Chapter 11, Problem 3.4VC

Summary Introduction

Case summary:

AP hospital is one of the top hospitals dedicated to serving women and children. The hospital consists of 2000 employees, 431 bed facilities covering 676,000 square feet. With numerous limitations, AP hospital was once a part of a large buying group serving over 900 members.

AP hospital and seven other hospitals partnered and formed a small firm by the powerful name of HPA Corporation. With two changes, the corporation saved $7 million in its first year. First, the corporation was structured and staffed so that saving with its contract efforts went to eight members.

Second, it made a long term contract with 3 to 4 years and not a short-term one within a year. The supply chain activities varied in service-based firms and in AP hospital the supply chain measure manifested itself through the MEO committee. The committee evaluated the purchase bills to achieve economic targets.

The companies succeed to make customized products with the help of third tier suppliers. The customized packs are used in the operating room, which is delivered by MGM and later assembled. The HPA permitted AP hospital to be creative and save costs which would benefit the hospital.

To determine: The process for including a new product into the supply chain.