Minor did not want to pass up. This case explains the strategy Balderdash and his team approached to attain the bold with Ideal. The year prior to the bid, O&M was struggling to contain Its costs while trying to understand the profitability of their customers and services. By the end of 1995 the company had encountered an $1 1 knew that he needed to reevaluate the company’s costing and pricing methods If they wanted to even be considered in winning the Ideal contract. Palavered and the team were concerned with their current cost-plus pricing method.
Cost-plus signified that the customer paid a base manufacturer price plus a mark-up added on by the distributor. This allowed for drawbacks like customers engaging in “cherry-picking” and only enabling the distributors to manage low-margin, inexpensive products. This method also tied O’s fee to the value of the product rather than the value of the service. The complexity of the pricing structure made it difficult for purchasing manager to track actual product costs or compare quotes from competing manufacturers and distributors.
The company did more than what was being paid for. Their tasks included: Own and manage the inventory for the manufacturer Take on the financial risk associated with the function of managing the inventory flow to the hospitals Care for product returns Carry the receivables (cash flow issues due to long payment terms of customers) Carry and manage most of the inventory for the hospitals (stockpiles at times) Track and verify “customer prices for contracted product purchases” and “monitor agreements between end-users and manufacturers”.
Owens & Minor creates a clear value-add for both manufacturers and suppliers. O&M takes the full responsibility for all parts of selling a product. On the other hand customers don’t want to buy and own products before they are ready to use It. Thus O also enables them to achieve more efficient structures, while reducing additional costs related to managing efficiently. The best decision for this company Is to follow activity based costing and develop that Into activity based pricing.
Customers were requesting efferent types of services such as products to be packaged In smaller units and having stockpiles programs. Valves and his tea hoped that activity-based pricing system would align fees with services, reliving O of the burden of unprofitable customers. Using the BBC method would enable the company to evaluate their cost drivers and make efficient decisions based on that data. Although, Palavered and his team submitted a flexible plan where they offered to use both pricing methods, it method proving that they can be leaders in changing the market.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more