1. What is the value-added by Owens and Minor? Is this value-addition visible?
They own and manage the inventory for the manufacture
They take on the financial risk associated with the function of managing the inventory flow to the hospitals.
They care for product returns and carry the risk for that.
They carry the receivables (cash flow issues due to long payment terms of customers; actually a 90 days credit)
They carry and manage most of the inventory for the hospitals, which are sometimes even running stockless.
They track and verify customer prices for contracted product purchases and monitor agreements between end-users and manufacturers
The distribution has changed in a way that hospitals required the distributors to carry
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They have the drawback of customers engaging in cherry-picking and only enabling the distributors to manage low-margin, inexpensive products.
Customers:
Cost-plus pricing lead to a complicated pricing structures, since distributors and customers negotiated separate product prices from manufacturers, introduced incentives, let prices vary from customer to customer, covered some products by contract and some don’t etc.
Hence purchasing managers were nearly unable to properly track actual product costs and compare quotes from competing manufacturers and distributors.
3. What effect will ABP have on customer behavior? Provide an example to illustrate.
ABP connects O&M‘s fee to the level of the service they provide:
Customer is motivated to keep its activities down to a minimum level and only order services that he really needs
ABP helps customers to optimize their service-level and hence their costs.
Customers who want to extend their service-level can get this because there is a way for O&M to price a higher service-level
They came up with a relatively simple matrix based on two major cost drivers—number of purchase orders per month and number of lines per purchase order. The number of orders was tied to our fixed administrative fees and the number of lines was tied to our variable costs—the number of times a worker had to go to a product rack, etc.
It was a very primitive way to
This paper provides a case study analysis and case solution to an organizational behavior and leadership Harvard Business School case study by Michel Anteby and Erin McFee concerning the Transportation Security Administration (TSA) at Boston’s Logan Airport (Anteby & McFee, 2009). The case focuses on supervisor and managerial responses to a Transportation Security Officer’s (TSO) role in enabling a security breach at the airport. The time setting for the case study is a Monday morning in 2009, the day after the security breach. The principal decision maker is Mina O’Reilly, one of about 100 Supervisor Transportation Security
Cost-plus pricing puts many distributors in a difficult position. Unless distributors manufacture the medical supplies they sell, they have difficulty offering competitive prices to customers while continuing to make reasonable profit margins. Applying only the cost-plus pricing method forces distributors to absorb the costs associated with holding, managing, and delivering inventory, regardless of the variations in weight, size or handling difficulties among different products. This is in addition to
And the customer are sensitive to the price since those products are using only few times and need to be change all the time.
Case 12-02 To Recognize or Not to Recognize, That Is the Question Shakespeare Inc. (“Shakespeare” or the “Company”) is a privately held book printing and publishing company with a December 31 year-end. The summary balance sheet as of December 31, 2010, included: Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Total liabilities Total shareholder equity $ 6,500,000 28,250,000 $34,750,000 $ 4,500,000 13,750,000 $18,250,000 $16,500,000
Accounts Receivable, Other Receivables, Allowance for Doubtful Accounts, Bad Debt ExpenseInventories and Reserve for Inventory Obsolescence
|organisation |customers and will increase the profits. The difference from the other two sectors is that customers are |
Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro
One of the best aspects of the way the time-driven ABC system was put into place at Kemps was how efficiently and accurately management determined the main issues with the current cost system and responded with appropriate and relevant solutions. For example, one of the greatest problems the company was facing was that many of its operating costs were spread out equally over a customer base that was growing more diverse and demanding more personalized and varied service, effectively cutting or potentially eliminating entirely Kemps’ profit margins for a product. Therefore,
Young Professional magazine was developed for a target audience of recent college graduates who are in their first 10 years in a business/professional career. In its two years of publication the magazine has been fairly successful. Now the publisher is interested in expanding the magazine’s advertising base. Potential advertisers continually ask about the demographics and interests of subscribers to Young Professional. To collect this information the magazine has commissioned a survey to develop a profile of its subscribers. The survey results will be used to help the magazine choose articles of interest and provide advertisers with a profile of subscribers. As a new employee of the magazine, you have been
First, we have identified if there is really an insufficiency in the amount of selling prices set by the Sales Department, in reference to Exhibit 1 of the case. We did this through identifying the maximum amount of overhead costs that the company can incur for the three products and comparing it with the total overhead costs. See Table 1 for details.
with a number of strategic issues facing a capital-intensive, mature industry. Their product costing system was
Supplier Power: This highlights that it is easy for suppliers to rise up their prices. This is determined by the number of suppliers, the uniqueness of their product, their control over the buyer, and the cost of changing from one buyer to another. The scarcer the supplier choices you might have, and the more you need the help and that
o Retail clients through value added resellers – handled, installations, configured SW,customer networks and service part of responsibility
With this system each customer’s order cost the same amount to complete causing orders with high profit limits to subsidized orders with low profit limits making it difficult for Super Bakery to know the true cost for an order. The company changed to the activity-based costing (ABC) system allowing the managers the ability to recognize the cost and profit margins for each sale. The ABC system associates the costs with the activities allowing managers the opportunity to access a system that allocates overhead costs that uses multiple bases. Costs can be traced back to each individual’s account regardless of the product provider letting managers know which products are profitable and which ones are not. The traditional costing system allocates cost to departments or jobs instead of overhead cost pools. The traditional costing system makes it difficult to know which activity or product is making a profit.
Competition within the industry as well as market supply and demand conditions set the price of products sold.