quality control approach such as TQM and
Six Sigma not only for the manufacture and
delivery of products and services, but also
during the design stages. MedTrack will also
aim to target and achieve ISO certification
within five years of establishing itself as a
growth-oriented firm that is measured by a
metric such as two consecutive profitable
quarters.
Because of the dependence of MedTrack
on RFID and computer hardware, the part-
ners and suppliers of these devices will be
selected based on their existing quality con-
trol methodologies. Strong preference will be
given to firms with a quality management
program or certification.
MARKETING ORIENTATION
Marketing Segments
MedTrack identifies three customer seg-
ments among hospitals based on their size:
large hospitals (500-plus beds), medium-
sized hospitals (150 to 500 beds) and small
hospitals (up to 150 beds). The specific
needs of these segments vary according to
the scale and scope of their operations and
their annual expenditures for supplies, which
are our primary tracking target. Based on
detailed financial data on 468 California
hospitals,^9 small hospitals’ supply costs range
on average between $1 million and $7 mil-
lion per year, while the amounts for mid-
sized and large hospitals go up to $38 mil-
lion and $68 million, respectively. With
regard to equipment, there is no clear posi-
tive correlation between hospital size and
expenditures for equipment. Nevertheless,
the amounts average from $3 million to
$120 million per year per hospital. In addi-
tion to having large budgets, large and mid-
sized hospitals manage numerous staff and
have complex administrations. Hence, the
larger the hospital, the more difficult it
becomes to effectively manage its supplies
and its equipment movement. Asset shrink-
age can go up to 10 percent,^10 to millions of
dollars per hospital. The goal of MedTrack
will be to reduce or eliminate shrinkage by
reliably tracking valuable hospital assets
most susceptible to theft or unauthorized
“borrowing.” In light of the significant costs
of developing and implementing a tracking
system, MedTrack’s efforts should be direct-
ed toward larger hospitals where the organi-
zation is fairly complex and where the sup-
plies and equipment budgets (and asset
shrinkage) are sufficiently high to warrant
the implementation of the system. On the
other hand, implementing MedTrack in the
largest hospitals would require significantly
more financial and human resources due to
the scale. Therefore, MedTrack will target
the mid-sized hospital with somewhat com-
plex administration, multimillion dollar sup-
plies, an equipment budget, and a substan-
tial asset shrinkage problem as its primary
potential customer.
Marketing Strategy and Resources
Product. MedTrack is a complete tracking
solution designed by professionals experi-
enced in hospital administration and created
by highly skilled programmers to respond to
specific hospital needs and impact costs neg-
atively. The product will add value by reduc-
ing asset shrinkage, assisting in inventory,
staff, and patient management, and increas-
ing hospitals’ effectiveness in responding to
emergencies, because hospitals will be able to
locate their critical equipment and supplies at
all times. MedTrack’s greatest advantage will
be its ability to offer a completely integrated
system that replaces any legacy inventory
management software and hardware.
The offering will consist of (a) an RFID
to be attached to supplies or equipment that
need to be tracked, (b) RFID receivers that
receive signals from devices, (c) a computer
server for hosting the data base and applica-
tion, (d) several client computers for users,
(e) application platform/software, and (f)
training, maintenance, and support.
All hardware components will be out-
sourced. MedTrack will broadly design the
application/software platform and database,
but will outsource them for development.432 ENTREPRENEURSHIP CASE