Describe the current system in use

Assignment Help Operation Management
Reference no: EM131919739

Problem: Med-Chem Products: Hospital Division

The following case is based on the experiences of one of the co-authors with an actual company and its management. Fiona Richey knew that she had been given the opportunity of a lifetime. She had just been hired to be an internal troubleshooter and consultant by the Hospital Division of Med-Chem Products. This was quite a feat. After all, she had graduated about four years ago with an undergraduate degree in Operations Management and Logistics from a large midwestern university. During that time, she had developed a reputation for being a good team player, creative thinker, and someone who got things done quickly (and correctly). That was one of the major reasons that Med-Chem had hired her. Originally, she had been working for a supplier to Med-Chem. About six months ago, she had been approached by one of the managers of MedChem, with a very attractive job offer.

Even though she had been at Med-Chem for only four weeks, she had begun to get a feel for the division, its products, its operating plans and procedures, and its problems. During this time, she had not been given any major projects. Rather, she was told to get to know people and to look around. As a result, she was ready and eager when Todd Hall, the division director, called her and gave her the first real assignment, and what an assignment. At this time, over coffee, Todd told Fiona that he had been concerned about the current planning system that was in place. He seemed to be finding out about problems after they occurred. The marketing and operations groups within the division always seemed to be making after-the-fact corrections to the plans that they each had generated. More important, no one in the division seemed to feel any responsibility for the plans. Whenever things went wrong, everyone took the position of blaming everyone else. What Todd wanted Fiona to do was two-fold: he wanted her to review the current system and to prepare a critique of it. In addition, he wanted her to recommend changes. Fiona knew that she had to do well on this project.

The Hospital Division of Med-Chem

Med-Chem was a Fortune 100 drug and chemical manufacturer, headquartered in Germany and with divisions and plants located worldwide. The Hospital Division was a division of this company. In the United States, it was headquartered in Atlanta, Georgia. This division manufactured a line of pharmaceuticals and testing equipment for use in hospitals, emergency rooms, nursing homes, and so on. Within this division, there were two major groups: marketing and operations. Marketing was responsible for three major activities: sales, distribution, and forecasting. Of these three, forecasting was considered to be the most important. The products offered by this division were essentially make-to-stock. As a result, it was important that the right amounts be in stock at any point in time. As the marketing people had told Fiona, forecasting was a nightmare task. First, Med-Chem had a very broad product line, consisting of some 5,000 items. In addition, not all of the products were equally important. The group had adopted the product model developed by the Boston Consulting Group when describing the products. According to this model, the various products could be assigned to one of four categories. The first category was that of a star. A star product was one that was seen as being important. A product could be important because of a high contribution margin, unique position in the marketplace, or because it helped to enhance the reputation of the division (for being a leader in this product). These were products that management always wanted to ensure were delivered at or near 100 percent of actual demand. About 10 percent of the products fell into this category.

Next came the cash cows. These products, about 35 percent of the current catalog, were highly stable, highly predictable in nature. They generated a very good revenue stream. Management never wanted to stock out of these items. The third group was the question marks (25 percent). In general, these were new products or ones that had not yet established their value in the marketplace. The final category, dogs, were products that were considered low performers. Typically, such product lines were old, were positioned in segments where the competition was severe, had very low contribution margins, or were not unique (i.e., there were a number of equally effective generic substitutes available). Many dogs were kept because marketing felt that they helped to round out Med-Chem's product offerings. For all four groups, marketing rarely informed operations of large orders by major customers or its attempts to stimulate ordering through special promotions or discounts. Marketing was allowed to change the forecasts at any point, up to and including the point that the products were scheduled to be shipped. Operations was responsible for building the products required by marketing. At present, operations viewed this as a major problem because of marketing's constant modifications to the forecasts and the lack of any data concerning actual sales occurring in the marketplace. After talking with some of the plant managers, Fiona knew that their primary objective was to minimize the total production cost, including the cost of holding inventory. With the frequent production changes dictated by changes in the forecasts, operations found themselves expediting orders and undertaking dramatic production changes. If left alone, Fiona knew that operations would schedule operations to reduce cost.

Med-Chem's Current Planning System

The current system had been in place for as long as anyone could remember. This system did not differentiate between the performance of marketing and the performance of operations. Everyone agreed that all the information needed by management to reduce the problems existed but no one really knew how to proceed. As Todd told Fiona before she left, there had to be a better way of planning at Med-Chem.

Questions

1. Describe the current system in use as it applies to the operations personnel and marketing personnel. To what extent does this system help or hinder Med-Chem's ability to achieve its objectives? Why?

2. For marketing and operations, what are the critical activities that they must do well for Med-Chem to be successful in the marketplace?

3. What general recommendations would you make to Todd regarding the current situation?

Reference no: EM131919739

Questions Cloud

What is the total cost of a level plan : Jones Inc. is preparing an aggregate production plan for next year. The company expects demand to be 1,000 units in quarter 1; 2,000 units in quarter 2; 4,000.
What is the total cost to meet additional demand : Dave's Stove-Top Popcorn currently has three full-time employees who are each paid $1,500 per month. An employee can only work a maximum of 100 hours per month.
How does fema define a major disaster for making declaration : How does FEMA define a major disaster for the purpose of making a declaration? Do you think a major disaster declaration should be available for all disasters?
Why was ramping up production of these products : Why was "ramping up production" of these products, along with asset backed securities, without limit such a bad idea?
Describe the current system in use : Describe the current system in use as it applies to the operations personnel and marketing personnel. To what extent does this system help or hinder Med-Chem's.
Analysis of statistics and engineering factors : ENG1004 Engineering Problem Solving Principles Assignment: Final Report. Analysis of Statistics and Engineering Factors of Relevant to Chosen Field
Find pseudo-American option value : XYZ Corp. will pay a $2 per share dividend in 2 months. Find the pseudo-American option value.
Determine the cost of a plan : Determine the cost of a plan which uses only overtime and the services of Jason Fitch. Suppose clients pay the same hourly rate regardless of which attorney.
What would the nominal annual rate on loan be : A firm has decided to borrow $500,000 on a 10% add-on basis, payable in 6 end-of- month installments. What would the nominal annual rate on the loan be?

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd