Strategy & Implementation Summary
Operational Plan
Premium Therapy's products will initially consist of manufactured goods. The strategic operational plan is to minimize overhead through the outsourcing of production, distribution, sales and support for both the EMIT MX and SX. Premium Therapy will also decrease required start-up capital through the rental of necessary equipment whenever possible.
Manufacturing
Premium Therapy has arranged to outsource production to Schmidt Scientific, Inc. in Boston, Massachusetts. Schmidt Scientific, Inc., is part of the Schmidt Magnetics Group which has been in magnetics since the late 1800s. Throughout the previous century, Schmidt Scientific, Inc. has gained experience in the production of electromagnetic devices for a variety of applications, including both medical and industrial. The manufactured components will be stored and distributed by specialty distributors contracted for such purposes.
Products
In order to manufacture both the MX and SX models of the EMIT system, three components will need to be produced:
- Logic Controller MX: This device will send powerful currents through the Arrays of Overlapping Coils, causing stimulation of the underlying motor neurons and contraction of the targeted muscle. Due to the requirement for increased power over the SX model, the Logic Controller for the MX model will be significantly more expensive to produce.
- Logic Controller SX: This device will send less powerful pulses of electrical current through the Arrays of Overlapping Coils, stimulating the underlying tissue without contracting the underlying muscle.
- Arrays of Overlapping Coils: This last component will require much more variability than the previous components. Not only will it be necessary to effectively target different regions of the body, but it will also be necessary to accommodate different body sizes. Premium Therapy will initially produce arrays targeting 6 different regions, each with 3 different sizes.
Production Costs
Production costs for each component were estimated using initial price quotes from Schmidt Scientific, Inc. Upon realization of its projected level of sales, Premium Therapy will investigate the feasibility of manufacturing facilities of its own to improve on its cost structure and increase its profitability.
Through outsourcing production, Premium Therapy will be able to keep initial capital requirements lower with the trade-off of higher production costs. It is estimated that the total cost of manufacture for each of the components will be:
- EMIT MX Logic Controller: $5,000.00 per unit
- EMIT SX Logic Controller: $925.00 per unit
- Array of Coils (for models MX and SX): $95.00 per unit
It is estimated, as well, that production costs will drop 3 percent per year as volume increases and experience with manufacturing techniques is gained.
Sourcing
Primary raw materials needed are as follows:
- Electrical components (capacitor, wiring, etc.) for Logic Controller and Arrays of Coils.
- Molds for external console of Logic Controller.
- Material for wraps in which overlapping coils will be placed.
All of these components are easily sourced and multiple suppliers have been identified. Premium Therapy will establish business relationships with these suppliers to be negotiated for preferred pricing structures without compromising quality standards.
Product Support
In the early years, trained employees of the specialty distributors will provide product support for the EMIT systems MX and SX. Once the EMIT system gains acceptance, Premium Therapy will consider adopting the responsibility of product support.
Facilities and Properties
The company will initially be based in Cambridge Research Park, Massachusetts. This location will facilitate research and testing opportunities at Harvard University to be conducted in coordination with the University of Arizona Health Sciences Center.
In view of the strategic plan to contract with third parties for all manufacturing and distribution requirements, the only necessary facilities will be offices for personnel. After Year 5, when the company has reached its anticipated milestones, the company will explore the feasibility of constructing its own manufacturing and distribution facilities.
