External operations portfolio analysis and segmentation

This thesis focuses on a medical device manufacturer, Company X, using a razor-and-blades business strategy, in which surgical instruments are offered to customers at little or no cost in order to facilitate the sale of certain implantable products that require the use of such instruments. It faces considerable challenges in managing the instrument supply chain. Company X is interested in better understanding its instrument portfolio through segmentation so that it can efficiently manage its supply chain with an appropriate supply chain strategy for each segment. This thesis deals with the development of a segmentation methodology that can be used to objectively rank and segment medical device products that do not directly generate sales revenues, but contribute to the revenues generated by a dependent class of products. A methodology was developed to rank and segment the instruments within Company X's instrument portfolio using criticality heuristics. The segments were then evaluated for opportunities for inventory reduction without harming service levels. In addition, a cost minimization decision tool was developed to determine the optimal amount of excess inventory that should be discarded when items subject to minimum order quantities. Using the segmentation methodology and the minimum order quantity decision tool, Company X can potentially reduce its inventory value by over 60%.

Department dc:contributor.department

Leaders for Global Operations Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2014

Author dc:creator

• Rosenfield, Todd A

Advisor dc:contributor.advisor

• Charles Fine and Josef Oehmen.

• Sloan School of Management.
• Mechanical Engineering.
• Leaders for Global Operations Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/92657

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/92657