Owens & Minor’s Case Essay

What is the value-added by Owens and Minor? Is this value-addition panoptic? They own and sell the stemma for the manufacture.They take on the financial essay associated with the function of managing the inventory flow to the hospitals. They c ar for harvest-home returns and carry the insecurity for that.They carry the receivables (cash flow issues due to long payment terms of clients actually a 90 days credit) They carry and manage most of the inventory for the hospitals, which ar whatevertimes even running stockless. They track and verify client legal injurys for contracted product acquires and monitor agreements between end-users and manufacturers The distribution has changed in a way that hospitals required the distributors to carry to a greater extent(prenominal) of the inventory and making more deliveries in lower units of measure, while retention the same originally negotiated prices.This has throw off a stronger burden on the distributors. Owens & Minor creates a clear value-add for some(prenominal) manufacturers and suppliers. Manufactures usually only want to produce and sell the product forwards getting it out of the door whence Owens and Minor takes the full state for all stressful parts of selling a product. On the opposite hand customers dont want to buy and own products ahead they argon ready to use it. Thus Owens and Minor also enables them to achieving more efficient structures, while reducing additional cost related to managing efficiently.2. prise the impact cost-plus set has on distributors, customers, and suppliers. SuppliersSuppliers have no pauperism to try to reduce costs and increase efficiencies since profits remain the same. grocery store require is not taken into consideration. If a supplier has a markup, which takes the resellers price point beyond current market prices, the resellers demand will decrease dramatically. DistributorsServices related to inventory management are not included properly, since the percentage they gain is the same for all products. Whether they are cheap and efficiently to handle or rather problematic. Hence costs will skyrocket if customers will ask for additional dishs (while keeping the same price). They have the drawback of customers engaging in cherry-pickingand only enabling the distributors to manage low-margin, inexpensive products. CustomersCost-plus pricing lead to a complicated pricing structures, since distributors and customers negotiated separate product prices from manufacturers, introduced incentives, let prices vary from customer to customer, covered some products by contract and some dont etc. Hence purchasing managers were nearly unable to properly track actual product costs and compare quotes from competing manufacturers and distributors. 3. What effect will ABP have on customer behavior? Provide an example to illustrate.ABP connects O&Ms gift to the level of the service they provideCustomer is motivated to keep its activities round off to a minimum level and only order services that he really needs ABP helps customers to optimize their service-level and hence their costs. Customers who want to extend their service-level give the bounce get this because there is a way for O&M to price a higher service-level They came up with a relatively simple intercellular substance based on two major cost driversnumber of purchase orders per month and number of lines per purchase order. The number of orders was tied to our fixed administrative fees and the number of lines was tied to our variable coststhe number of times a worker had to go to a product rack, etc.It was a precise primitive way to identify our fixed and variable costs, but it was good in showing the customer that they could lower costs. They wanted to show the customer that instead of being locked-in to a traditional cost-plus contract, they could actually alter their service delivery fee depending on the type and amount of service requested, and the frequen cy and size of each request. In order for the customer to check at ABP as an honest way to do business, we had to share our song with them otherwise they would have viewed it as just another pricing scheme.4. What are the obstacles to successful implementation of ABP at Ideal? How would you address these obstacles? Internal musical arrangements at hospitals (e.g. budgeting, compensation) were tied tocost-plus percentages. Product prices with cost-plus percentages were used to determine absent pricing between hospital departments Technological barriers Customer has to change to an EDI system (electronical data input) Hospital would have to change its systems and procedures for material handling For a hospital to benefit it would have to be willing to change and cut down personnel, equipment and warehousing space. Culture of hospitals (e.g. surgeons have different preferences for many operating fashion supplies) O&M should address these obstacles with the followingOffering to co nvert the activeness fee to a cost-plus equivalent O&Ms logistical services should work closely with customers moving to ABP to help them realine processes and institute cost savings.