Mtc supply chain value creation
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This document proposes a strategy to improve the supply chain and reduce costs for MTC, a healthcare provider with 80 hospitals in the area. The strategy involves 3 phases: 1) Improving the business model long-term by bringing sterilization in-house, using smart kiosks, and online customer assistance. 2) Redesigning the organization structure medium-term. 3) Implementing cost savings actions short-term. The proposed changes could generate a total cost savings of 17.4% and $38 million in additional annual profit through steps like closing warehouses, reducing inventory, downsizing salesforce, and moving to online customer support.
Mtc supply chain value creation
- 1. MTC SUPPLY CHAIN VALUE CREATION Adrian Cocan - senior consultant
- 2. Adrian Cocan, 19+ years of experience in business building and consolidation Extensive expertise in operations, supply chain, finance, sales and marketing
- 3. SITUATION ROOM • MTC – Collegeville Pennsylvania (80 hospitals in the area) • Excise tax hike – 2.3% of revenue meaning 10% of profits • There are imperative cost savings and business transformation for new growth
- 4. STRATEGY PROPOSAL • 1. Business model improvement for long term • 2. New organizational design for medium term • 3. Cost savings swift actions for short term impact
- 5. KPI’S ADD A MEASURE OF SUCCESS • Strong integration with company objectives • Feasible without interfering with daily operations • Sustainable – as of environment, human resources, community, shareholders, customers • Cost saving but adding to operational improvement
- 6. FINANCES • 7.03% growth rate since 2010 • 4% growth rate since 2012 • Disproportionate growth rate between SG&A in relation to growth • Large amount of account receivables: 1Billion, 0.75B respectively
- 7. BUSINESS MODEL CHANGE • In-house sterilization for shortening product release time, reduce the inventory and costs • Short-cut regional warehouses and local warehouses, direct feed the clients by using smart kiosk. Assume the utilities bill for that, help hospitals cut their own costs. • Introduction of online advisory for clients, reduce salesforce and save high paying salaries
- 8. TRANSFORMATION STEPS • Create sterilization unit and activate • Create smart kiosk • Create concierge style customer assistance • Move sterilization in-house • Start activating smart kiosk using existing salesforce • Displace salesforce by online assistance for surgeons and hospital staff
- 9. SUPPLY CHAIN KPI’S • Closure of 50% of offices simultaneous with salesforce downsize • Kiosk feed and start operations while wind down the regional and local warehousing • Cost controlling and operations analysis weekly • Schedule weekly calls to hospitals to ensure SLA does not decrease • Inventory decrease: -8% costs • Warehouse costs: -6% • Transport costs: -2% • Total of 14% cost saving, 110M dollars
- 10. SALESFORCE AND ONLINE CUSTOMER ADVISORY • 12% cost saving on replacing traditional salesforce with online advisory, adding up to 89M Dollars yoy savings • Less insurance costs, less automobile costs, less tax • Higher flexibility, higher speed of service, NO trunk inventory
- 11. CONSOLIDATED RESULTS OF TRANSFORMATION • Operational model; supply chain; salesforce; online assistance; business model • 26% combined savings generates 17.4% total cost savings (out of 100% minus margin) • 38M dollars additional net profit
- 12. THANK YOU