Channel friction: Is it getting worse?

John Pritchard

For over 25 years I’ve been speaking to supply chain leaders on a daily basis. I’ve always been curious how large health systems buy products and services, and how they interact with their suppliers. I had hoped the last two years would have brought buyers and sellers closer together. But I’m sensing things are worse than prior to the pandemic, not better.

Prior to COVID, supply interruptions were few and far between. Trust between trade partners was high and the pool of suppliers for a category were well known. Fast forward to March 2022 and supply interruptions are a daily juggling act, buyers don’t feel they have transparent insight to vendors’ operations and IDNs are buying from organizations they had never heard of prior to the pandemic.

Recently I was speaking to a supply chain leader of a large IDN who was lamenting how one of his major suppliers continues to have supply issues with product being delivered from China. What really frustrated him was that he was not made aware of a delay until just a couple of days before the delivery date. His solution was to insist the sales representative bring an executive in from the operations team. As suppliers continue to pursue an enterprise sales model, it will be imperative to provide IDNs with an operations and logistics relationship from their key suppliers.

Conversely, suppliers are frustrated with access to IDNs. Many reasons make access to IDNs harder than ever, including many from the supply chain teams working remote, and competing priorities like supply and worker shortages. One leader from a Fortune 100 healthcare supplier told me he’s struggling to get time on his customers’ calendar for quarterly reviews where has millions of dollars of business and calls to discuss new business are next to impossible.

This perfect storm concerns me because I know IDNs can benefit from interacting with suppliers. Suppliers see how hundreds of IDNs do business every day, and they can share lessons learned on a real-time basis. But the days of suppliers steering every interaction towards more market share must stop.

Suppliers that are focused on what IDNs need help with today are the ones that will be rewarded with access. IDNs need solutions for nurse and worker safety and satisfaction, avoiding supply disruptions and any ways to prevent the spread of infection. This is today’s common ground.

Now more than ever, open communication between trade partners is needed for ascension out of the lows of the last couple of years. When speaking of the stare down between IDN supply chain leaders and suppliers, one friend often remarks, “Someone has to blink first.” I for one think it’s high time we get back together and be willing to blink on occasion.

Thanks for reading this issue of The Journal of Healthcare Contracting.

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