Case Summary: Owens & Minor, Inc.

Minor did not want to debate up. This case explains the strategy Balderdash and his team up approached to attain the bold with Ideal. The year foregoing to the bid, O&038M was struggling to enclose Its costs while trying to take in the profitability of their clients and services. By the end of 1995 the familiarity had encountered an $1 1 knew that he postulate to reevaluate the guilds costing and pricing methods If they assessd to even be considered in win the Ideal contract. Palavered and the team were concerned with their authorized 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 write out low-margin, low-cost products. This method also tied Os allowance to the value of the product rather than the value of the service. The complexity of the pricing structure do it difficu lt for purchasing manager to shack actual product costs or compare quotes from competing manufacturers and distributors.The company did to a greater extent than what was creation paid for. Their tasks included Own and manage the stock-take for the manufacturer Take on the financial risk associated with the function of managing the inventory flow to the hospitals Care for product returns track down the receivables (cash flow issues due to long wages terms of customers) Carry and manage well-nigh of the inventory for the hospitals (stockpiles at times) Track and roll customer prices for contracted product purchases and superintend agreements between end-users and manufacturers.Owens &038 Minor creates a authorise value-add for two manufacturers and suppliers. O&038M takes the full phase of the moon responsibility for all parts of marketing a product. On the other dedicate customers dont want to buy and own products onward they are ready to use It. therefore O also enabl es them to achieve more in effect(p) structures, while reducing surplus costs related to managing efficiently. The best closing for this company Is to follow activity ground costing and develop that Into activity ground 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 ordinate fees with services, reliving O of the burden of profitless 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.