Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • April 2009 (Revised June 2010)
  • Case
  • HBS Case Collection

Supply Chain Partners: Virginia Mason and Owens & Minor (A)

By: V.G. Narayanan and Lisa Brem
  • Format:Print
  • | Pages:27
ShareBar

Abstract

Virginia Mason Medical Center (VM) hired Owens & Minor (O&M) as its alpha vendor for medical/surgical supplies in 2004. By 2005, O&M was performing Just-in-Time and Low Unit of Measure services for VM, but they believed the pricing model in the industry was outdated. VM and O&M partnered to create the Total Supply Chain Cost (TSCC) pricing program, an activity-based model that assigned all the cost drivers of distribution and inventory handling to VM, but also assured O&M of a profit. The TSCC incented VM to streamline its distribution activities, since these would directly impact its fee. After beta testing the TSCC for one year, VM's Daniel Borunda and O&M's Michael Stefanic believed that TSCC was a better and more cost-effective pricing model, but could they convince their companies to continue to invest in TSCC?

Keywords

Activity Based Costing and Management; Price; Distribution; Supply Chain Management; Medical Devices and Supplies Industry

Citation

Narayanan, V.G., and Lisa Brem. "Supply Chain Partners: Virginia Mason and Owens & Minor (A)." Harvard Business School Case 109-076, April 2009. (Revised June 2010.)
  • Educators
  • Purchase

About The Author

V.G. Narayanan

Accounting and Management
→More Publications

Related Work

    • April 2010 (Revised September 2011)
    • Faculty Research

    Supply Chain Partners: Virginia Mason and Owens & Minor (A) (Abridged)

    By: V.G. Narayanan and Lisa Brem
Related Work
  • Supply Chain Partners: Virginia Mason and Owens & Minor (A) (Abridged) By: V.G. Narayanan and Lisa Brem
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College