Align Technology Inc

Align Technology, Inc.

Matching Manufacturing Capacity to sales Demand

Align technology Inc has brought revolution in the technology of dentist field by

offering that they can straighten patient’s teeth without metal braces invisibly and

effectively. They made invisalign system which operates by obtaining virtual

image of patient’s teeth, manipulating these images in prescribed increments,

creating positives of these positions and then manufacturing plastic thin

negatives of teeth for every stage of treatment which as a result was a clear and

removable appliance that straighten patient’s teeth effectively. Operations of this

system take place in US, Mexico and Pakistan.

Issues

These were some factors which effect company sales and demand:

* Main issue with Align Inc was that the demand of its product becomes less than

its manufacturing capacity so that company was not meeting its financial targets.

* In US over 200 million people had malocclusion while less than one percent has

treatment from orthodontist which results in less demand of their product.

* Many of the customers (Orthodontist, GPD) were not interested in switching

from traditional way (Metal braces) toward invisalign system.

* The cost of the company was too high then its price which leads toward loss for

the company.

* Company was just marketing and providing training about its product to

orthodontist not to the general practice dentist but many of the case were first go

to them and stop there with traditional way because GPD does not know about

the invisalign system.

* Company also has restricted applicability of its product to adults with mild

malocclusion.

Analysis

Align technology is facing many issues which results in less sales and demand

than its manufacturing capacity. At very first they did wrong forecasting of sales

which shows rapid growth of the business due to their marketing campaign and

then company build their production capacity according to this forecasting. They

also have 20% excess manufacturing capacity to avoid delivery problems. When

company goes into the market then they face great disappointment because

there were very little sales which were not enough for the company to achieve its

financial target of 50% margins.

In US over 200 million people had malocclusion while less than one percent has

treatment from orthodontist. Align Inc just provides awareness about their product

they don’t provide awareness about the importance of treatment which results in

demand generation. The other point is that many of the orthodontists were not

interested toward this technology. They don’t want to switch from the traditional

way to the invisalign technology because of the lack of knowledge and training

about this system. In marketing the company was not be able to convince

consumers to ask their orthodontist about this treatment. This treatment also has

some restrictions that this can only be used on adults and at mild malocclusion.

These all factors play a vital role for the loss of the company.

Company was using Pull strategy by focusing patients in their ads that patients

will be aware and ask their dentist about this product. This also results in fewer

sales because when people went to their dentist they don’t refer them to the

orthodontist for invisalign system and treat them with the traditional way.

In order to make cost effective product and to gain profit then company need to

reduce its cost from its price. As the fixed cost was so high then company should

do something to reduce its variable cost which can be reduced by devising new

software and procedures.

No doubt the idea was smart, business was smart, it was great revolution in

dentist field and it can go up in future if it is marketed and handled properly. It

offers many benefits against its alternative (metal braces) like practically invisible,

improved oral hygiene (i.e. patient can remove it while eating), reduced root

resorption and overall treatment time, easy to use and many more. Above

strategies that he company uses bring totally loss for the company which can be

worst in near future if everything is not be reviewed. According to the given

balance sheet and income statement company is far from its profitability which

shows that it need to change something and to add some of the new strategies

which are being used by big brands and companies.

If we analyze the manufacturing process of the invisalign system then we came

to know that its operations take place in US, Mexico, and Pakistan. The whole

process start from Treatment initiation in which the prescribing orthodontist take

X-rays and PVS impression of patients teeth make a file and send that to

California where company receive order and enter the data into the computer .

When this completes then the kit was sent to the dental lab where plaster molds

were made for reference and also for destructive scanning. These were accurate

representation of patients’ teeth which was later trimmed and inspected by the

dental technicians. Then in data acquisition the plaster moulds were scanned

with white light to capture the image of the teeth and then created 3-D model for

each arch and then software combined the 3-D model and white light scanned

image to see that they are same or not before sending the data to treat

operations. Then this was sent to technician supervised by dentist in Pakistan to

create virtual images of the patients along the treatment path. The technicians

separately cut out each tooth and then positions were adjusted according to

prescribed treatment. The reasonable movements were made with two week

interval. These all stages vary from patient to patient. In SLA mold fabrication the

prescribed treatment plan was first reviewed by trained orthodontist then sent to

align online ClinCheck software. This allow the orthodontist to view the treatment

at every stage and its up to orthodontist whether to approve that or to provide

feedback for revision. Approximately 30% plans are revised. This all is highly

customized processes. These plastic models were then sent to Mexico under

supervision for fabricated the final aligner and then trimmed, labeled, polished

and shipped to the prescribing orthodontist (See Exhibit no 1).

Total Manufacturing Time

Total manufacturing time that Align takes in days = 19 days

Bottle neck

ClinCheck process takes 8 days which is greater in the whole process. Because

the prescribing orthodontists take much time to review the plan and give their

feedback. This causes delay in their manufacturing.

Options

According to the research in America there are 131 to 148 adults who are facing

malocclusion and can be benefited from dental treatment but they feel hesitation

for their physical appearances because 92% of adults agree that an attractive

smile is important social asset.

* Align Inc need to raise their marketing and awareness campaign in people who

face hesitation with metal braces in the society.

People are more likely to visit dentist then Orthodontist. Where dentist are not

well aware and trained about the product so they are reluctant to refer the patient

to the orthodontist for invisalign system and treat patients according to traditional

way. Also the reason for the people to visit dentist instead of orthodontist is the

fee of orthodontist is more than the general practitioner dentist.

* Align Inc can raise its sales by focusing on the training and awareness of

general dentist along with the orthodontist.

Applicability was restricted by the company itself which also play a role in their

fewer sales. FDA clears their item for every person and every type of

malocclusion. But they put restriction to adults and only for mild malocclusion

which restricted their applicability and orthodontist don’t recommend that to

mature malocclusion which also very common in people.

* Align Inc can allow their product to everyone without any restriction of its

applicability of mild malocclusion.

As according to the case the capacity of the Align Inc is more than its demand

and sales. They now don’t need to invest in the manufacturing capacity but need

to revise their marketing and sales strategies. They are currently using

orthodontist for their sales and provide them training who were also not very

interested to switch to their product. Company is using Pull strategy and their ads

toward people didn’t mention prices of their products.

* They can use Push strategy by providing training to dentist so that they can

recommend patients to use this system.

Decision criteria

According to the condition of the Align Inc it’s going with the loss. It has invested

a lot in building its manufacturing capacity according to sales forecasting. Now

they need to match their capacity with their sales demand. This can grow by their

effective sales and marketing strategies. They need to refocus their system of

sales and demand.

Company need to make decision only on their demand and capacity because its

company is facing loss because of the excess capacity.

Decision

In order to match capacity with the demand company need to manage their

capacity. Align Inc should use Push strategy for the sales of its product. Need to

train dentist provide them invisalign system for use which help them to adopt new

technology.