The case study that considers business of the largest health care provider in Santa BarbaraCounty is going to be considered in this paper. This company is called Pacific Healthcare. Currently, the company faces some problems in business. The task of the paper is to provide possible solutions to these problems. Taking this into account, the paper is going to have the following structure: introduction, analysis of the problems, discussion, conclusions and recommendations.
The company under consideration is the largest health care provider in the local region. The company has three hospitals – Pacific Memorial, Pacific Cabrillo and Pacific Isla Vista – with a total amount of beds about 1000. The company also has two nursing homes and ten outpatient clinics.
Therefore, the company purchases a lot of medical equipment from famous corporations. For instance, the company has been purchasing X-ray films only from Kodak. However, the head of department of radiology has passed away recently. He was the biggest fan of this particular firm and its films.
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The head of the department that is responsible for supply has decided that the current Kodak price is higher than the price in its competitors. Despite the fact that the company provides a lot of supportive services, the price is still too high. Among the company’s main competitors the following ones should be pointed out: Dupont, Agfa, Fuji and 3M. Dupont and Agfa provide the same quality products.
Analysis of the problems
The problem is the following: the new person, responsible for supply of X-ray films, is not satisfied with the current pricing policy of the supplier. There are some other firms that are able to provide the same products. The task is to combine the highest quality with the lowest overall costs. Thus, the company should find a single supplier that will be able to meet these requirements. Solution to these problems requires answering the four questions.
What are all the possible alternatives that should be considered when addressing the problem under consideration?
In fact, the company has five alternatives. These alternatives are possible suppliers of the product, which are able to meet the mentioned requirements. It is important to mention that the company is interested in a single supplier. That is why it can continue cooperating with Kodak or sign a contract with a new partner.
However, it is also possible to mention some additional alternatives. For example, the company can find some other suppliers not from the mentioned list. This supplier can be from another region or even country, but cooperation with it may bring economic and social benefits. Probably, the transportation costs are not going to be too high to decrease the degree of efficiency of such cooperation.
Second of all, the company is able to use some combination of a few suppliers. For instance, it may choose two suppliers. One of them will provide high quality films with lower prices. The second one would provide more cheap products. Thus, the company will be able to use diversification in the business. Then these films can be proposed to the different groups of patients.
Generally, we believe that the company is more interested in a single supplier. It is the most appropriate option, because it is characterized with the lower transaction costs. Simply speaking, it is more economically beneficial. That is why, the company, in fact, have five alternatives as five suppliers.
Whether medical staff personnel should be allowed to control sourcing decisions?
Medical staff personnel should be an active member in the process of making sourcing decisions. However, they should not be allowed to control these decisions. Consequently, it is going to lead to some chaos and delays in the whole supply chain. Professional people should take care of this particular area of business. Medical staff personnel should be able to put forward some propositions. They are the final consumers of the products. That is why their opinion should be accounted, but they should not be the members of a control team. It is going to spoil the company’s organizational structure.
Furthermore, some committee should be created, which will unite employees from the different departments. This committee should have a right to propose the supply department some decisions. It is going to be the best form of cooperation in the case under consideration.
What are the advantages and disadvantages of cooperation with Kodak?
The advantages of cooperation with Kodak are the following:
It is a long-term partner of the company under consideration. That is why the company may rely on it and may not worry about possible problems and delays in the supply process.
Since Kodak is a long-term partner, the company under consideration may expect for some discounts and other bonuses from cooperation. Usually, companies try to appreciate their constant clients. This case is not an exception.
Medical staff personnel are used to work with the films of this company. Transition to the new company and new films may affect quality of medical observations and conclusions. No money is worth a human’s life.
On the other hand, cooperation with Kodak has some significant disadvantages. Among them the following ones may be pointed out:
The company is not ready to propose some discounts for its long-term partner. It can be even said that the company does not demonstrate required degree of loyalty. At least, the company should try to convince Kodak that something should be changed in their cooperation.
The company’s prices are higher than those, proposed by competitors. Moreover, the company’s competitors propose the same quality products. The question is whether it is economically justified to by films of this company.
Every business needs some innovations and changes to reach a new stage of development. Probably, it is time to change the supplier, films and approaches to X-ray observations. It may lead the company to the upgrade levels.
What actions should be taken to obtain reduced film prices after Mr. Howell’s death?
First of all, Kodak is used to cooperation with Mr. Howell. That is why it is very important to get their trust again. This is a task of the head of the supply department. It is important to remember that personal relations may be more useful in this case. The supplier will be ready to make some discounts only in the conditions of full trust and collaboration.
Second of all, a new head of the department should fully justify his requirements to Kodak. This company is a well-known global company. Further, it is not going to accept unjustified complaints. Cooperation should be mutually beneficial. That is why the companies should propose each other respective benefits.
Finally, a new head of the department should conduct negotiations with other companies in order to show Kodak that it is ready to change supplier. Some sort of pressure should be in this case. It is going to be an additional argument in negotiations with Kodak.
Conclusions and Recommendations
The company under consideration has faced a problem, when one alternative from five should be chosen. The company should choose between five potential suppliers. Moreover, the company must choose between long-term partner and lower prices. It is a very difficult task, especially for a new manager. The problem is strengthened by the fact that the old manager passed away. Negotiations with Kodak should be held by a new manager.
In fact, the company has five alternatives. These alternatives are possible suppliers of the product, which are able to meet the mentioned requirements. Moreover, the company is interested in a single supplier. The main question of the case study is what supplier should be chosen. Also, it is significant to know whether it is reasonable to change supplier at all.
After analysis the following thing should be said. The company should try to continue cooperation with the current supplier Kodak. It is a long-term partner that has already proven its loyalty and stability. The company under consideration can fully rely on this partner.
However, the company under consideration should try to convince Kodak to reduce prices a bit. Therefore, negotiations with other companies are going to be significant argument in conversation with Kodak. It should be shown that the company appreciates such cooperation, but it is also interested in economic benefits. That is why Kodak should try to reduce prices a bit or propose other economic benefits. Kodak is going to accept such requirements, since it is very bad to lose a client, especially, in the conditions of the global financial crisis. This case is going to be solved in a mutually beneficial way for both companies.
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