American Hospital Supply Corporation

By: Nishant Mehta(11110) Given Information
Found in 1922, American Hospital Supply Corporation (AHSC) provided hospitals and laboratories with general and specialized patient care for e.g. gloves, surgical drapes and gowns. In 1957 AHSC had begun to automate its order entry and billing procedures by installing IBM machines. In the early 60 s AHSC started facing difficulties in serving large hospital customers. At this point they introduced a new system called Tel-American. In the early 70 s Tel American had lost its sheen and was replaced by a system which consisted of a Mainframe computer which was attached to Tek pro. This new system was called Analytic Systems Automatic Purchasing (ASAP). Slowly and steadily upgraded and enhanced versions of ASAP were introduced and first of them was the ASAP 2 which allowed messages to be transferred among AHSC, the sales representatives and the Customer. The ASAP 3 allowed the customers to enter orders using the hospitals own internal stock number. ASAP 4 was a computer to computer order entry system was released in 1983 and simplified purchasing process by eliminating manual steps except approval. The ASAP 5 was launched as a pilot project in 1984 and provided the capabilities to edit order files on PC rather than online. The ASAP system provided benefits to AHSC as well as to the customers.

The objective of migrating to the Information system was based on the following points: y y y y y y Automate the order entry and billing procedures so as to provide the sales reps to have more time for selling rather than preparing the orders. On time delivery of the orders. Information system such as ASAP helped the hospitals to move towards effective material management which in turn increased the business for AHSC. Ordering through ASAP was easier. ASAP helped the business to retain customers. Lower costs of packing and shipping.

y y y ASAP was used by Hospitals and small nursing homes/alternate care sites did not utilize the benefits provided by ASAP. The number of alternate care sites is increasing year by year and a large portion of patients are utilizing their services. ASAP as Information system was efficient.

Q1: How much competitive advantage can IT really provide? Here in this case ASAP is the application of IT which provided AHSC with the following advantages over its competitors: y ASAP provided ease of ordering and as well as on time delivery which increased the customer satisfaction and thus helped AHSC to keep itself ahead of the competition. y ASAP provided the sales reps more time to focus on selling and distribution rather than doing paperwork.

Q2: How can company find opportunity for such uses of IT? y AHSC used the ASAP system to reduce the materials management costs of hospitals which was a large part of their operating expenses and thus AHSC was able to retain customers even though their prices were 1-2% higher than the competitors.

Q3: What can we do to make IT related competitive advantage sustainable over period of time? y We can develop the same with continues evaluation and updating the IT within the organization

Q4: What factors which includes Industry, technology and others made ASAP successful? ASAP slowly and steadily evolved and focused on: y Quality of service y Cost Management y Materials management y Ability to reconceptualize business relationship y ASAP provide the customers with ease and more power for ordering.

Q5: How are AHSC and customers impacted by ASAP? AHSC was able to: y retain customers y increase time that sales reps used for selling y AHSC used ASAP to connect with the customers and suppliers. y Reduced cost of Shipping and packaging. Customers received the following benefits: y Reduced cost of Inventory management. y Ease of ordering y Editing the order before placing them y Centralized order placing system

AHSC through the use of ASAP was able to cater to large hospitals whose cost of materials management were high whereas the small nursing homes and physicians who had a small material management contributed a small part of the revenues generated by AHSC. With the steady increase in nursing homes and physicians AHSC should shift its focus to providing an IT solution for this market to tap the potential and maintain its growth by being the leader in this segment.

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