Two distinct markets, several supply options

Tuesday, September 30, 2003

TOLEDO, Ohio – It’s hard enough to manage inventory at one HME company serving one market. Imagine, then, having Bob Brown’s scope of responsibility: handling all the supplies for two companies in two different markets.

Brown is the resident purchasing manager for both Young Medical Equipment and Toledo IV Care. Among his duties is keeping track of 2,500 SKUs for Young and 600 SKUs for Toledo IV. Two separate companies, two separate markets.

“They’re both unique animals, that’s for sure,” he said. “I’ve been at this since 1996 and have constantly looked for ways to make my life easier.”

His search netted several outsourcing options – consignment purchasing, drop shipping and distribution through Mundelein, Ill.-based Medline Industries and Valley Forge, Pa.-based AmerisourceBergen for Young; drop shipping and distribution through Ameri-sourceBergen and Somerset, Mass.-based Medical Specialties for Toledo IV.

“The key word is partnership,” Brown said. “I prefer to partner with distributors and wholesalers. They are more than willing to negotiate with us.”

To even reach the point where he could take advantage of vendor inventory programs, Brown said he studied the dynamics of both companies with owner Tim Pontius. Specifically, they looked at whether they needed to make some internal changes before outsourcing distribution. As it turned out, they did.

“When I started in 1991, we were into many different markets,” Brown said. “However, we determined that we’re best at respiratory, rehab, DME, orthopedics and infusion. So we streamlined and dropped diabetic supplies, urologicals and wound care.”

Consequently, Brown learned which products are conducive for outsourcing and which ones should be handled in-house. For instance, enteral nutrition and some rehab items can be drop-shipped.

Through Medline, Young sells crutches, briefs, bath benches and canes on consignment. Besides the advantage of not paying for a product until it is sold, consignment also provides a cushion of extra stock, Brown said.

“It allows me to have more on hand than I normally might so if there’s a run on a product, I have it,” he said.

Infusion pump reprocessing from Medical Specialties is a valuable service for the IV side, Brown said.

“When therapy is completed, they send out a driver and return it to the manufacturer – we don’t have to make the trip,” he said. “They do the cleaning and send it back to us.”

AmerisourceBergen, which handles DME and infusion, offers the lowest price unless otherwise specified, he said, which in the case of Baxter products “is lower than we could buy direct from the manufacturer.”

Brown still buys direct as well, using contracts through Lubbock, Texas-based MED Group.