Prime Vendor: Getting the Most from Your Most Important Supplier

Health Industry Distributors Association


The relationship with your prime vendor is a lot like a marriage. You are in it for the long haul and if you pick the right partner, you will bring out the best in each other.

In this new column, The Journal of Healthcare Contracting will explore both new and everyday examples of the different ways distributors and supply chain executives are working together to make their committed, long-term partnerships successful. Here’s a preview of some focus areas we plan to cover, by sharing the perspectives of distribution thought leaders and provider executivesHerhe`dfd:

Physician preference item (PPI) spend. For most healthcare organizations, PPI accounts for a significant portion of spending and is rife with logistics inefficiencies. It is also an area that often is not supported by the prime vendor. Coincidence? Perhaps not. We will talk with providers who are collaborating with distributors in innovative ways to support PPI management, and see what they have learned.

Prime vendor data resources. There are a host of areas where providers are making the most of the full-service logistics solutions, sophisticated data, and customer resources their prime vendor partners can offer. We will dig deeper into how providers are adopting and adapting these resources – like customizable purchasing trends, inventory data analyses, and dedicated teams to help navigate contract pricing and tiers – to meet their needs.

Low-/logical-unit-of-measure (LUM) programs. To reach the full potential of materials management efficiency, some inventory delivery programs require close provider-distributor alignment. We will use LUM to illustrate how providers are making delivery orders in optimal quantities based on usage and other considerations, which have been shown to dramatically reduce their inventory costs.

Order standardization. Providers are finding they can consolidate purchases through one prime vendor, putting more line items onto single orders, increasing the amount of items ordered electronically, and gaining more thorough views of spending patterns, among other process efficiencies. Through provider case studies, we will show how standardizing procurement procedures can be just as lucrative as product standardization for healthcare organizations to reduce costs.

Alternative payment models. There are multiple ways to pay for distributed products and services, the most prevalent being a single, cost-plus model across all medical product categories. We will take a closer look at some of the alternative options providers are using, such as transaction- or activity-based models, to purchase higher-cost or lower-turn items.

We look forward to the opportunity of providing a forum to share strategies that enhance your prime vendor relationship, allowing your business and supply chain processes to operate with high efficiency.