Case Study Report: Logistics Management of Medical Device Company

This report provides a comprehensive analysis of the logistics management challenges faced by a medical device company. It delves into issues such as multiple distribution channels, customer service deficiencies, inventory management problems, and stockouts. The report explores the application of various logistics management strategies to address these challenges. The analysis includes the use of continuous flow and agile supply chain models, lean production, and inventory turnover improvements. The report emphasizes the importance of aligning supply chain systems with organizational objectives, fostering strong supplier relationships, and leveraging automation. Recommendations include improving forecasting, enhancing marketing efforts, optimizing inventory management, and streamlining logistics processes to enhance efficiency, reduce costs, and improve customer satisfaction. The report concludes with a discussion on the significance of these strategies for maintaining and improving the company's success in a competitive market.

LOGISTICS
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Issues faced.................................................................................................................................1
Resolving issues..........................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Logistics management is considered as very important part of supply chain management
which implements, plans and controls the effective and efficient forward, reverse flow along
with storage of services, goods and related information among origin and consumption point
with context to attain requirements of the customer. The present report is about Medical Device
Company which is highly innovative and successful multinational company which distributes
and manufactures a varietal range of medical devices through surgeons in operating room. This
will articulate about challenges faced through organization along with application of different
models for resolving the issue.
Issues faced
The first issue is that other products and peripherals are also sold within MDC brand and
even shipped at first state to both European manufacturing plants, prior to be downstream within
MDC supply chain. It has been articulated that other products and peripherals are also important
but if resource management is not in systematic line, then it create issue as these peripherals are
of no use with actual products. In the similar context, it has been observed that entire range of
product is shipped with 15 warehouses, which are replicated as mother warehouse, or hubs and
they feed to particular 40 warehouses as MDC’s sales distribution agents and representatives’
draws inventory (Mangan and Lalwani, 2016). It could be replicated as multiple channels which
creates complexity in supply chain management and even increment in cost of sales and even
raise administration. In the similar issue with application of multiple distribution channels there
is increment of customer service issues and inclusion of distributors. With this aspect, to manage
systematic shipping is also a major issue in multiple channels, as this will lead to different trucks,
expanded shipping services instead of one large shipment. It creates problem of integration and
coordination which decreases sales and revenue and raises cost.
The third issue is numerous customers has need of improvement is service solutions
centred throughout increment in availability of product along with mix of low level of handling
stock. In the present scenario, technological advancement in medical along with expanded range
of product drives business growth. The customer service department is very important part in
business which is related to customers on behalf of the company. It handles every complaint on
basis of company or issues related to service and sales delivery (Fernie and Sparks, 2018). In the
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present scenario, customers are the actual decision makers as they always compare with their
competitors as if there is poor customer service is strongly correlated with insufficient customer
retention. The absence of customer service would suit each demographic as its blunders are
objectively off put and displease it customers of every walks of life. Simultaneously, bad
customer service leads to bad review as this discourages other potential customers whereas
performance monitoring and collection of feedback helps in improving customer service.
Furthermore, in this era there is high competition which offers similar solutions as there
is demand by some users is of solutions. There are different variants of particular device is
available for immediate application. On the similar aspect, payment for particular variant is done
when there is actual use at the time of operation (Suryanto, Haseeb and Hartani, 2018). As in this
all equipment are expensive. Henceforth, competition in marketplace is rising with some of its
competitors and initiating for offering these solutions. With reference to logistics and supply
chain system’s optimization is highly crucial and major problem. In this competitive
environment, decision making for every critical area has need of mathematical analysis and
modelling. However, it is critically linked to supplier management within logistics and supply
chain. The strategy of competitor is highly effective as they are incurring less cost which
decrease sale, revenue and customers as well.
Simultaneously, fifth issue in this study has been extracted is very common in logistics
and supply chain system such as Inventory management. Within MDC’s European operation
inventory turnover is very problematic and has reached to five turns per year whereas industry
standards is 10. This will outcome in increment in inventory in the system as will create issues
like product obsolescence (Zijm et.al., 2019). Generally, inventory turnover measures efficiency
related to wholesale distribution of durable goods whereas this measures number of times
inventory is sold or implied in stated duration. In this study, it has been extracted that
organization has low inventory turnover as it is spending high holding costs such as insurance,
rent etc. The goods which are not turning over are obsolescence and then too ordering too much
stock and on frequent basis. This will lead to cash flow issues due to tying much capital in
inventory. In simpler terms, there is presence of holding more goods as compared to realistic
need at stated time.This could result through weak sales as due to upper stated issues and this
indicates poor inventory management.
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Moreover, stock out is replicated as sixth issue which might be due to poor inventory
management as it is a situation in which requirement or demand of item could not be
systematically fulfilled through current inventory (Christopher, Mena and van Hoek, 2018). It is
occurred at different stages along with chain is also becoming very common with resulting
requirement for expediting inventory direct to users through either manufacturing plant. It gives
impact on sales team as well as all effort and time invested in motivating and training the sales
team for accomplishing objectives of sales has been fully compromised. It justifies the stock out
which could be excuse for attaining sales target and with explanation when problem would be
fixed which is highly demotivating and embarrassing. If any customer faces stock out, then there
is presence of high degree of tolerance for situation if they had faced numerous stock outs prior
for similar business. It will be great opportunity for its competitors because customers would
initiate shopping around.
Resolving issues
The main responsibility of the organization is to give better service to its customer with
systematic supply chain strategy. Supply chain is replicated as backbone for supplying product
within market such that it could be used through companies and customers could make margin.
On basis of solving above stated issue, there must be systematic alignment of supply chain
system with system objectives and this will improve the supply chain system as well. It designs
and optimizes supply chain for serving customers via entire understanding for serving its
customers (Khan et.al., 2018). The organization might be driven through Enterprise Resource
planning systems as with physical structures, numerous layers of various process optimization
tools for making things highly productive and efficient as possible. The net outcome is very cost
effective supply chain which is not flexible as per needs of the customers. The alignment enable
the synchronization of flows throughout the entire components of SOCR model and this does
through connecting pieces through its integrating elements such as Strategic alignment,
governance, collaborative organization structures, core business processes, Information
technology, Standardization of improvement strategies and last is optimization of network.
Supply chain models which are oriented to efficiency and responsiveness and with
reference to improvement in service solutions it must adopt continuous flow model as it has high
demand stability. The processes of manufacturing in this model are designed for producing a
regular cadence of information and product flow (Cruz and Wang, 2018). Apart from this, it
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must adopt agile supply chain model so it will gather all unique specification through their
customers. It implies order to decouple points which engages manufacturing an item after
retaining the purchase orders of the customers. Thus, for ensuring agility in supply chain,
manager lays emphasis on ability for high capacity and to design process of manufacturing
which is capable of smallest possible batches (Kwak et.al., 2018). The organization must have
best industrial framework which signifies that best relationship with its supplier. The suppliers
are very essential for offering products of the organization to its customer and it is highly
essential that availability of product at right time in the market. Apart from this, it should not be
over supplied within the market so there is requirement of good relationship with their suppliers
and facing problems related to product’s supply. The problem related to product’s supply and
tries for extracting solution to problem through continuous monitoring of supplier’s performance.
On basis of above stated issues, lean production is one of the topmost models which
could be applied for resolving them. It could be described as mode to eliminate and recognize
wasteful activities through supply chain in order for raising speed and product flow. Its
application because of inappropriate processing as in this every product enjoys similar level of
processing which is only essential for some products. Moreover, there are different sub
warehouse under mother warehouse which is very time consuming and expensive as well so for
this it must imply to simulation then forecast its performance if it leads to good performance
(Arvis and et.al., 2018). It helps in developing long term value in front of customers and raises
business performance. Apart from this, it will improve quality, productivity via extraction of
wasteful activities as with leagile supply chain its demand could be predictable and has long lead
time so it must go with lean and continuous replenishment.
In the similar aspect, inventory turnover is a major issue within the MDC as it leads to
inventory seasonality as goods carried through distributors would have more customer demand
which is forecasted through different weather conditions might be subjected to exceptional
variations. There is low inventory turnover which shows that organization has need of more
stocking so inventory operation would be highly efficient if product sale is quicker. Through
lowering the tied up blockage, the organization’s turnover ratio could be improved and could
reach to industry standards (Sweeney, Grant and Mangan, 2018). Moreover, inventory turnover
will create will create obsolescence of the stock as outdated stock often could not be sold for
most distributors, inventory which is more than 12 months is an obsolete. So, in this context
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inventory turnover could be improved through better forecasting as if demand forecast is
appropriate then stock of that specific item is proper. This will balance the inventory level, as
this will increase the inventory turnover from five while observing industry standards.
The other aspect for improving inventory turnover, there must be increment in sales as
companies are required for formulating better strategies of marketing for creating high demand
within industry and it will push sales. It must lay emphasis on advertisements and have presence
of promotional offers and events. Simultaneously, business should efficiently manage inventory
turnover for optimizing cash flow and accomplishing demands of the customers and maximizing
the profit margin. Improvement of this measure leads to best strategies of sales and it benefits in
every business aspects (Litke, Anagnostopoulos and Varvarigou, 2019). The best context is to
turn automation via software it is very easy for tracking things such as catalog inventory and
profile of the client. The information analyzed and stored within software could be highly
customized for best fit on needs of the organization. Henceforth, automation is efficient and
fastest mode to complete any business process. In addition to this, business could decrease the
changeover and setup cost through manufacturers. The business which employs services of
numerous manufacturers for long duration could negotiate for best pricing.
The marketing is very significant for increment in inventory demand which is cost
appropriate and well designed. It leads to raise demand for inventory as return on investment is
well organized and enable to move more products for raising sales. Furthermore, supply chain
could be optimized as logistics could improve the inventory turnover as this creates ease for sales
and this develops actionable strategy. When lot of resources are expended on storing,
warehousing inventory and tracking will give great impact on bottom line as it is better for
organizing the procedure to work on efficient basis. The pricing tool could not be used for
moving more products but operates tally what has been sold and left. Thus, it is very easy to
extract that what has been reordered on regular basis and what must be substituted from
warehouses.
The other major issue is stock out which is of high carrying costs whereas business has
excess inventory as either sales are less and then forecasted or levels of stock holdings have been
planned and managed poorly through the operations. Purchasing in the bulk through suppliers
could tied up capital in stock and this leads to high inventory on very hard and lead to bad cash
flow. Thus, level of inventory lean could off-set the unnecessary carrying cost. The stock out
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could be avoided with the up gradation of ABC analysis could be also referred as Pareto
Analysis. Detailed attention is laid emphasis on important items which ensure numerous items
with more customer demand which will lead to avoid stock out. Generally, this analysis will help
managers of warehouse which place inventories in suitable location within warehouse and ensure
about effective and efficient order fulfillment saving cost of labor. Furthermore, inventory
turnover could be improved with best use of demand forecasting tool as historical performance
and demand level of item could be implied for extracting numerous possible future trends and it
accounts possible alterations or variability in demand (Hassan and et.al., 2018). With vertical
supply chains, communication of supplier could be improved for pull systems which will directly
manufacture on demand only. The most of the wholesale distributors has need of inventory in
hand and refines process of order purchasing is fastest method to decrease cost in supply chain
and ensuring accuracy of forecasting demand.
CONCLUSION
From the above report, it could be concluded that logistics and supply chain management is
very important for every organization. It has shown that lean production is one of the best
strategies for improving customer service and control the inventory turnover. Moreover, there
must be better supply chain alignment in medical device company because each product is
associated to one’s health. Thus, it had shown that there must be elimination of wasteful
activities that will give effective outcome.
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REFERENCES
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Christopher, M., Mena, C. and van Hoek, R., (2018). Leading procurement strategy: driving
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