Introduction
Applied Medical has disrupted traditional managerial ethos by appealing to a unique business model that allowed the company to grow its business at double-digit rates for almost a decade while keeping all its operation facilities in South Orange County. The base of the company 's unique business model is to strongly favor internally-developed products, processes, and solutions. This model has helped the company achieve its growth goals to become the world leader in the trocar market in less than two decades. However, this philosophy has also kept the company away from ongoing managerial disciplines like six sigma, sustainability, or disciplines that promote the methodical development of innovation.
Applied Medical 's value proposition …show more content…
With the company 's manufacturing facilities located in a high labor costs area, it is essential to improve efficiencies in the production methods to reduce manufacturing costs. The company 's operating margin declined from 54% in 2006 to 11.7% in 2010 coinciding with a revenue expansion of almost 300% ("Securities", 2011). Applied Medical 's competitors operating margins are almost double of the one posted by Applied during the 2010 reporting period ("Profitability", n.d.). Higher margins would allow competitors to adopt a price reduction strategy if they decide to regain lost market share.
Recommendations
In order to face these new challenges while keeping its value proposition, Applied Medical could improve operational efficiency. The leadership team at Applied Medical acknowledged that maintaining the beneficial aspects of the current organizational business practices might not be scalable. ("Securities", 2011). Disciplines that spawn innovation like Lean practices along with Sustainability and Six Sigma can improve the quality level and operating margins.
Embrace …show more content…
Best-in-class quality organizations maintain a robust quality system is by implementing Six Sigma methodologies. Swink et al. (2014) noted, “Organizations often view Six Sigma as an improvement program aimed at gaining greater consistency and efficiency through the organization"(p.185). Six Sigma methodologies encompass many data-driven procedures aimed at process improvements and variation reduction. The foundational building block of the discipline is a method called DMAIC, a process improvement cycle based on defining, measuring, analyzing, improving and controlling process variables. Applied Medical can benefit by implementing DMAIC. "The focus of the DMAIC improvement process is initially on the product outcome; then it shifts to the underlying processes needed to produce and deliver products" (Swink et al., 2014,
Applied Medical has disrupted traditional managerial ethos by appealing to a unique business model that allowed the company to grow its business at double-digit rates for almost a decade while keeping all its operation facilities in South Orange County. The base of the company 's unique business model is to strongly favor internally-developed products, processes, and solutions. This model has helped the company achieve its growth goals to become the world leader in the trocar market in less than two decades. However, this philosophy has also kept the company away from ongoing managerial disciplines like six sigma, sustainability, or disciplines that promote the methodical development of innovation.
Applied Medical 's value proposition …show more content…
With the company 's manufacturing facilities located in a high labor costs area, it is essential to improve efficiencies in the production methods to reduce manufacturing costs. The company 's operating margin declined from 54% in 2006 to 11.7% in 2010 coinciding with a revenue expansion of almost 300% ("Securities", 2011). Applied Medical 's competitors operating margins are almost double of the one posted by Applied during the 2010 reporting period ("Profitability", n.d.). Higher margins would allow competitors to adopt a price reduction strategy if they decide to regain lost market share.
Recommendations
In order to face these new challenges while keeping its value proposition, Applied Medical could improve operational efficiency. The leadership team at Applied Medical acknowledged that maintaining the beneficial aspects of the current organizational business practices might not be scalable. ("Securities", 2011). Disciplines that spawn innovation like Lean practices along with Sustainability and Six Sigma can improve the quality level and operating margins.
Embrace …show more content…
Best-in-class quality organizations maintain a robust quality system is by implementing Six Sigma methodologies. Swink et al. (2014) noted, “Organizations often view Six Sigma as an improvement program aimed at gaining greater consistency and efficiency through the organization"(p.185). Six Sigma methodologies encompass many data-driven procedures aimed at process improvements and variation reduction. The foundational building block of the discipline is a method called DMAIC, a process improvement cycle based on defining, measuring, analyzing, improving and controlling process variables. Applied Medical can benefit by implementing DMAIC. "The focus of the DMAIC improvement process is initially on the product outcome; then it shifts to the underlying processes needed to produce and deliver products" (Swink et al., 2014,