cause problems leading to each risk is vital so that stakeholders can take effective action to
solve them. Although symptoms are often easier to identify, correcting for the root cause can ensure that risks are
mitigated quickly and comprehensively.

Design mitigation layers to be complementary. The first, foundational line of defense against vulnerability is a well-
performing supply chain. Additional layers of defenses should function together so that collectively they provide
strong protection. While any one layer of defense may not fully protect against all important risks, care should be
taken so that together, the mitigation layers preclude important risks from having negative impacts on crucial
segments.

Clearly calculate each layer’s cost and benefit. The return on investment of each mitigation layer can be determined
by explicitly calculating its cost and potential benefit. This step functions not only as an indication of the layers’
value to the company, but also as a tool in communicating the importance of risk mitigation to other stakeholders,
such as investors.
Thank you