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 patients teeth without metal braces invisibly and effectively. They made invisalign system which operates by obtaining virtual image of patients 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 patients 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 dont 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 dont 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 dont 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 dont 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 dont 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 didnt 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 its 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.