WAC

Operation management

Submitted To:

Sir Irfan Mehmood

Submitted By:

Asad Raza (10108085)

Ahabeesh Rasool (10108086)

Ajmal Hussain (10108051)

Align Technology Inc,

Align technology company make Aligners (38 sets) per case in which they change malocclusion

or misalignment of teeth into strainers and good smiley teeth that is completely new products

which is differ from traditional brackets and wires , it is invisible during course (see exhibit 1).

Company facing many issues that are highlight below:

Issues:

1. Costs are too high and company did not making profitable business (Average selling

price 1600 $ but the total cost is $1800) that is big issue for the company.

2. Excess capacity. The company is making 20% excess to the demand. The company was

forecasting more sales of 10,000 cases per month but actually the cases per month were

2500. The demand for the product fell short of its manufacturing capacity.

3. The orthodontists were not adopting this new product because they were tending to use

the traditional technology and they were trained for traditional treatment. No orthodontist

would switch from metal braces to Align technology without quick response.

4. They were having problems in their marketing strategy. They were confused in using

push vs pull strategy.

5. The company was not focusing on general practitioner. They were only training the

orthodontist and general practitioners were totally neglected. As the total orthodontists in

North America were 8500 and general practitioners were 100000.

6. Lack of structure and operational strategy that how it could be run business.

7. Distributional channels of the align it mean that orthodontists did not benefits for the

company

8. Wrong Sales forecasting. That is not matching to the capacity.

Analysis:

Align company cannot doing profitable business due to Align company manufacturing cost

greater than his selling price that makes company deficit (loss) the cost of the company would be

greater in its manufacturing and total representative cost but the causes of the deficit balance

only due to the miss settlement in the selling price that is the big issue for the company that they

are not actually good in his price setting, reason of less price to the cost that is not ethical for

business which is actually greater then it cost (see the exhibit 2) but the actual ability of the

customer to spend on his treatment that is greater than $3500 which is traditional way of the

customer to spend through Brackets and wire but the company selling price that is $1600 which

is less from the traditional way but the company offering products that is innovative and invisible

it mean that company products is good from the traditional but the selling price of the company

is very low therefore company cannot reached at his target profit goals. Company still need to

differentiate his products to the traditional way and also need to set the selling price that should

be greater than company cost or getting his target profit margin. And company needed to

visualized and analysis the spending ability of the customer to spending on his teeth treatments

and then company should selecting the range of the selling price of his invisible that included

profit margin.

Second major problems for the company are orthodontists’ that were not adopting this new

product because they were tending to use the traditional technology and they were trained for

traditional treatment. No orthodontist would switch from metal braces to Align technology

without quick response. Orthodontists’ are not engaged or satisfied and taking responsibly of the

invisible products for the company and it growth they are only focused on the earning. Company

major distribution channel are the Orthodontists for this company selected well practice and

experience Orthodontist for his products treatment and his awareness to the customers but the

orthodontists were not efficiently doing work and adopting the invisible technology which is

created problems for the company , Company giving treatment to the Orthodontist by sales

representative that are giving training and awareness to the orthodontists about the products that

are 6400 orthodontists’ get train from the representative but the return of cases to the company

by the orthodontists were very less (See Exhibit 3) that 40% Orthodontist submitted at least one

case to the company other 60% orthodontists are not interested to the invisible products because

they are not taking any case for the enviable company. Therefore company needed to train and

engaged his orthodontists for his products distribution to the customers. In this case company

should used push marketing strategy by the orthodontists because without this (orthodontists)

company cannot make awareness to the customer and push customer to use this products that is

good for the traditional and beneficial for the customers.

Options:

And company also considered GP (general practicing) that were also make awareness for the

products and for its treatment which would be lead to the less cost and easily available for the

customer at any ware (See Exhibit 5) . In this way company can get high profit margin from the

GP because there fee or treatment cost are very low. And company can push his products to the

customer at cheaper rate with high profit margin as compare to the orthodontists. In Strategy

Company sales forecasting method also not well, because (see exhibit 4) company forecasting

method or forecast value is greater than it capacity which is irrelevant and wrong for the

company estimated value which is greatly insufficient and cannot match which the actual

capacity see 2000 year capacity that is 6466 case but the company forecasting that it would

reached at 8122 cases but the actual cases occur that are 3322 case which included huge different

between this forecast and capacity and actual sales, and how company forecasting his sales with

overtime (Wages) but the company actual capacity cannot covered or reached to the actual sales.

Align company have many alternative to recover his profit margin, company should minimized

his cost either it should reduced manufacturing cost it become through reduced his capacity to

the actual demand in this way extra charged and highly efficiency used of equipment but the

demand is low that could created problem for company cost to reduced this company can

recovered his profit margin, and other way is that if the company cannot decreased his capacity

according to the demand then company should sell his products after recovering total cost and

also included profit margin it could be possible that because traditional spending on teeth

treatment that were to high ranging from ( 3000 to 5000) it mean that it should be done.

Decisions& Recommendation:

Most efficacies in profit margin is that company should make or adjusted selling price which is

recovering profit because it would be done, people are able to pay extra or high price for the new

technology (invisible).

In orthodontists, alternative options are GP which can be penetrate our products to market and

also increased our sales with low price it mean that company should also need to train GP for his

products that could be benefits for the company major problems.

Exhibit 1:

Exhibit 2:

Total target market= 200 million

2000000 are those whose doing some treatment with his teeth

Aggregate spending on his teeth is 7 Billion

It means that actual spending on his teeth per person that is ranged from 3500 to 4000 dollars.

Exhibit 3:

Target train orthodontists =6000

But the Sales representative actually trading 6400 Orthodontists’

Case submissions by the arthodontist are only 2600 orthodontists

That is 40% return from the orthodontists that is very low.

Exhibits 4:

Forecast sales, and Capacity 2000 2001

Sales forecast 8133 13500

Actual sales 3322 7312

capacity 6466 10400

Exhibit 5:

Orthodontist result verses general practicing

Orthodontists GP

No Of practitioners 8500 100000

Income 300000 125000

Working hours in week 34 39

Care result Low high