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Logistics - BUSM57951 Assignment 3; Marked out of 60; Value for Semester is 10%; see Rubric for more specific allocation of marks Due: See SLATE for deadlines: an on-line submission is all that is required. Late penalty: 20% after the due time and date, and 20% per calendar day thereafter, per program policies Requirements: 1) Small Group assignment - group may be 1-4 people - adhere to academic honesty policy 2) Computer generated, with your names in file name and on each document 3) Use standard MS software only. i.e. no special graphic, video, etc. software 4) 1200 to 1500 words 5) Write a report as Joe Matus to the Director of Materials Management, and the VP Finance and Support Services: a. assume the same basic situation as in 1997 with 2 well known local suppliers; assume the existing suppliers' claims of bacteria elimination are all based on 1 year old lab tests, done by the suppliers and that the lab tests have been provided to you and your quality control department; b. Update the situation by providing one additional current article on "Super Bugs": C. Summarize the situation, and request time and resources to properly research the available anti-bacterial soaps, specifying what your role would be and what other hospital resources you are requesting. d. Layout a timeline and a decision making process, which will lead to supplier/product qualification: e. Assume that Bergman, Altrex and ChemCare are approved through the above process, but their prices are now (Bergman = $60.50, Altrex = $75.00, Dolphin - $53.00, Chem Care - $57.00. Also assume you find one additional acceptable (100% effective, feel and smell are OK) supplier, Asia AntiBacterial Corp., based in Hong Kong; the Hong Kong company wants a 2 year commitment, quarterly shipments, net 30 terms and a price of $70.00 USD per 10L bottle; payment terms are FOB Hong Kong; shipping costs per shipment are $150; f. Describe how you would proceed to a contract with one or more suppliers, attempting to achieve excellent prices and service (often implying single sourcing and long term commitments) while allowing for the possible development of new bacteria or mutations of existing bacteria. Address the communication issues in the case, but take a broader point of view NOTE: do not do research on Biochemistry: your job is to present the issues and ask for appropriate (Cross Functional Teams and/or SME's) technical assistance: as Purchasing Officer vou are responsible for organizing HILLVIEW HOSPITAL: THE HANDSOAP DECISION Cara Maurer prepared this case during the 1997 Case Writing Workshop solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation The author may have disguised certain names and other identifying Information to protect confidentiality Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. This material is not covered under authorization from CanCopy or any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright 1997, Ivey Management Services Version: (A) 2002-10-25 In early January 1997, Joe Matus, purchasing officer at the Hillview Hospital in London, Ontario, was reviewing four suppliers' quotes for antiseptic handsoap. Joe had asked for new quotes after receiving a large number of complaints from hospital staff about sudden problems with the current handsoap. Testing revealed that the current supplier had changed the soap's formulation without informing the hospital. HILLVIEW HOSPITAL London, a city of 350,000 in Southwestern Ontario, was renowned for the quality of its main hospitals: Hillview Hospital, Victoria Hospital, University Hospital, Parkwood Hospital, St. Joseph's Health Care Center, Childrens' Hospital of Western Ontario and the London Psychiatric Hospital. Founded in 1894, Hillview Hospital was a chronic care hospital, specializing in the areas of complex care, rehabilitation and geriatrics. Hillview was one of London's large employers with 658 full-time and 543 part-time employees. BACTERIA INFECTIONS In recent months several newspaper articles had printed reports on mutating bacteria, known as MRSA and VRE, that had become resistant to antibiotics (Exhibit 1). Although these bacteria were not life-threatening to a healthy person, they could be fatal for sick and already weakened people. Therefore, hospitals had to pay very close attention to controlling these bacteria by using soaps and cleaners that eradicated them completely. Hillview Hospital used about 4,500 litres of handsoap per year from 1,100 soap dispensers located throughout the hospital. THE PURCHASING DEPARTMENT Joe Matus, a graduate from the University of Western Ontario, had been at Hillview in his current position of purchasing officer in the material management department for two and a half years. (Refer to Exhibit 2 for an organizational chart.) Purchase decisions were based on comparisons of all suppliers that provided a quote. If a difference in price was five per cent or less, preference was given to local suppliers. The hospital wanted payment terms of net 30 to optimize cashflow. THE HANDSOAP PURCHASING DECISION Hillview had had a long-term, problem-free relationship with its current antiseptic handsoap supplier, Bergman Labs. When several staff members complained that the soap was suddenly clumping up in the dispensers and was not cleaning as well as before, Joe Matus questioned the supplier about the soap. Bergman Labs admitted to having changed the formulation of the soap without informing the hospital. Joe was very concerned about this lack of communication between Hillview and its supplier since consistent quality and guaranteed patient safety were major concerns for the hospital. Following the incident, Joe had asked for new quotes and was now comparing the four supplier responses he had received. Logistics - BUSM57951 Assignment 3; Marked out of 60; Value for Semester is 10%; see Rubric for more specific allocation of marks Due: See SLATE for deadlines: an on-line submission is all that is required. Late penalty: 20% after the due time and date, and 20% per calendar day thereafter, per program policies Requirements: 1) Small Group assignment - group may be 1-4 people - adhere to academic honesty policy 2) Computer generated, with your names in file name and on each document 3) Use standard MS software only. i.e. no special graphic, video, etc. software 4) 1200 to 1500 words 5) Write a report as Joe Matus to the Director of Materials Management, and the VP Finance and Support Services: a. assume the same basic situation as in 1997 with 2 well known local suppliers; assume the existing suppliers' claims of bacteria elimination are all based on 1 year old lab tests, done by the suppliers and that the lab tests have been provided to you and your quality control department; b. Update the situation by providing one additional current article on "Super Bugs": C. Summarize the situation, and request time and resources to properly research the available anti-bacterial soaps, specifying what your role would be and what other hospital resources you are requesting. d. Layout a timeline and a decision making process, which will lead to supplier/product qualification: e. Assume that Bergman, Altrex and ChemCare are approved through the above process, but their prices are now (Bergman = $60.50, Altrex = $75.00, Dolphin - $53.00, Chem Care - $57.00. Also assume you find one additional acceptable (100% effective, feel and smell are OK) supplier, Asia AntiBacterial Corp., based in Hong Kong; the Hong Kong company wants a 2 year commitment, quarterly shipments, net 30 terms and a price of $70.00 USD per 10L bottle; payment terms are FOB Hong Kong; shipping costs per shipment are $150; f. Describe how you would proceed to a contract with one or more suppliers, attempting to achieve excellent prices and service (often implying single sourcing and long term commitments) while allowing for the possible development of new bacteria or mutations of existing bacteria. Address the communication issues in the case, but take a broader point of view NOTE: do not do research on Biochemistry: your job is to present the issues and ask for appropriate (Cross Functional Teams and/or SME's) technical assistance: as Purchasing Officer vou are responsible for organizing HILLVIEW HOSPITAL: THE HANDSOAP DECISION Cara Maurer prepared this case during the 1997 Case Writing Workshop solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation The author may have disguised certain names and other identifying Information to protect confidentiality Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. This material is not covered under authorization from CanCopy or any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright 1997, Ivey Management Services Version: (A) 2002-10-25 In early January 1997, Joe Matus, purchasing officer at the Hillview Hospital in London, Ontario, was reviewing four suppliers' quotes for antiseptic handsoap. Joe had asked for new quotes after receiving a large number of complaints from hospital staff about sudden problems with the current handsoap. Testing revealed that the current supplier had changed the soap's formulation without informing the hospital. HILLVIEW HOSPITAL London, a city of 350,000 in Southwestern Ontario, was renowned for the quality of its main hospitals: Hillview Hospital, Victoria Hospital, University Hospital, Parkwood Hospital, St. Joseph's Health Care Center, Childrens' Hospital of Western Ontario and the London Psychiatric Hospital. Founded in 1894, Hillview Hospital was a chronic care hospital, specializing in the areas of complex care, rehabilitation and geriatrics. Hillview was one of London's large employers with 658 full-time and 543 part-time employees. BACTERIA INFECTIONS In recent months several newspaper articles had printed reports on mutating bacteria, known as MRSA and VRE, that had become resistant to antibiotics (Exhibit 1). Although these bacteria were not life-threatening to a healthy person, they could be fatal for sick and already weakened people. Therefore, hospitals had to pay very close attention to controlling these bacteria by using soaps and cleaners that eradicated them completely. Hillview Hospital used about 4,500 litres of handsoap per year from 1,100 soap dispensers located throughout the hospital. THE PURCHASING DEPARTMENT Joe Matus, a graduate from the University of Western Ontario, had been at Hillview in his current position of purchasing officer in the material management department for two and a half years. (Refer to Exhibit 2 for an organizational chart.) Purchase decisions were based on comparisons of all suppliers that provided a quote. If a difference in price was five per cent or less, preference was given to local suppliers. The hospital wanted payment terms of net 30 to optimize cashflow. THE HANDSOAP PURCHASING DECISION Hillview had had a long-term, problem-free relationship with its current antiseptic handsoap supplier, Bergman Labs. When several staff members complained that the soap was suddenly clumping up in the dispensers and was not cleaning as well as before, Joe Matus questioned the supplier about the soap. Bergman Labs admitted to having changed the formulation of the soap without informing the hospital. Joe was very concerned about this lack of communication between Hillview and its supplier since consistent quality and guaranteed patient safety were major concerns for the hospital. Following the incident, Joe had asked for new quotes and was now comparing the four supplier responses he had received