Essay on Supply Chain Partners: Virginia Mason and Owens &

1480 Words Nov 20th, 2013 6 Pages
Michael Stefanic, director of cost management at Owens & Minor (O&M), a medical and surgical supplies distributor and Daniel Borunda, material systems manager at Virginia Mason (VM) Medical Center came together to try to battle healthcare costs and improve the healthcare supply chain. Virginia Mason, a private non-profit healthcare organization based out of Seattle, offered both primary and specialized care and developed the Virginia Mason Production System (VMPS). The VMPS was a modified version of the Toyota Production System that helped VM work towards its goal of being a quality leader, emphasized line-level employee teamwork, and fought for a zero defect rate. The components of VMPS included value-stream mapping
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While discussing the details of the TSCC they discovered different ways to trace hidden costs that wasn’t apparent using the cost plus pricing method.


A problem that O&M faced when bringing in new customers was bringing in additional products. Increasing the number of SKUs on hand can cause O&M to lease more warehouse space and incur additional costs. One solution that could be built into the TSCC model is when bringing in new customers, O&M could propose the customers use SKUs O&M already has on hand. O&M can show the new customers savings by exhibiting the total carrying costs of each SKU and how much of the total carrying costs will be allocated to each customer using this specific SKU as compared to the costs associated with the customers using their preferred SKUs. If O&M made this proposal to all prospective customers and they were willing to use SKUs O&M already has on hand, this could be a step towards a mass standardizing of SKUs. In the end, standardizing SKUs can help both O&M and their customers cut costs.

An understanding of the “everyday lean” enterprise-wide change involves transparency with all employees involved in the process. An added improvement to the current TSCC model would be to incentivize the distribution center employees through performance bonuses based on increased efficiency in their everyday

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