Information given

The following outlines the history of the ASAP system: The American Hospital Supply Corporation, developed and used the Analytic Systems Automatic Purchasing (ASAP) technology. A summary of the case follows:
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AHSC is a leading distributor of hospital supplies to 7500 short term general hospital AHSC had an 13% increase in sales from 1978 to 1983 AHSC develops ASAP systems through 1984. ASAP 1, (1967), moves order entry from AHSC to the hospitals (customers). uses telephone for I/O and punch cards for AHSC mainframe. It is a Transaction Processing System. The TPS handles batch orders. ASAP 2, (1970), uses teletype I/O device and prints receipts. ASAP 3, (1981), allows customers to use local stock numbers, and customized formats. ASAP 4, (1983), uses hospital computer to AHSC computer links. The customer system recommends orders. Approved orders sent to AHSC mainframe. Online editing of orders. 30 Million USD spent on development so far.

Objectives
y y y AHSC intended to focus on reducing its operating expenses and on increasing its sales, particularly of products manufactured in-house R&D and an active acquisition program would be company s competitive strategy AHSC future strategy included increased emphasis on self manufactured products, on the alternate site market and on sales to corporate accounts

Assumptions
y y y y y y Supplies would receive more attention and this would help in the contributing to most of the hospital cost Aggregate demand for care would likely increase Consumers would exert more choice Health management organizations would continue to proliferate Hospitals would enter into less traditional markets, such as occupational health and wellness programs AHSC s corporate buying program was expected to play an increasingly important role

Implementation
y y y y Company expanded into the sale of prepared intravenous solutions and products and other patient care items Acquired other distributor and manufacturers AHSC promoted its nationwide coverage, broad product line, high service level and local presence Corporate agreement with large and multinational chains

Conclusion
y y y y y Hospitals accounted for two-third of AHSC s sale AHSC provided virtually everything except pharmaceuticals and heavy medical equipments International business accounted for roughly 10% AHSC faced competition from local and regional distributors The corporate plan gave customers competitive pricing, limits on price increases and cash bonuses in return for purchasing certain volume of products. This also made customers eligible to receive consulting services designed to them control cost

Analysis/ Recommendation
Question 1. How much competitive advantage can IT give wrt to this case? Solution 1. AHSC gained an competitive edge by gaining a status of prime vendor of choice among the hospitals. As a prime vendor, it offers: y Help to hospitals in order to lower administrative charges and inventory carrying cost, reduced paper handling, lower shrinkage due to loss, spoilage, and theft, fewer purchase orders and deliveries to handle and guaranteed service Broad array of competitive product line by making it a one stop shopping for all the hospitals Quick service Reduce turnaround time Helping incorporate just in time concept

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Just installing the system does not help but understanding its facets and service and using it optimally is the selling point. Considering the system installed in the AHSC case: y y There were no technical glitch, it was quite flawless It was very reliable which plays an important role when capturing the end user

Question 2. How much can companies find opportunities for such usage of IT? Solution 2. Companies can find opportunities for usage if IT by: y y y Focusing on customer feedback and incorporating it to develop new platform Analyzing data internally Evaluating competition

Question 3. What can be done to make IT related competitive advantage sustainable? Solution3. To make IT sustainable in such an environment, company can work on many parameters such as: y y y y Forward integration Inventory, billing Developing new software s/ platform by collecting inputs from continual feedback It has to be an ongoing process

Question 4. What factors which include technology, industry made AHSC successful? Solution 4. In AHSC case, technology was highly used and it played very advantageous to both company and the end user. y y y y y y y y y The technology used was very user friendly It provided reliability which the which is one of the reasons for AHSC s success It was evolving continuously which fulfilled the customers need gradually This also helped in paper work/handling Access to use the technology was given to the customers and not just the staff which made the process transparent This helped AHSC focus more on their core roles This also lead to less human intervention in the supply chain which reduces the probability of errors to nearly zero Revenue save from the above could be invested in expansion of the hospital Most importantly, it helped a lot in saving time

Question 5. As a competitor of AHSC in mid 1985, how would you respond to ASAP? Solution 5. It is difficult to launch and gain trust of a new entrant in a market which already has established itself and has a high market share. But this can still be achieved by: y Development of a better system before the launch of their upgraded system. This can be done by interacting with AHSC s customers and gathering their wants from the existing ASAP system If better service is offered to AHSC to for lower price or discounted rate, it can give competition to ASAP but this would definitely take some time. Different marketing strategies can be incorporated

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Question 6. What should AHSC do next to achieve competitive advantage through IT? Solution 6. This can be done by : y y y y y Customer feedback: understanding customers need with time and offering them the same Not stocking large inventory instead applying just in time concept Focus can made on expanding the product line Invest in R&D and develop new technologies and make them a part of ASAP as a full time activity Understanding the market structure and Porter s five rule model can be applied, which talks about : 1. Threats of new entrants 2. Bargaining power of suppliers 3. Bargaining power of buyers 4. Treat of substitutes 5. Degree of rivalry between existing competitors

Question 7. ASAP in example of IOS. How do they impact the different organizations that they link? Solution 7. IOS stands for inter organization system which means that a common operating system is two or more organizations this helps in: y y y y Avoiding duplication of data is Redundancy is vomited Data is secured Offers transparency bet the systems

Question 8. ASAP is an IOS providing computer to computer linkage between AHSC and its customers. What is an IOS? How does it differ from tradition distributed data processing technology? Solution 8. IOS stands for inter organization system which means that an common operating system is two or more organizations. It has advantages over traditional technology such as: y y y IOS can be accessed from a single point unlike the tradition distributed data processing technology It is an centralized management Accessibility is better

Question 9. How are AHSC and the customers impacted by ASAP? Solution 9. There has been a tremendous impact on both AHSC and the customers which can be summarized as: For AHSC y y y y y Consistency in receiving offers Manage of inventory more efficiently Retention of customers The system was accurate, accountable, reliable and transparent The forward and backward integration helped both AHSC and consumer

For Customers y y y y y There was an ease in placing orders It saved a lot of time Flexibility offered Consumers could customize their orders Tracking orders was simple

Question 10. How sales representatives impacted? Solution10. ASAP had a positive impact on the sales representative: y y y y y y y They were more focused on closing new deals instead of following up Less time was spent on handling orders More time could be dedicated to product features and benefits Any problems faced by the customers could be cleared the same day by checking the status in their account They could intimate the distributors and vendors regarding the requirement on the same day through messaging It also lead to more effective customer account management The above reasons helped in market penetration

Question 11. How did ASAP benefit the distribution system? Solution 11. ASAP was very beneficial to the distribution system to great extent such as: y y y y y Queries regarding price and availability of the product were removed Order entry was made easier Order status could be checked such as, order supplied, delayed or suspended This lead to disciplined and error free ordering Error checking of inputs could be validated

Question 12. What impact did ASAP have on suppliers? Solution 12. ASAP had an equally positive impact on suppliers: y y y Transmission of purchase order was simple and immediate Hard copies of orders were redundant They also decided on one settlement check per month