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Write a three- to four-page report on the Med-Chem Products: Hospital Division case study found at the end of Chapter 13: Sales and Operations Planning.

Be sure to address the following questions in your report.
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?

 

Sample Solution

 

 

 

Med-Chem Products: Hospital Division Case Study Analysis

1. Current System and its Impact

Med-Chem’s Hospital Division operates under a traditional, siloed system with limited communication between Marketing and Operations. Here’s a breakdown of its impact on each department:

Marketing:

  • Strengths:
    • Strong sales force with established relationships with hospitals.
    • Focus on fieldwork allows for data collection on customer needs.
    • Utilizes the Boston Consulting Group (BCG) product portfolio analysis to categorize products.

 

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  • Weaknesses:
    • Forecasting relies heavily on historical data, potentially missing out on market trends.
    • Limited communication with Operations hinders understanding of production capacity and lead times.
    • BCG analysis might not fully capture the nuances of the hospital market.

Operations:

  • Strengths:
    • Efficient production system categorized by product type (Stars, Cash Cows, Question Marks, Dogs).
    • Maintains adequate stock levels for “make-to-stock” products.
  • Weaknesses:
    • Relies on inaccurate forecasts from Marketing, leading to potential stockouts or overproduction.
    • Lacks insight into changing customer needs and market demands.
    • Production focus might not align with product profitability or market potential.

Impact on Objectives:

This siloed system hinders Med-Chem’s ability to achieve its objectives in several ways:

  • Inventory inefficiency: Inaccurate forecasts can lead to stockouts of high-demand products and excess inventory of low-demand ones, impacting profitability.
  • Missed sales opportunities: Operations might not be prepared to meet sudden surges in demand due to poor communication with Marketing.
  • Product development limitations: Without understanding market trends, Operations might not prioritize production of the most profitable or needed products.
  1. Critical Activities for Success

Marketing:

  • Market research: Conduct regular market research to understand evolving hospital needs and competitor strategies.
  • Sales forecasting: Develop data-driven forecasting models that consider market trends and competitor activity, alongside historical data.
  • Collaboration: Foster strong communication channels with Operations to share market insights and adjust production plans accordingly.

Operations:

  • Demand planning: Analyze market data and sales forecasts to plan production schedules effectively.
  • Inventory management: Implement just-in-time (JIT) inventory practices to minimize stockouts and overstocking.
  • Product prioritization: Prioritize production of high-demand and high-profit products based on market analysis and sales forecasts.
  1. Recommendations for Todd

To address the current limitations, Todd should consider these recommendations:

  • Break down silos: Encourage collaboration between Marketing and Operations. Organize regular meetings and joint planning sessions.
  • Invest in integrated software: Implement a Sales and Operations Planning (S&OP) software system to improve communication and data sharing between departments.
  • Improve forecasting: Train the Marketing team on advanced forecasting techniques that incorporate market research data.
  • Inventory optimization: Work with Operations to implement a more responsive inventory management system based on actual demand.
  • Product portfolio analysis: Refine the product analysis process to consider market growth potential alongside the BCG matrix.

By fostering close collaboration, data-driven decision making, and a focus on market needs, Med-Chem’s Hospital Division can achieve greater efficiency, profitability, and market responsiveness.

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