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American Hospital Supply Management

Case Study analysis


Bhushan Kotwal
Roll no: 11102

1. About Company 2. Current Challenges 3. Traditional information system at AHSC 4. Benefits to Customer & Sales force 5. Conclusion

About Company
Founded in 1922, by Foster G. Mc.Gaw. Company begun its business by manufacturing & selling medical supplies i.e. patient care system. Its product line included general and specialized care, including IV solutions, surgical drapes and gowns, gloves, syringes, chemical reagents and other medical items. Hospital is AHSCs major customer; it contributes 67% of AHSCs sales. AHSC could provide virtually everything a hospital would need. AHSC would get 25% revenue from laboratories. AHSC also served international market as well.

Business challenge
Material Management Problems: The hospitals biggest challenge is to optimize material management, purchasing, ordering processes. Alternative patient care sites such as physicians office, surgical and emergency centers, and nursing homes were able to kept much less stock than that of hospitals. AHSCs ultimate goal is to reduce its operating expenses and to increase the revenues by addressing these issues, by leveraging the uses of information technology. AHSC had to achieve an integration & coordination between its technology, distribution ^& information system to tackle these issues.

Traditional information system

All the business processes of AHSC were conducted manually, decentralized. For example, there was no central pricing control, so it had created billing a complex process. Sales orders preparation would take much time, it involved lot of paperwork. In 1957, AHSC automated its order entry and billing processes by installing IBM 632 billing machines across its distribution centers. It led, order receiving and list packing for warehouses to be automated. As a result, hospitals were able to speed up communications could reduce inventory. Order processing became faster, accurate with reduced paper handling.

ASAP system
By 1970, AHSC installed Analytic Systems Automatic Purchasing (ASAP), which was new order entry system. AHSC implemented incremental versions of ASAP; ASAP1, ASAP2, ASAP3, ASAP4, ASAP5, all these led to efficient inventory management,

automation of purchase process, ease of ordering i.e. providing strategic benefit to AHSC and its customers.

Benefits of ASAP
Benefits to Customer (Hospitals) Company didnt make cost-benefit analysis, however customer leveraged many benefits such as efficient inventory, material management, ease of ordering, purchasing that saved both costs & time. All these benefits were attributed to ASAP system. Overall 50 % of AHSCs hospital orders came through ASAP. Benefits to Sales Force After implementing ASAP, the sales force of AHSC could spend more time selling the product, explaining customer product and less time in paperwork. Performance of sales force improved substantially between 1975 and 1984. Sales Processes such as off loading of order entry, order status checking and customer queries handling were optimized which led to cost & time saving.

AHSC anticipated the need of Information system for making value addition to its supply chain. It also realized that helping customers (Hospital) to improve its business would give strategic advantage to itself. Accordingly it leveraged ASAP system which led to inventory, material optimization and automation of ordering, purchasing processes of customer.