CASE DISCUSSION QUESTIONS

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

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

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

$4.$ How would you fix these problems?

Based on the content below on "Meditech Surgical", answer the case study questions above. Meditech Surgical

Meditech Surgical Three years after Meditech was spun off from its parent company, Meditech captured a majority of the endoscopic surgical instrument market. Its primary competitor, National Medical Corporation, had practically invented the $$800$ million market just over a decade ago. But Meditech competed aggressively, developing new, innovative instruments and selling them through a first$-$class sales force. The combination paid off, and Meditech had become a phenomenal success in a short period of time. Despite the success, Dan Franklin, manager of Customer Service and Distribution, was concerned about growing customer dissatisfaction. Meditech had recently introduced several new products that were central to the entire Meditech product line. New product introductions, which were critical to Meditech$$s strategy of rapid product development, needed to be introduced flawlessly to protect Meditech$$s reputation and sales of other products. But Meditech consistently failed to keep up with demand during the flood of initial orders. Production capacity became strained as customers waited over $6$ weeks to have their orders delivered. Poor delivery service, which is fatal in the health care industry, was jeopardizing Meditech$$s reputation.

COMPANY BACKGROUND

Endoscopic surgical techniques fall under a class of surgical procedures described as minimally invasive. Minimally invasive surgery, as opposed to traditional open surgery, requires only small incisions to perform an operation. As a result, procedures using endoscopic techniques often provide substantial benefits for the patient both physically and financially. The procedures often shorten patient recovery, which can translate into reduced surgical expenses overall. Despite the benefits and the multidecade history of endoscopic technology, the procedures have only become popular in the last $10$ years. Only $3$ years ago, the market for endoscopic surgical instruments was expected to double its size in $5$ years. Growth beyond $5$ years also looked promising. Largo Healthcare Company, Meditech$$s parent company, decided to spin Meditech off as an independent company focused solely on producing and selling endoscopic surgical instruments. Largo management hoped that the new company would prosper without the distractions of other Largo businesses and capture market share of endoscopic instruments as quickly as possible. Since its inception just over $6$ years ago, Meditech has produced innovative, low$-$cost products. New products were brought to the market quickly and pushed by an aggressive sales force. Old products were updated with innovative features and presented to the market as new products. Consequently, the competition between Meditech and National Medical centered on the continuous development and introduction of new products by both companies. A dozen or more new products would typically be introduced by Meditech in any given year. While the development strategies were similar, the sales strategies differed dramatically. National Medical concentrated on selling to surgeons. Meditech$$s sales force concentrated on selling to hospitals material managers as well as to surgeons. Material managers tended to be more concerned with cost and delivery performance. The surgeons, on the other hand, focused on product features. As the pressures increased on health care costs, the importance of the material manager$$s purchasing position also increased. Meditech was well positioned to take advantage of this important shift. The success of Meditech$$s strategy quickly became evident. Within $6$ years, Meditech had captured the leading share in the endoscopic surgical instrument market. This was no small feat by any market$$s standards, but with surgical instruments, this was especially impressive. Market share changes in the professional health care industry tended to take place gradually. Surgeons and doctors often held onto preferred manufacturers. Hospitals frequently used group purchasing organizations $($GPOs$)$ that took advantage of extended contracts with suppliers. The process of $$converting$$ a hospital to a new supplier often took months of negotiation and convincing.

Most endoscopic surgical instruments are small enough to fit into the palm of a surgeon$$s hand. They are mechanical in nature, typically having several intricate mechanisms to provide the required functionality. Materials used to produce the instruments include plastic injection$$ molded parts, metal blades, springs, and so forth. In all cases of use, surgeons use the instrument for one