DRAFT
BASSANO CORP.: STITCHING UP THE WOUNDS OF POOR PROJECT
MANAGEMENT
Josh Underwood wrote this case under the supervision of Professor Scott Loveland solely to provide material for class discussion.
The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
© Josh Underwood and Scott Loveland
Version: 2025-04-22
This was not how February of 2024 was supposed to start for Claudia Bernardi. Bernardi was the recently
promoted Director of Operations at Bassano Corp. (Bassano) and was anticipating another stellar year for
the medical products manufacturer based in Houston, Texas. But just months into her role, Bernardi was
already handling a major crisis: Bassano’s implementation of a new enterprise resource planning (ERP)
software had gone awry, and it had been two weeks since any customer orders had been shipped. As
complaints piled up and pressure grew, it fell to Bernardi to clean up the mess. With her recommendations
to Bassano’s CEO due imminently, Bernardi had to quickly devise a plan to get orders flowing once again
and chart the path forward for the company.
BASSANO CORP.
Bassano was a regional manufacturer of wound care products including bandages, adhesives, and other
dressings. In 2023, Bassano had sales of USD $317 million and a net profit of $18 million (see Exhibits 1
and 2).i Bassano offered an array of over 1,500 different products and earned an average gross profit margin
of 45 per cent on its sales. Although a newer entrant to the market, Bassano had grown impressively in
recent years. This growth, largely fueled by acquisition, transformed Bassano into an important industry
player in the American South. In addition to its main production facility and warehouse in Houston, Bassano
had warehouses in San Bernardino, California and Atlanta, Georgia.
Sales and Distribution Strategy
Bassano’s warehouses formed an important part of its sales and distribution strategy. Bassano maintained
a 99 per cent service level and guaranteed next day shipping to its downstream customers.ii Therefore, a
large physical footprint was necessary to store inventory and ensure timely arrival. Bassano maintained
relationships with several distributors of medical products who were responsible for marketing Bassano’s
products to end consumers (Exhibit 3). These distributors also had service levels of 99 per cent. Bassano’s
warehouses used a periodic review system to re-stock inventory. Under this system, the warehouses placed
orders with the manufacturing facility once per week and had a lead-time for delivery of one week.
i
ii
All figures expressed in U.S. Dollars (USD) unless otherwise noted.
Service level referred to the probability of not running out of stock during an order cycle.
In addition to a robust distribution network, Bassano employed a large workforce of salespeople who visited
end consumers like doctors and nurses. During these visits they cultivated interest in Bassano’s products
by showcasing new product developments, ease of use, and healing benefits. These salespeople were paid
a commission of 10 per cent of gross profit on products sold within their respective sales territory. Sales
commissions were paid 14 days after the products were delivered. On average, it took 24 hours for a product
to be delivered to a distributor from the warehouse.
THE WOUND CARE PRODUCT INDUSTRY IN THE UNITED STATES
In 2023, the American wound care product industry was valued at $2.8 billion and was growing at a rate of
3.3 per cent.iii Competitors in the industry could be segmented into two categories: incumbent firms and
independent firms. There were two incumbent firms: 3M, with revenues of $644 million, and Smith &
Nephew Plc, with revenues of $714 million. These firms were multinational in scale, were long-standing
industry players, and often had diversified product offerings. Independent firms, like Bassano, were newer
entrants and smaller in scope.
End customers in the wound care industry could be sorted into three groups: hospitals (50.3 per cent of the
market), long-term care homes (13.2 per cent of the market), and independent clinics (36.5 per cent of the
market).iv These buyers purchased goods such as bandages, gauze, tape, and other supplies to be used in
patient care. The use of such products was essential to positive patient outcomes. Wound care products
were highly specialized and were only sold to corporate buyers, not the general public.
Each of the three main customers had specific and differentiated criteria for purchasing supplies. Hospitals
most often prioritized the quality of products and, as such, were willing to pay a premium. Conversely,
long-term care homes valued low prices to minimize facility costs. The buying behavior of independent
clinics was more difficult to quantify because of the wide diversity of use cases, locations, and business
strategies. However, independent clinics generally valued speed of delivery and excellent customer service.
A new trend within the industry concerned the rise of hospital buying groups: the practice of several
hospitals (ex., those within a given city or county) coordinating their purchases to take advantage of their
collective size, thus deriving greater benefits such as negotiating leverage or volume discounts. These
buying groups enabled hospitals to obtain the high-quality products they desired at discounted rates.
Bassano executives felt most consumer priorities favored incumbent firms. They benefitted from high
market perceptions of quality and exceptional brand equity. Furthermore, their large size meant they had a
higher willingness and ability to offer product discounts while withstanding lower margins. Bassano
responded by competing on its attentive and responsive customer service, hence its large physical footprint
of warehouses and its 99 per cent order in-stock rates.
BACKGROUND TO THE IMPLEMENTATION
Near the end of the 2022 fiscal year, Bassano’s senior managers agreed it was time for the company to
source a new enterprise resource planning (ERP) system. ERP software systems streamline core business
processes – such as finance, HR, manufacturing, procurement, supply chain, and sales – by providing a
iii
Federico Irigoyen, Wound Care Product Manufacturing in the US, IBISWorld, July 2024, https://my-ibisworldcom.proxy1.lib.uwo.ca/us/en/industry-specialized/OD4099/about. All figures in USD unless otherwise noted.
iv
Ibid.
unified platform that ensures a single source of truth for data accuracy. Prior to this point, Bassano had over
65 separate systems which varied by business function and location. As a result, data from many activities
was effectively stored in a silo, restricting the ability of different operations to co-ordinate effectively.
Equally as troubling, it was impossible for senior management to view accurate or up-to-date statistics
about vital information such as inventory balances or shipping times.
Bassano’s patchwork technology system had accumulated over time as Bassano acquired new companies
and grew rapidly. Other priorities, such as securing sales contracts, were more important at the time and
software integration fell by the wayside. However, given that Bassano had been considering national
expansion, it seemed like a good time to consolidate Bassano’s systems. The new ERP would consolidate
the 65 systems into one integrated platform, greatly improving efficiency and information flow.
Bassano designated one member of senior leadership, Steve Williams, to oversee the transition. To assist
him, a committee of employees was also struck. These employees were sourced from different business
functions and locations and would spend 10-15 per cent of their time on the software implementation while
spending the remaining 85-90 per cent of their time on their regular responsibilities. Because Bassano had
many business functions (research and development, procurement, manufacturing, sales, distribution, etc.)
across its three locations, this employee committee became quite large.
Although Williams had no specific background in project management, he decided that no assistance from
outside consultants would be necessary, reasoning that “most consultants are just a waste of time and
money”. Williams also decided that one year would be a sufficient timeframe to procure and implement the
software and pushed aggressively to meet this target. Bassano accepted a proposal from a leading
multinational ERP provider and began the work of adopting the software.
Outside of the initial kick-off and the first scoping meeting, Bernardi was not consulted much on the project.
Information requests were minimal and Bernardi’s questions never seemed to be answered. This seemed to
be the case for most people in the company. Worse, some even complained that their suggestions were
brushed off or outright ignored. It seemed as if Williams and the committee had their own ideas about what
the ERP should be and should do, instead of listening to what frontline voices had to say. She could tell
that the tight timeline was pushing the project toward failure. There simply wasn’t enough time to do
everything necessary – especially with an inexperienced leader at the helm.
By January 2024, the agreed-upon deadline of one year arrived. It was time to put the ERP into operation,
despite protests in some corners that Bassano was not prepared. Williams decided that a ‘plunge’
implementation would be pursued, wherein the system would come online at one time for all areas of the
company. In an ideal world, this strategy would be akin to flipping a switch, seamlessly moving from one
system to another. This was done as a time-saving effort and partially because Bassano had confidence in
its ability to successfully manage a project of this scale.
Unfortunately, this confidence may have been misplaced. On the day of the implementation, known as the
‘go-live date’, the ERP crashed almost immediately. Because of the plunge implementation strategy, all
product functions such as ordering, shipping, tracking, and more became almost impossible to perform.
THE PROBLEM
It had been two weeks after the initial failure and despite Bassano’s best efforts, continued crashes and
glitches rendered the ERP inoperable. Therefore, it had been two weeks since any orders had been shipped
and two weeks since any customers had received inventory.
Since the failure, the barrage of angry and worried customers contacting Bernardi had only grown. Bassano
differentiated itself based on its fast, attentive service, so the crisis presented a significant threat to the
livelihood of Bassano’s customers and its selling strategy. Bassano’s customers were not the only angry
stakeholders – salespeople, who relied on product sales and deliveries to earn commissions, were incensed
at their lost income and the potential for long-term damage to their sales prospects, credibility and reputation
in the industry.
To make matters worse, Bernardi was unsure of when the new ERP would finally be functional. It could be
a week, a month, or a year before the system would perform as expected. This variability would weigh
heavily on Bernardi’s thoughts as she planned a course of action. She had developed several alternatives to
help her start shipping orders in the ERP’s absence, and wondered which she should recommend pursuing.
THE ALTERNATIVES
Rapid Response Team
The first choice available to Bernardi involved the formation of a rapid response team consisting of hired
short-term labour. This team would help staff at each of the three warehouses co-ordinate ordering and
shipping in the absence of computerized processes.
Bernardi figured that 30 labourers per warehouse would be sufficient. The team would be formed of 15
order takers, ten packers, and five accountants. The order takers would be responsible for organizing
outgoing demand and the contents of each order; the packers would assist with preparing and shipping the
orders on the warehouse floor; and the accountants would manage billing and inventory counting.
Bernardi began setting out the costs of preparing rapid response teams in each warehouse. The hourly wages
for order takers, packers, and accountants, respectively, were: $32.50, $37, and $40. Additionally, each
worker would need to be paid a per diem of $80 per day and an accommodation reimbursement of $130 per
night. Short-term labourers would work in their designated cities for five days per week, traveling to their
designated warehouse to do so. Therefore, Bassano would also need to pay for travel expenses, estimated
at $1,000 per worker, per week.
Reduce Service Levels
Bernardi wondered if Bassano’s 99 per cent service level was necessary in the current environment.
Reducing the service level, she surmised, could give the warehouses time to catch up on their late orders.
This would be an especially attractive option if the outage were to be fixed soon; however, it might also
require Bernardi to hire a rapid response team if the outage were to last any longer than a few weeks. With
this proposal, Bassano’s distribution partners would be responsible for carrying more inventory. Bernardi
wondered how they would react to the change, especially considering the chaos of the past two weeks.
To quantify the impacts of this change, Bernardi sourced information on two products (Table 1). These
products were considered ‘average’ sellers amongst Bassano’s diverse product line. Bernardi wanted to
evaluate the potential impact of reducing service levels from 99 per cent to 97.5 per cent, 95 per cent and
90 per cent. She expected no changes to the periodic inventory system - warehouses would continue to
place a single order each week and operate with a one week lead time for deliveries. If she were to institute
this policy change, she needed to consider stakeholder and strategic alignment.
Table 1: Product information
Selling Price (per case)
Average Daily Orders (cases)
Standard Deviation of Demand (cases)
Product A
$48.95
50
20
Product B
$42.95
100
16
Source: Created by the case author.
Close the San Bernardino and Atlanta Warehouses
Finally, Bernardi considered the most radical option: closing Bassano’s warehouses in San Bernardino and
Atlanta. Bernardi had been thinking of doing this even before the ERP crisis. Under this plan, only
Bassano’s main Houston warehouse would remain in operation. The inventory reductions from closing two
warehouses would likely be significant, and Bernardi wondered how much money Bassano would save.
She also wondered if it was the optimal time to execute such an ambitious plan, especially since morale and
organizational functionality were both at all-time lows. However, she knew that bold action would likely
be needed to return Bassano to efficiency and profitability.
CONCLUSION
Bernardi felt as if the weight of the company had been placed upon her shoulders – it was certainly a big
responsibility to not just spearhead Bassano’s recovery from the software failure, but also to plan its
operational strategy moving forward. Bernardi knew that whatever she recommended would require
substantial supporting analysis alongside a detailed implementation plan – Bassano’s CEO would not
tolerate any more missed deadlines or inaccuracies. The uncertain timeline added to the complication, so
sensitivity analysis would be essential.
EXHIBIT 1:
BASSANO CORP.
CONDENSED CONSOLIDATED INCOME STATEMENT
Sales
Cost of Sales
Gross Profit
$
$
$
2023
316,988,000
174,723,786
142,264,214
$
$
$
2022
310,648,240
176,355,006
134,293,234
$
$
$
2021
229,879,698
123,882,169
105,997,529
SG&A Expense
EBIT
$
$
100,877,919
41,386,296
$
$
103,539,058
30,754,176
$
$
85,009,512
20,988,016
Other Expenses and
Income (net)
$
21,475,800
$
21,403,664
$
13,723,818
Pretax Income
$
19,910,495
$
9,350,512
$
7,264,198
Income Tax
$
1,906,324
$
1,667,880
$
1,429,321
Net Income After Tax
$
18,004,171
$
7,682,632
$
5,834,878
$
$
$
$
2021
35,171,594
33,606,263
30,277,779
16,325,294
Source: Created by the case author.
EXHIBIT 2:
BASSANO CORP.
SELECT BALANCE SHEET ITEMS
Cash
Accounts Receivable
Inventory
Accounts Payable
$
$
$
$
2023
31,087,614
41,969,956
49,749,030
24,604,939
$
$
$
$
2022
16,382,109
40,945,292
43,800,919
27,685,320
Source: Created by the case author.
EXHIBIT 3: BASSANO SUPPLY CHAIN
Source: Created by the case author.