Owens & Minor Inc A Case Solution

Case Solution

A forward-thinking manager at Owens & Minor (O&M), a substantial national medical and surgical distribution company, enlisted the assistance of both logistics and cost managers to develop a cutting-edge prices schedule using the customer's activities as opposed to the cost in the product since the existing cost-plus prices structure handled to obtain impossible for O&M to cost services correctly. The case also explores the customer capacity his new proposal.

Excel Calculations

Questions Covered

What are the services rendered by the distributor to manufacturers and hospitals?

How has the nature of distribution changed over time?

What is the value added by O&M?

Evaluate the impact of cost-plus pricing has on distributors, customers and suppliers.

What effect will ABP have on customer behavior?

Explain Exhibit 5. How does price matrix work?

How does the cost in Exhibit 5 correspond to the costs shown in the customer profitability statement in Exhibit 4?

Why doesn’t the matrix comprise all the costs shown in Exhibit 4?

What are the obstacles to the successful implementation of ABP at Ideal? How would you address these obstacles?

What type of customers will adopt ABP first?

How difficult or easy is it for O&M’s rivals to adopt ABP?