Addressing Customer Dissatisfaction Through Supply Chain Efficiencies

Meditech Surgical: Addressing Customer Dissatisfaction Through Supply Chain Efficiencies Alisa B. PehrsonSchool of Business, Liberty University

Author Note

Alisa B. Pehrson

I have no known conflict of interest to disclose.

Correspondence concerning this article should be addressed to Alisa B. Pehrson

Meditech Surgical: Addressing Customer Dissatisfaction Through Supply Chain Efficiencies

Simchi-Levi (2021) notes that supply chain management has become the next step, after lean manufacturing, in increasing efficiencies to positively affect profit. Further, to realize these advantages there must be an integration of all players within the supply chain to produce the right amount, distribute to the right locations, and provide products at the right time while maintaining customer satisfaction and minimizing costs. The Meditech case study is a demonstration of these challenges. It is noted that the company is experiencing a decrease in customer satisfaction due to inefficient supply chain operations resulting in delays of new product delivery (Simchi-Levi, 2021).

Challenges in New Product Introduction

Per the case study in Simchi-Levi (2021) Meditech is facing numerous problems in introducing new products. Although the company has made a name for itself through aggressive sales of frequently released innovative products, the company is experiencing overwhelming demand for each release resulting in delivery periods of up to six weeks. This is negatively affecting overall customer satisfaction, and specifically, hospital material managers who are more concerned with price and availability (p. 21).

On the other hand, Semichi-Levi (2021) notes the production of the finished goods is doing well; however, perhaps a bit too well because there is an excess of finished goods on hand. This can contribute to higher inventory costs. Ironically, because the forecasts are not compared for accuracy against actual demand, this leads to high levels of inventory being on hand yet an inability of Meditech to deliver on time.

Systemic and Organizational Challenges

Planning and scheduling are the two main processes driving production; however, the planning is based on faulty forecasting derived from an annual forecast (which notes no specific process for calculating), broken down into months by the number of weeks, and then adjusted prior to the beginning of each month. Some major system challenges occur because 1) no database exists to track forecasts and/or their percentage of accuracy and 2) the forecast data are in hardcopy form and data must be manually gathered (Simchi-Levi, 2021). Organizationally, this provides a next to impossible to calculate forecast- which is not used, ultimately, to plan or schedule production. Further, panic buying is exacerbating the challenges because it is suspected that panic-buying leads to exaggerated demand with new product introduction, creating longer delivery times.

The customer service manager is the first to recognize the dissatisfaction issues because there is a lack of data during and after production from which to glean insight. The means that the first instance of feedback comes from the customer loop whereby frustration is voiced to the service manager and reported back to the HQ. Additionally, new products are being introduced, on average, monthly (Simchi-Levi, 2021). This leaves little time for the lifecycle process to occur or to receive feedback on what customers view as the pros and cons of the instruments- likely contributing to the demand discrepancies.

Recommended Solutions

Meditech’s challenges necessitate several recommended solutions. The first is to implement a database for forecasting and analyzing demand and supply. The data must be codified to be reliable and usable despite the company being decentralized. Moreover, to alleviate panic buying, demand data should combine internal (forecasting analytics) and external data (material managers). Nguyen, et. al. (2021) highlights that solid forecasting and anomaly detection are integral to balancing supply and demand and this results in proper inventory levels, accurate delivery dates, reliable planning and scheduling, and higher customer service. Additionally, requiring pre-orders for new products could reveal the real demand figures and provide advanced information that can be applied to production planning. Further, Meditech needs to understand who their main customer is and address their needs. If their major buyers are the hospital material managers, then they should focus on this demographic’s needs and consider slowing new releases while focusing on cost-effectiveness and delivering on time. Last, but certainly not all-encompassing, the organization should reduce the surplus of safety stock to one week. Not only has a consultant already confirmed that a 40% reduction would have no effect on customer service (Simichi-Levi, 2021) but this increases costs in the form of storage and potential disposal of unsold product (Wang, et. al., 2016). Addressing Customer Dissatisfaction Through Supply Chain Efficiencies

References

Simchi-Levi, D. (2021). Designing and managing the supply chain: Concepts, strategies and case studies (4th ed). McGraw Hill Education.

Nguyen, H. D., Tran, K. P., Thomassey, S., & Hamad, M. (2021). Forecasting and anomaly detection approaches using LSTM and LSTM autoencoder techniques with the applications in supply chain management. International Journal of Information Management, 57, 102282. https://doi.org/10.1016/j.ijinfomgt.2020.102282

Wang, X., Cai, H., & Florig, H. K. (2016). Energy-saving implications from supply chain improvement: An exploratory study on china’s consumer goods retail system. Energy Policy, 95, 411-420. https://doi.org/10.1016/j.enpol.2016.04.044