THE MEDICAL DEVICES COMPANY
Inventory is one of the most beneficial strategies, a valuable asset, and it can be easily converted into liquid cash without undergoing large cost. In the case of a Medical Device Company, many ask whether there is too much inventory in the system; and the fact is that there is too much inventory in the MDC system. This reflects on the company’s poor formulation of policies and the companies may end up tying working capital, which in turn may cause customer retention and hurt the added shareholder value. This paper aims at looking into strategies to reduce inventory as the product flow in the supply chain in the MDC system in Europe (Enslow, 2004).
The first step in the strategy as to how the MDC company should reduce inventory is to Pareto the inventory by creating a comparison of the inventory against the sales, thus, making sure to increase the high selling inventory. This is followed by reducing replenishment lead times by removing unnecessary transportation and storage time, for instance, the distribution to the 15 warehouses that serve as hubs and then to the 40 warehouses (Mangan, Lalwani, & Butcher, 2008). This provides inventory for the sales representatives, and distribution agents can be minimized since they are not adding any value to the products. Moreover, revising order cycles or quantities by using options such as re-evaluating the costs of holding inventory is of paramount importance. It should also improve the forecasting accuracy since it is a way to determine how much to stock. Furthermore, by eliminating the obsolete stock, MDC can help reduce the inventory costs as keeping it in the warehouses will only increase the storage cost. Owning up the obsolete stock creates space for productive inventory (Enslow, 2004).
By understanding the customer’s requirements, the success of MDC is dependent on doing what the