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Pacific Healthcare’s Supply Management Case Study


Major Facts

Pacific Healthcare has over 1,500 beds. The facility offers evidence-based services to many patients in Santa Barbara County. The institution has been using X-ray films from Kodak. Barney Rubble is currently the facility’s Corporate Director of Supply Management. Mr. Rubble plans to select a cheaper a supplier. This change of policy is aimed at supporting the facility’s future goals. Kodak has been providing different services such as maintenance and furnishing of X-ray equipment. The biggest concern facing Barney Rubble is how to get quality supplies while at the same time minimizing the facility’s overall costs (Langabeer, 2008).

Major Problem

Can Pacific Healthcare find a single-source supplier of quality X-ray films while at the same time reducing its overall expenses?

Possible Solutions

Alternatives to Consider

The current goal is to ensure the facility gets a single-source supplier. The contract is expected to last one year. As well, the institution is looking for quality films. The institution is also planning to reduce costs for various medical supplies. Barney Rubble should therefore consider various alternatives in order to address this problem in a professional manner (Balaraman & Kosalram, 2013). The first alternative is to target a new supplier such as Fuji or 3M. Studies indicate that such companies produce acceptable X-rays films. This alternative will make it possible for the facility to minimize its expenses. However, such films might not be of the best quality. As well, the companies will not offer the required maintenance practices. The second alternative is to purchase such supplies from companies such as Agfa and Dupont. Each of these companies produces quality films that can support the facility’s goals.

The X-ray films marketed by these two firms are cheaper compared to the ones marketed by Kodak. The company will save a lot of money. Such savings can be used for maintenance purposes. However, the firm might be unable to get qualified personnel to service its X-ray equipment. This move can be disastrous and eventually result in numerous losses (Mathew, John, & Kumar, 2014). The other option should focus on the services provided by Kodak. This company is also the leading marketer of high-quality X-rays films. It is agreeable that the move will address the organization’s problem. The healthcare institution can therefore continue obtaining its films from Kodak. The above options can address the current problem facing Pacific Healthcare. Barney Rubble should therefore identify the best alternative in order to support the facility’s goals.

Sourcing Decisions

The current problem facing Pacific Healthcare arises from its supply management practices. According to the facility’s policy, procurement decisions should be made by the Corporate Director of Supply Management. However, different medical practitioners have been making various sourcing decisions. This practice has made it impossible for Barney Rubble to address the current situation at the facility. This situation explains why the organization should support every supply policy (Heine & Maddox, 2012).

The death of Thurston Howell has resulted in new problems at the organization. The facility should therefore appoint specific individuals who will make the best sourcing decisions. Several reasons can be used to support this practice. For example, some medical personnel may decide to focus on their personal interests. This move will eventually affect the future of the facility. The approach “can promote various malpractices such as corruption and lack of transparency” (Leone & Rah, 2012, p. 18). The practice will eventually affect the integrity of the organization’s supply policies.

The supply policies should identify the right people to make appropriate decisions. The targeted department will acquire quality materials in order to fulfill the needs of the facility. This idea will make it possible for the firm to focus on specific changes in the external market. Different market changes can affect the future goals of the healthcare facility. The “facility should therefore have a single department whose role is to make appropriate sourcing decisions” (Leone & Rah, 2012, p. 74). Such decisions should be implemented accordingly depending on the changes experienced in the market. Several factors can also affect the facility’s sourcing decisions.

Staying with Kodak: Advantages and Disadvantages

Pacific Healthcare is a leading provider of quality health services in Santa Barbara County. The facility’s partnership with Kodak is something that has continued to support the best goals. Kodak supplies X-ray films to this facility. New supply strategies have been proposed at the company for different medical supplies. The facility can benefit significantly from its agreement with Kodak. To begin with, the healthcare organization will always get quality X-ray films. Such films have the potential to support the quality of health services availed to different patients. As well, the decision to stay with Kodak will ensure the institution gets the best maintenance services (Langabeer, 2008). The facility will also get substantial discounts from the Kodak. However, some disadvantages might emerge if Pacific Healthcare stays with Kodak. For example, the organization might continue to pay more for the X-ray films. This practice can eventually affect the hospital’s profitability.

The other alternative is for Pacific Healthcare to identify a new supplier. This move will ensure the institution gets cheaper X-rays films. The approach can “reduce the institution’s operational costs” (Langabeer, 2008, p. 65). The facility will also be able to identify new suppliers in order to reduce costs. However, the strategy can produce several disadvantages. For example, the facility will have to incur more expenses whenever maintaining and servicing its X-ray equipment. The use of new X-ray films can eventually discourage more patients. This situation explains why Barney Rubble should make appropriate decisions. Such decisions will ensure every hospital gets quality supplies in a timely manner. The approach will eventually make the institution successful.

Obtaining Reduced Film Prices

The case study indicates that Thurston Howell always wanted the institution to acquire its X-ray films from Kodak. Thurston Howell was the institution’s director of radiology. During his time, the director failed to authorize the use of X-ray films from other companies. Barney Rubble is currently the facility’s Corporate Director of Supply Management. He is the one who should monitor the procurement of various supplies. Rubble should have used appropriate measures in order to obtain reduced prices for Pacific Healthcare’s X-ray films. Mr. Rubble should have collaborated with Howell in order to have a proper procurement strategy. The team should have “discussed with Kodak in order to have reduced prices for its films” (Hopp & Lovejoy, 2012, p. 37). This approach would have succeeded because Pacific Healthcare was one of Kodak’s leading customers. The “loyalty portrayed by the facility could have encouraged Kodak to market its films at a discounted price” (Toba, Tomasini, & Yang, 2008, p. 53).

The two individuals should have used new approaches in order to address this issue. For instance, Thurston Howell should have obtained maintenance services from other providers. This approach would have forced Kodak to establish a new agreement with the institution. As well, Mr. Howell should have identified other potential suppliers such as Dupont, Agfa, and Fuji. This strategy could have reduced the level of dependence on Kodak’s X-ray films. The facility’s “important goal is to get quality resources and eventually reduce its operational costs” (Heine & Maddox, 2012, p. 5). This strategy would have identified new procurement practices at the facility. New agreements could have also been made with Kodak in order to support the needs of the facility. The availability of cheaper X-rays films can eventually make the healthcare facility successful.

Choice and Rationale

The facts presented in the case study explain why Barney Rubble should consider a new supplier for different medical resources. The supplier should be able to deliver quality but cheaper X-rays films. Companies such as Dupont and Agfa should be considered because their products are much cheaper (Heine & Maddox, 2012). The savings obtained from this new contact can be used to service and furnish the facility’s X-ray equipment. This is the case because the facility uses over 1,500 sheets of X-ray film every day. The current contract between Kodak and Pacific Healthcare is not sustainable.

Implementation

A powerful plan should be used to implement the above choice. Barney Rubble should make appropriate consultations with these companies. The next approach is to identify competent individuals who can service the organization’s equipment. The Finance Department should also be consulted in order to offer the best suggestions. The approach will ensure Rubble’s choice is sustainable and profitable (Balaraman & Kosalram, 2013). New policies should be implemented in order to streamline every sourcing process. The hospital will minimize its costs and eventually realize its objectives.

Reference List

Balaraman, P., & Kosalram, K. (2013). E-Hospital Management & Hospital Information Systems: Changing Trends. International Journal Information Engineering and Electronic Business, 1(1), 50-58.

Heine, P., & Maddox, N. (2012). Hospital Management Reform: A Step to Healthcare Reform. Journal of Management and Marketing Research, 1(1), 1-7.

Hopp, W., & Lovejoy, W. (2012). Hospital Operations: Principles of High Efficiency Health Care. New York, NY: FT Press.

Langabeer, J. (2008). Health Care Operations Management. Burlington, MA: Jones and Bartlett Learning.

Leone, G., & Rah, R. (2012). Supplies Management in the OR. New York, NY: Flow Publishing.

Mathew, J., John, J., & Kumar, S. (2014). New Trends in Supply Chain. Operations Management, 1(1), 1-10.

Toba, S., Tomasini, M., & Yang, H. (2008). Supply Chain Management in Hospital: A Case Study. California Journal of Operations Management, 6(1), 49-55.

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