Essay: Problems faced by Meditech
The other problems that were being faced by the company pertained to the high levels of the finished goods inventory at Meditech. After the introduction phase, as the business process and the manufacturing unit was assessed, it was found out in almost the case of every product, that the company had more inventory than that it could handle and safely store. This high level of inventory tended to increase the inventory management costs and storing facility costs for the company, adding up the costs of manufacturing and providing the goods to the clients of the company. The high inventory costs and the decreasing capacity of storage at the company aided in squeezing the margins of the Meditech company resulting incremental decrease in the profitability of the company in terms of the revenue earned by Meditech on the sale of its products.
The third main problem that was being faced by the company pertained to the poor service levels of the company which were directly related to the constant stock outs of the new products. This decreased the reputation of the company and harmed its image as a company which could not fulfill and keep its promises and commitments in the forms of the orders placed by its clients.