Patent

Case Study 1: Meditech Surgical

Only three after being spun off from parent company Largo Heathcare Company, Meditech managed to capture a vast majority of the endoscopic surgical instrument market. Meditech produces endoscopic surgical equipment that allows surgeons to perform operations classified as “minimally invasive” which reduce often reduce patient recovery times and overall surgical expenses. Both Meditech and its primary competitor, National Medical Corporation, continuously develop and introduce new products each year. In any given year Meditech typically would introduce a dozen or more new products.

Within six years, Meditech captured the leading share of the endoscopic surgical instrument market by differentiating itself from National Medical Corporation by not only focusing on selling to surgeons, but also to hospitals and material managers. Materials managers were concerned with cost and delivery performance and there purchasing position was of importance as health care cost increased. Meditech distributes its goods to domestic and international customers from a central warehouse. For domestic sales only, it uses domestic dealers to ship goods to hospitals. While it only uses four or five major distributors, each distributor to about a dozen or more hospitals. For international sales, it uses Largo Healthcare’s international affiliates which are wholly subsidiaries that are located outside of the United States.

Meditech’s problem in introducing new products is that they constantly had shortages at the beginning, its finished goods inventory levels where considerably high, and it had poor service levels. The driving force behind these problems can be attributed to Meditech’s lack of historical data of previous orders and panic ordering by a domestic dealers and international affiliate due to their uncertainty if products would be delivered on or not. Once data was collect to track previous orders and was put together, the graphs provided...