1. Describe the importance of Williamson’s work for the healthcare supply chain.
ID: 330636 • Letter: 1
Question
1. Describe the importance of Williamson’s work for the healthcare supply chain.
2. Explain transaction-cost economics and how this concept relates to supply-chain management.
3. Demonstrate an understanding of the ten key insights from Oliver Williamson’s TCE model.
4. Categorize the types of supply chain present in a typical healthcare organization in terms of their associated risk to the healthcare organization
5. Integrate healthcare supply-chain principles with TCE tenets to develop a list of considerations for a typical transaction in the supply chain
6. Evaluate TCE in the context of the supply chain using the Value Chain model.
?Chapter 12 Health Care Supply Chain Management
Explanation / Answer
1. Williams Work for Healthcare supply chain is significant and clearly explains the various types of relationships a firm have with its suppliers ranging from transactions to strategic. He focuses on improving supply chain by using TCE model to access the cost of the contract, both obvious and hidden cost. Williams believes that each firm have transaction cost whether they buy a service/product or not. Therefore, his work useful because of mathematically developed models which nicely fits in working on outsourcing and finding collaborative supplier relationships in Healthcare Industry.
2. Every firm has to decide whether to work internally or outsource the service, both involves cost and its analysis is the most important. Cost can be simplest to very complex vertical integration of various services which combines the cost. Therefore, transaction cost economics is a critical area which includes monetary cost, risks, cost of manging the relationships, switching cost, distribution cost, etc. Transaction cost comprises supply chain management which manages the cost associated with distribution and logistics of product.
3.The Ten Key insights from Oliver Williams’s TCE Model are-
A. Outsourcing is a Continuum, not a destination which means that company should go for outsourcing only those activities in which they don’t have expertize and mostly complex services to avoid time and cost.
B. Contracts should be created with Mutuality for longer relationships and strategy to work with the suppliers. William focuses on Win Win approaches which have collective advantages for each player involved.
C. Company should understand the transaction attribute and the associated risk and price. Williams focus on 3 attributes which impacts risk is assets specificity, uncertainty of work and Variable frequency.
D. The more the bilateral dependencies, the more arises the need of preserving Continuity which states that Businesses are not static but dynamic and service providers should provide services matching dynamic environment.
E. Using of Contract as a Framework rather a legal weapon.
F. Developing Safeguards to prevent Defection is important at times of high risk. When things go wrong, it is necessary to defend responsibility and face risk with developed safeguards.
G. Williams suggests that predicted alignments can reduce cost of transactions.
H. Style of contracting matters a lot, therefore contracting must be done carefully and with credible terms.
I. Building trust is important. Money can be gained but trust cannot.
J. Keep the things simple. Making things complex don’t make you win rather you be stuck in difficult situations.
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