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American Hospital Supply Corporation case study

American Hospital Supply Corporation case study

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Published by surojitsaha15094
American Hospital Supply Corporation case study
American Hospital Supply Corporation case study

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Categories:Business/Law
Published by: surojitsaha15094 on Feb 27, 2012
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04/07/2014

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The following outlines the history of the ASAP system:The American Hospital Supply Corporation, developed and used the Analytic Systems AutomaticPurchasing (ASAP) technology. A summary of the case follows:
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AHSC is a leading distributor of hospital supplies to 7500 short term general hospital
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AHSC had an 13% increase in sales from 1978 to 1983
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AHSC develops ASAP systems through 1984.
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ASAP 1, (1967), moves order entry from AHSC to the hospitals (customers). uses telephonefor I/O and punch cards for AHSC mainframe. It is a Transaction Processing System. The TPShandles batch orders.
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ASAP 2, (1970), uses teletype I/O device and prints receipts.
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ASAP 3, (1981), allows customers to use local stock numbers, and customized formats.
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ASAP 4, (1983), uses hospital computer to AHSC computer links. The customer systemrecommends orders. Approved orders sent to AHSC mainframe. Online editing of orders. 30Million USD spent on development so far.
Obj
ectives
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AHSC intended to focus on reducing its operating expenses and on increasing its sales,particularly of products manufactured in-house
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R&
D and an active acquisition program would be companys competitive strategy
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AHSC future strategy included increased emphasis on self manufactured products, on thealternate site market and on sales to corporate accounts
A
ssumptions
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Supplies would receive more attention and this would help in the contributing to most of the hospital cost
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Aggregate demand for care would likely increase
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Consumers would exert more choice
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Health management organizations would continue to proliferate
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Hospitals would enter into less traditional markets, such as occupational health and wellnessprograms
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AHSCs corporate buying program was expected to play an increasingly important role
Implementation
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Company expanded into the sale of prepared intravenous solutions and products and otherpatient care items
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Acquired other distributor and manufacturers
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AHSC promoted its nationwide coverage, broad product line, high service level and localpresence
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Corporate agreement with large and multinational chains
 
C
onclusion
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Hospitals accounted for two-third of AHSCs sale
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AHSC provided virtually everything except pharmaceuticals and heavy medical equipments
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International business accounted for roughly 10%
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AHSC faced competition from local and regional distributors
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The corporate plan gave customers competitive pricing, limits on price increases and cashbonuses in return for purchasing certain volume of products. This also made customerseligible to receive consulting services designed to them control cost
A
nalysis/ Recommendation
uestion 1. How much competitive advantage can IT give wrt to this case?Solution 1. AHSC gained an competitive edge by gaining a status of prime vendor of choice amongthe hospitals. As a prime vendor, it offers:
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Help to hospitals in order to lower administrative charges and inventory carrying cost,reduced paper handling, lower shrinkage due to loss, spoilage, and theft, fewer purchaseorders and deliveries to handle and guaranteed service
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B
road array of competitive product line by making it a one stop shopping for all thehospitals
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uick service
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R
educe turnaround time
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Helping incorporate just in time conceptJust installing the system does not help but understanding its facets and service and using itoptimally is the selling point. Considering the system installed in the AHSC case:
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There were no technical glitch, it was quite flawless
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It was very reliable which plays an important role when capturing the end user
uestion 2. How much can companies find opportunities for such usage of IT?Solution 2. Companies can find opportunities for usage if IT by:
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F
ocusing on customer feedback and incorporating it to develop new platform
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Analyzing data internally
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E
valuating competition
 
uestion 3. What can be done to make IT related competitive advantage sustainable?Solution3. To make IT sustainable in such an environment, company can work on many parameterssuch as:
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F
orward integration
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Inventory, billing
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Developing new softwares/ platform by collecting inputs from continual feedback
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It has to be an ongoing process
uestion 4. What factors which include technology, industry made AHSC successful?Solution 4. In AHSC case, technology was highly used and it played very advantageous to bothcompany and the end user.
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The technology used was very user friendly
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It provided reliability which the which is one of the reasons for AHSC s success
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It was evolving continuously which fulfilled the customers need gradually
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This also helped in paper work/handling
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Access to use the technology was given to the customers and not just the staff which madethe process transparent
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This helped AHSC focus more on their core roles
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This also lead to less human intervention in the supply chain which reduces the probabilityof errors to nearly zero
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R
evenue save from the above could be invested in expansion of the hospital
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Most importantly, it helped a lot in saving time
uestion 5. As a competitor of AHSC in mid 1985, how would you respond to ASAP?Solution 5. It is difficult to launch and gain trust of a new entrant in a market which already hasestablished itself and has a high market share.
B
ut this can still be achieved by:
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Development of a better system before the launch of their upgraded system. This can bedone by interacting with AHSCs customers and gathering their wants from the existingASAP system
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If better service is offered to AHSC to for lower price or discounted rate, it can givecompetition to ASAP but this would definitely take some time.
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Different marketing strategies can be incorporated

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