Owens
Technische Universität München
Management Accounting
-Case Study-
Harvard Business Case
Case Study: Owens & Minor
Structure of the Case Study
1. 2. 3. 4. 5.
O&M: Company Profile Costing and Pricing at O&M The Case O&M‘s Proposal Solution of the Case-Questions
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Owens & Minor, Inc: Company Profile Headquarter: Mechanicsville, Virginia, U.S Revenue 2010: $ 8.12 billion Number of employees 2010: 4,800
One of the leading distributors of medical and surgical supplies 200,000 products from about 1,200 manufacturers, e.g. gloves, wound closure devices, sterile procedure trays, intravenous products, operating room items, etc
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Owens & Minor, Inc: Company Profile Core Business-Process:
Services (Consulting, Logistics Service, etc. )
Manufacturer Manufacturer
Bulk Products Individual Order‐ Delivery
Manufacturer Manufacturer
Customer
Customers: primarily hospitals, healthcare systems, group purchasing organizations (= buying groups of hospitals) and the federal government
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Situation: Change in Customer-Behaviour Initially: Service stopped at the hospital‘s loading door: pallets with high number of units Now: low-unit-of-measure or stockless systems become popular at customers: e.g. plastic totes that go directly to the nursing and surgical units, bypassing the entire storeroom process Increasing service-level
Questions for O&M: What are the costs of the service? How to price the service appropriately?
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Activity-Based Costing at O&M (introduced at O&M in 1994) Several activites (= Cost Drivers) affect costs per customer and hence customer profitability:
Type of service requested Number of lines per purchase order Number of purchase orders generated per month
Cost Drivers
Number of
Management Accounting
-Case Study-
Harvard Business Case
Case Study: Owens & Minor
Structure of the Case Study
1. 2. 3. 4. 5.
O&M: Company Profile Costing and Pricing at O&M The Case O&M‘s Proposal Solution of the Case-Questions
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Owens & Minor, Inc: Company Profile Headquarter: Mechanicsville, Virginia, U.S Revenue 2010: $ 8.12 billion Number of employees 2010: 4,800
One of the leading distributors of medical and surgical supplies 200,000 products from about 1,200 manufacturers, e.g. gloves, wound closure devices, sterile procedure trays, intravenous products, operating room items, etc
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Owens & Minor, Inc: Company Profile Core Business-Process:
Services (Consulting, Logistics Service, etc. )
Manufacturer Manufacturer
Bulk Products Individual Order‐ Delivery
Manufacturer Manufacturer
Customer
Customers: primarily hospitals, healthcare systems, group purchasing organizations (= buying groups of hospitals) and the federal government
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Situation: Change in Customer-Behaviour Initially: Service stopped at the hospital‘s loading door: pallets with high number of units Now: low-unit-of-measure or stockless systems become popular at customers: e.g. plastic totes that go directly to the nursing and surgical units, bypassing the entire storeroom process Increasing service-level
Questions for O&M: What are the costs of the service? How to price the service appropriately?
© Gunther Friedl – WS 11/12
Case Study: Owens & Minor
Activity-Based Costing at O&M (introduced at O&M in 1994) Several activites (= Cost Drivers) affect costs per customer and hence customer profitability:
Type of service requested Number of lines per purchase order Number of purchase orders generated per month
Cost Drivers
Number of