Owens & Minor case for aligning supply chain incentives

Executive Summary

Statement of issues: Due to the changes of business environment, O&M suffered a continuous loss on business. Instead of acting individually, customers organize buying groups and combined buying ply to gain advantages in negotiating gross margin with distributor. With the increased popularity of JIT and stockless idea, customers want to shift exist and risk associated with inventory to distributor, and they also want distributor to deliver better go at its own expense. Moreover, competitions from private denominate distributors and manufacturing distributors further squeezed profit margin of our company.

Owens and Minor play a very important role in the entire SC. They ar in charge of providing information to manufacturers on product flow. Their services to the hospitals include storing the inventory in their warehouse and making regular shipments based on stockless and JIT strategy, thus taking all the fiscal risk in inventory handling and storage. They dont add apprize to the product itself, but they do add a stripe of value to the SC.

The nature of distribution has changed over time. The bargaining power of hospital has increased due to mergers and alliances, pressuring the distributors to reduce their margins. Upstream members of the SC have also put some pressure on O&M to take additional damage in their operations.

If the ABP strategy could be successfully implemented, both distributors and customers incentives could be allied. Customers would be willing to society expensive products via distributors channel instead of buying directly from manufacture.

Generally, customers who could reduce or simplify the activities happened through with(predicate) the supply chain would adopt ABP faster. Also, customers who understood and were willing to take a sustainable relationship with distributors would adopt the ABP first.

ABP was a raw concept and its value had not been proven. Aggressive implementation of advanced idea such...

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