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11106 - KALYAN P

AHSC: The ASAP System

MIS CASE ANALYSIS

Case Summary y American Hospital Supply Corporation, the largest firm in the U.S. hospital supply industry, has achieved success through the use of information systems. y In this case, Information technology (IT) and in particular the Information system (IS) emerged as a key force in shaping the basis of competition in many markets. y The Analytical Systems Automatic Purchasing (ASAP) system developed by American Hospital Supply Corporation (AHSC) in the early 1960s is one of the best-known, most often-cited strategic information systems, exemplifying what we now refer to as the potential strategic role and capabilities of information technology. Objectives y Analytic Systems Automatic Purchasing (ASAP) a computerized system for ordering, tracking and managing supplies. At that time, the American Hospital Supply Corporation (AHSC) began to automate its internal order entry and billing procedures by installing IBM 632 tab-card billing machines in its distribution centers. It began then as an internal move to automate the company's distribution function expanded in the 1960s and 1970s to become one of the first, and one of the most successful, supplier-tocustomer electronic linkages in the industry. y Evolution of theASAP system is as follows A) AHSC's initial, experimental attempts to respond to market needs for efficient distribution through the use of computerized systems and communication capabilities B) AHSC's business strategy to leverage the ASAP system through aggressive penetration and diffusion within its hospital customer base as a central and unique means of exchange between itself and its customers C) By reflecting the actions by AHSC as well as its competitors, to control the electronic channels of distribution and the contrasting pressures from hospital customers to evolve towards a multi-vendor, universal distribution system. Assumptions y AHSC succeeded from a business perspective by leverage information technology to redefine the fundamental roles and relationships among players in the business network y In health care sector reliability plays a vital role and ASAP met the requirements in terms of the data transfer and the order receipt with a maximum efficiency Analysis (Q & A) (1)How much competitive advantage can IT really provide? y Advantage is tremendous if approach is good with a good revenue generation & scale up operations y Flawless process with no glitches faster process, stream lining the process, reduced inventory costs. (2) How can companies find such opportunities & uses of IT? y IT can be used in getting feedback from customers with a specific close ended questions & answer for customers , thereby to address gap analysis y Looking at competitors in the market & evaluating them, addressing internal data, Based on these factors strategy can be designed for IT process. (3) What can be done to make IT related competitive advantage sustainable over a long period of time? y Updating the existing process (ASAP) with 3 core functions, VIP services in market refer purchase card system (IBM) .

11106 - KALYAN P

MIS CASE ANALYSIS

(4) What factors made ASAP so successful? y User friendly system, ease of communication, time reduction, cost reduction, reliability, continuos evolvement (from ASAP 1 to 5), reduction in paper handling, pioneers in this system with first mover advantage. (5) As a competition of ASAP how would you respond? y Look for promotion, place, price and also find the loop holes use it cost quality, service, speed, then a competitor can win over ASAP. (6) What should AHS do next to achieve competitive advantage? y Better customer feedback mechanism, also improvisation can be made by proper CRM, supply chain S/W system acquiring new customer, full fledge R&D department, new technology for emerging markets. (7) How ASAP as an example of IOS can impact different organizations they link? y ASAP is an example of IOS (inter organizational system) because it can impact different organizations they link y There is no time loss between no discrepancies in dbms system used at vendor, distribution stage so they can use & retrieve the info at all times. y Reliable & transparent data from authentic source y Build relationship with suppliers & distributors. y Clustered network of related organizations/hospitals connected with ASAP have competitive advantage than with other players. (8) ASAP is an IOS providing computer to computer linkage S/W AHSC and its customers; what an IOS is. How it differ from traditional distributed data processing technologies. y IOS can be accessed from single source centralised management as it is possible to work between 2 or more organizations. y Copies of databases of leads to decentralised system can be overcome by ASAP system. y By ASAP, integrate the departments in hospitals for multiple databases accessibility of info is good in IOS. (9) How are AHSC & customers impacted by ASAP? y AHSC - Consistent business from hospitals, better inventory management customer retention & new customer effective materials management continuous touch in with supplies accurate& accountability Customers - Ease of order places, delivery time improvement , transparency in prices , customization of orders low over all cost, less time spent orders more effective customer management improve penetration, Improved order process annual contract pricing Implementation y Tel-American system evolved into an ordering system supporting order entry through a touch-tone phone known as ASAP 1. In this case, the customer would simply call an AHSC distribution center, and "key in" the order. Although this system proved to be a revolution of order-processing, a major limitation of ASAP 1 was its inability to directly interconnect AHSC, its sales representatives and hospital customers, and its inability to provide printed copies for order verification. y Customer requirements led to the next major enhancement, ASAP 2 teletype machines at customer sites for order input and printing copies of orders for verification and administrative purposes. The customers paid for the terminals, while AHSC incurred the telephone charges. y In contrast to ASAP 2's purely technical improvements, ASAP 3 was focused on customizing the system to the specifications and requirements of different hospitals. For example, ASAP 3 allowed hospitals to order supplies using their own internal stock numbers, and to create standing order files for regular ordering. In this way, economic order quantities for different items could be incorporated into the system, facilitating quicker execution of the ordering process.

11106 - KALYAN P

MIS CASE ANALYSIS

y y

Similarly, from the output perspective, customers could specify their purchase-order formats and avoid Multiplicity of formats. These capabilities proved to be major differentiators. Most hospitals had not automated their materials management and supply functions by the early 1970s, and could not have designed and developed such an electronic ordering system without incurring significant costs. Thus, ASAP 3 was introduced in direct response to the hospitals' steadily increasing needs to improve their own internal management of supplies. A Significant aspect of AHSC's service-level strategy was to work with the hospitals to define measure and improve the non-product related costs of materials management.

Conclusion y From the case it is clear that the importance of ASAP's nearly three decade evolution, the distinctive business competence shifted from one of providing efficient, full-line distribution service on a national scale (economies-of-scale), to one of providing integrated materials management services leveraging the information content of exchange through a tightly-knit value-added partnership (economies-of-scope). y Simultaneously, the distinctive systems competencies evolved from providing the efficient telecommunications between AHSC and the customer for Order-entry, to one involving a complex, interorganizational technology platform capable of exchanging more detailed information among a network of partners. y Several systems other than ASAP are in the marketplace today, but at the end of three decades of use, ASAP emerged as a winner by occupying a dominant position. Recommendations y Develop a competent feedback model for customer and analyze the result with the recommendations of existing users of ASAP that can be utilized in devising new structure .For example like how they benefitted with existing system; better service & less price than ASAP for conversion of customers y Reduce the cost to customer with more additional support y Try to tap the untap market with direct interaction & convince the end customers Limitations y New entrants, diversified buyers & suppliers, traditional rivals, substitute products, government policies (if any) are supposed to be a few limitations identified from the case.

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