Supply Chain 101: Distribution vs Direct Purchasing

Have you ever been working on a project and discovered you don’t have all the supplies you need? Maybe you’ve been in the midst of preparing a meal and realized you are missing an ingredient? This creates a situation where either you can’t finish or you need to quickly find a substitute.

When healthcare providers are caring for a patient, it’s important that the supplies they need are readily accessible. In an efficient supply chain, the supplies are available and the provider can continue to care for the patient.

However, with the complexities of supply chain, there are many points throughout the procurement process that can cause delays, preventing the delivery of supplies when they are needed. This can cause frustrations for providers and be time consuming as they track down supplies or search for alternative methods. Since having the right supplies is a key part to providing quality care, it’s important to streamline the supply chain to make it as efficient as possible.

There are multiple possibilities for the procurement of medical supplies. Two common supply chain options are to either partner with a distributor or directly purchase from a manufacturer. With so many factors to consider, it can be overwhelming trying to determine the best route for a health system. Below are four reasons to choose distribution versus direct purchasing:

1. Relationship Management
2. Inventory
3. Delivery
4. Lowest Total Cost

Relationship Management
In order to have the right supplies available, a healthcare provider will likely need to have access to hundreds of products coming from many different suppliers. Purchasing these products direct from suppliers will require the provider to have multiple contacts, which requires more time.

Choosing a medical supply distributor can streamline the process, creating efficiencies and saving time. When a distributor understands the needs of the provider and works closely with supplier partners, they can act on behalf of the provider to ensure that everyone focuses on the same supply chain goals. This creates a communication pathway that facilitates having the right product on hand so providers can focus on the patient.

Inventory
In addition to streamlining communication and focusing on the same goals, distributors can play a major role in the management of medical supply inventory. Since a distributor works with multiple suppliers, they become a single source avenue for medical supplies. In addition, while unit of measure options may be limited when purchasing direct, a distributor can provide products in a unit of measure that works best for the health system.

Even though suppliers and distributors focus attention on having the product on hand when needed, supply issues still arise. When this happens, because a distributor works with many suppliers, it is likely that they can provide alternatives until supply issues resolve. This saves time for the provider and ensures that they can continue to provide the right care.

Delivery
For health systems, receiving products and delivering them to the right location is key to getting providers the supplies they need. This process is time consuming and can become complicated when receiving product from multiple sources.

A distributor partner can streamline this process by customizing a delivery program. A delivery program can provide many efficiencies such as:

• Set Delivery Times – allowing staff to be available to receive the product
• Routine Drivers – providing consistency and understanding the individualized needs of a health system
• Customized Pallet Architecture – ensuring product is delivered in a way that supports easy processing and storage
• Hassle-Free Returns – simplifying the process so that returns are managed quickly

By partnering with a distributor, health systems can also meet minimum order requirements, receive product quickly and save on freight and other delivery costs.

Lowest Total Cost
There are many options to consider when purchasing medical supplies. In order to achieve lowest total supply chain cost, providers need partners that are working toward a common goal - providing the right products in the most efficient manner possible. To accomplish this, it’s important to choose a partner that focuses on flexibility, transparency, customization and choice. By focusing on these factors and working with supplier partners to manage thousands of supplies, distributors can provide the supply chain efficiencies needed to deliver lowest total cost.

Concordance Healthcare Solutions is focused on providing distribution services to the entire continuum of care. We’re dedicated to working with our customers and supplier partners to create the best supply chain solutions in an effort to ensure that healthcare providers have the ability to provide the right care to patients at the time of need. Contact us to learn more.