MIT Leaders for Manufacturing Program 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 six 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 are required 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 multi-decade history of endoscopic technology,the procedures have only become popular in the last ten years. Only three years ago,the market for endoscopic surgical instruments was expected to double its size in five years.Growth beyond five years also looked promising.Largo Healthcare Company,Meditech's parent company,decided to spin Meditech off as an independent Copyright1995 Massachusetts Institute of Technology.This case was prepared by LFM Fellow Bryan Gilpin under the direction of Professor Stephen C.Graves as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.The case is based on the author's thesis,"Management of the Supply Chain in a Rapid Product Development Environment," supervised by Professor Rebecca M.Henderson and Professor Alvin W.Drake,from an LFM internship during July-Dec.,1994.MIT Leaders for Manufacturing Program Meditech Surgical1 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 six 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 are required 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 multi-decade history of endoscopic technology, the procedures have only become popular in the last ten years. Only three years ago, the market for endoscopic surgical instruments was expected to double its size in five years. Growth beyond five years also looked promising. Largo Healthcare Company, Meditech’s parent company, decided to spin Meditech off as an independent 1 Copyright � 1995 Massachusetts Institute of Technology. This case was prepared by LFM Fellow Bryan Gilpin under the direction of Professor Stephen C. Graves as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The case is based on the author’s thesis, “Management of the Supply Chain in a Rapid Product Development Environment,” supervised by Professor Rebecca M. Henderson and Professor Alvin W. Drake, fr om an LFM internship during July-Dec., 1994