February 2024 – The Journal of Healthcare Contracting
By Elizabeth Hilla, Senior Vice President, Health Industry Distributors Association
One of the easiest paths to efficiency is to get more of the products your health system needs onto the same truck. That’s why many providers partner with a prime vendor distributor to manage the acquisition and distribution of countless medical products from a variety of manufacturers. Using a prime vendor can create significant efficiencies for a healthcare provider – such as fewer purchase orders, more predictable deliveries, shorter lead times, and higher fill rates.
However, some manufacturers resist this approach, and want to handle the distribution of their own products. They may view the prime vendor distributor as a barrier between their sales team and the customer. Here are some helpful points to reassure manufacturers that distributors are useful partners for both ends of the medical supply chain – providers and manufacturers alike.
- TELL MANUFACTURERS WHY YOU USE A DISTRIBUTOR. Most likely, you picked a prime vendor distributor so that you could order, receive, and pay for products from many different manufacturers all through a single relationship. Fewer purchase orders, less receiving time, and fewer invoices to process. Your distributor may also be doing kitting or low unit of measure (LUM) services for you. Some manufacturer personnel may not fully appreciate how much staff time – and storage space – a provider saves by funneling purchases through their distributor. If that’s the case, you may need to educate them.
- SHOW MANUFACTURERS THE UPSIDE FOR THEM. Manufacturers want access to you and your team. You can reassure them you’ll still depend on their sales reps for their clinical guidance – after all, you don’t buy from the delivery driver on the loading dock. In fact, the manufacturer that partners with distribution will be able to spend more time educating your team about their products, because they are relieved of the non-sales responsibilities that distributors handle like tracking down deliveries and handling returns.
- RECOGNIZE THAT NOT EVERY PRODUCT WILL BE A GOOD FIT. As much as you might like to drive more of your purchases through your prime vendor, some products just won’t work. For frequently-purchased products, distribution is a no-brainer. On the other hand, large capital equipment and some infrequently-purchased complex medical devices are usually too costly to hold in a distributor warehouse and you’ll likely buy them direct from the manufacturer.
HIDA’s new white paper, Distribution Channel Considerations For Medical Products Manufacturers, may aid in these conversations. The paper is available on the HIDA.org website.