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CareMed: Importing Medical Supplies ahead of a Pandemic - The Year 2023 CareMed Inc. sells a wide range of personal protective gear, medical devices,
CareMed: Importing Medical Supplies ahead of a Pandemic - The Year 2023 CareMed Inc. sells a wide range of personal protective gear, medical devices, and other medical supplies used in hospitals and private practices [see Appendix 1]. CareMed was founded ten years ago by Morgan Melendez and Victoria Contreras, two nurses who met while completing their MBAs at Grand Valley State University. The company is headquartered in Grand Rapids, Michigan, and has 623 employees and revenues of nearly $1 billion per year. CareMed's sales occur in the United States. However, the company imports 80% of its products from suppliers outside the US. To manage international suppliers, the company has offices in Shanghai, China, and Eindhoven, Netherlands. The medical device market in the US is governed by strict regulations and standards, designed to ensure patient safety. Imported medical equipment must undergo rigorous government certification before it can be sold in US markets. Certifying that imported supplies meet US regulatory standards represents one of the biggest cost drivers for Care Med. Morgan and Victoria have been watching the news closely and are concerned about a novel coronavirus that has emerged in Central Asia. The new virus, called the Eurasian Steppe Virus 2023 (or ESV-2023), is highly contagious and has been spreading quickly westward from Georgia to Russia and Turkey. China and other Asian countries to the east have not yet been affected. The World Health Organization (WHO) has been closely monitoring the virus's spread. The WHO is working closely with the government of Turkey to stop the spread of the virus, but these efforts have been hampered by the political instability in the region and a lack of funding from the international community. If the WHO's efforts are unsuccessful, the virus could reach Europe and the US in 6 weeks to 8 weeks. Morgan and Victoria think that it is only a matter of time before the virus spreads to Europe and the United States. When that happens, Morgan and Victoria are expecting a major surge in demand for exactly the types of medical supplies that Care Med sells. When that happens, CareMed expects annual unit sales of at least 150,000 units with average revenue per unit sale of $10,000. To prepare for a possible surge in demand, Morgan and Victoria are considering onboarding a new supplier. They have found two potential suppliers: Zhuovue Supplies located in Shanghai, China, and Schlechte Medizin, located in the Baden Wuerttemberg region of Germany. Zhuoyue Supplies (Shanghai) Zhuoyue specializes in high quality healthcare products. The company has annual revenues of roughly $2.2 billion. It has long-term contracts with well-known US medical suppliers including Cardinal Health, McKesson, and Henry Schein. The company is ISO 9001 certified and has been awarded the prestigious AME Award for Manufacturing Excellence. However, in-depth reporting by the Wall Street Journal suggests that Zhuovue is currently undergoing a leadership change that has caused its service levels (lead time, on-time delivery, etc.) to drop off. The company's operations are entirely inhouse. Its production facilities are located in the Shanghai Free-
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