Case Analysis: American Hospital Supply Corporation: The ASAP System (A) By Varnita Diwanji, Roll No-11116 PGPM-2012,

EABS

Table of Contents

Executive Summary:................................................................................................................................ 2 Problem Analysis: ................................................................................................................................... 2 Solution Analysis ..................................................................................................................................... 3

Executive Summary: American Hospital Supply Corporation, the largest firm in the U.S. hospital supply industry, has achieved success in part through the use of information systems: Online purchasing system-ASAP( Analytic systems Automatic Purchasing). Changes in the hospital marketplace suggest a shift in strategy would be appropriate. Information systems have played a significant role in future strategies.

Given Information: AHSC founded in 1922 by Foster, based near Chicago. It used to manufacture supplies and distribute them Products: IV solutions, surgical drapes and gowns, gloves, syringes, chemical reagents

Sector Hospitals Laboratories International business

Contribution to sales 65% 25% 10%

AHSC s culture was characterized by promotion from within, a willingness to take risks and a strong emphasis on ethical behavior AHSC s strategy for future included increased emphasis on self-manufactured products, on the alternate-site market and on sales to corporate accounts Problem Analysis: AHSC was facing numerous impediments: y y y y y y Fixed rate reimbursement from government sponsored Medicare program Exerting pressure to cut health care expenditure by businesses and insurers Reduction in hospital admissions by 4% Average hospital stay shortened by 7% Hospital cost increased by 5 percentage point Logistical expenses increased by 10 percentage point

y y y y

Operating earnings fell by 8% Consumer were facilitated by alternative sites Negotiation of prices by customer making billing process complex Late and incomplete delivery of orders

The most important goal is to focus on reducing operating expenses and increasing sales of AHSC to overcome these impediments Solution Analysis

AHSC was looking for the solution of getting benefits of lower inventory, reduce paper handling, lower shrinkage due to loss, spoilage and theft, fewer purchase orders and deliveries to handle and guaranteed service. At this point of time ASAP came in picture. ASAP provided competitive edge to AHSC in many ways such as Centralization-It gave the ability to respond to customer orders by verifying the item number and showing the availability and price of each item Orders could be edited for accuracy and completeness before they were transmitted Recommendation of substitute by system in case of stock outs ASAP 2 allowed messages to be transmitted electronically among AHSC, sales representatives and customers ASAP 3 allowed customers to enter orders using hospital s own internal stock numbers. It reduced order entry time and improved ordering accuracy. ASAP3+ incorporated barcode scanning ASAP4- It eliminated all manual steps Hospital size didn t correlate with information system capability Service component- How to use system PC would be equipped with extensive tutorial software Other factors such as Streamlining order, Patient dealing, Just in time, Well trained and informed each facet of system, Flawless, no glitches, Reliable, Dependable, Cost to benefit ratio was more.

Companies can find numerous opportunities for such uses of information system such as feedback, Gap analysis, Diagnostic Test, Billing end to end, Time, Resources, Internal data analysis, Availability of stock, Duration of test, Positioning, Competitor, Evaluating competition, Strategy for using Information technology Numerous measures can be taken to make Information Technology related competitive advantage sustainable over a long period of time such as Innovation, Continual improvement, Pre punch card, Billing order service, Enhancement, Changes according to priority, Business goals should not be compromised ,Highlight instances through evolution(VIP, AHAP 1,2,3,4) Numerous factors made ASAP system successful, such as it was User friendly, Reliable, Dependable, Time-Cost reduction, ASAP 1-5 new set of function, Reduction in paper handling, Pioneer-First mover advantage, Selection of sector-Healthcare was an appropriate to streamline the operation , Lag time reduced, Inventory-supplies available, Focus on core operation, Less intervention in supply chain, More focus on sales resulting in higher revenue, Resulted in Cost saving, Reinvested in further expansion, Access to customer Competitor of American Hospital supplier in mid 1985 may have taken measures to respond to ASAP such as y y y y y y y y y y y Customer survey-recommendations from customer Develop better system Information feedback Discounted price Untapped market Approach mgmt of other hospital Convincing PPT of their respective products Addressing to Loopholes Focus on cost, quality, service, speed Product mix approach-price, place, promotion, distribution channels Focusing on product life cycle- Reluctance from customer, gestation period

To achieve competitive edge through Information Technology through IT, AHSC can Reduce charges, Better customer feedback, Preserving stock inventory, Expand product line, Improvisation of system-continuous improvement program, Proper CRM, supply chain network in place,

Hire full-fledged IT which will provide technical suggestion, R&D dept. for new technology, Strategic initiatives referring to Porter s 5 forces model AS IOS evolved and developed. ASAP is an example of IOS, IOS impact vendors a lot. y y y y y y y y y y Vendor distribution Database driven system Updated Transparency to data Relationship with supplier lead to consistent business Redundancy avoided Data security and sensitivity Faster decision making BI Analysis Vendor management Providing linkage between AHSC and its customer

IOS gave edge to AHSCIt differs from traditional distribution data processing technologies, Access from single source, Centralized, Copies from different location-decentralized, Monitor inflow and outflow of data, Size of data, Accessibility, Elimination of manual work

AHSC and customer impacted by ASAP because of y y y y y y Consistant business Inventory management Customer service Customer retention Addition of new customer Branding

y y y y y y y y y y y y y y

Forward and backward integration Accurate Accountable Transparency Ease of placing order Customize order Treatment ailment Fun while placing order Effective Material management Reducing inventory warehouse Annual contract pricing Low overall cost Improved order Derive more benefit Sale-

y y y y y y y

More time for selling product features and benefits Ability to retrieve order data allowing to better prepared for sales calls Closing new deals Offloading of order entry, order status checking reduced time Lowering cost of packing, billing and collecting Benefits because of faster communications Improved penetration