Turning bottlenecks into growth opportunities

This medical supply company's factory was running out of capacity, hampering the company's growth strategy. Bain determined that the lowest-cost strategy was to expand the existing plant, doubling production capacity while deferring expensive plans to build a new plant.

A medical supply company needed the manufacturing muscle to keep up with the growth strategy it hoped to implement.

MediCo was a $40 million producer of devices and tests used by the bedside in hospitals. While MediCo was the clear technology leader, and the only provider of certain critical tests, revenue and profits had fallen short of aspirations.

Believing that the manufacturing costs were scale driven, MediCo's management had recently reduced prices on device x with no significant impact on volume. Moreover, the factory was running out of capacity, requiring major investment and significant disruption of the business.

The Bain team was given two objectives:

to develop a growth strategy that would grow MediCo to $1 billion in market capitalization
to evaluate the manufacturing strategy and recommend changes

Next Approach

For the manufacturing aspect of the work, Bain analyzed MediCo's plant capacity, technology platforms and outsourcing opportunities.

Next Recommendations

Bain's recommendations were reviewed with the MediCo Board of Directors at a two day off-site meeting and were 100 percent approved for immediate action.