Where is our industry most vulnerable?

Monday, September 30, 2002

Where is our industry vulnerable - a question many of us talk about in so many ways day-to-day. Whether it is in the government/reimbursement issues, dealer profitability or quality of the products that serve our market.

Vulnerability of our industry is on all of our minds, but we have to ask the next question... what can we do about it?

Which specific areas of vulnerability?

1. Government/Reimbursement

2. Dealer Profitability

3. Quality

4. Technology

These four areas affect every part of the channel. Our efforts/actions, no matter who we are, are our assurance that we will control or offset vulnerabilities.

Competitive bidding is an example of our government stepping in and looking for a change that from their perspective may make all the sense in the world. We all understand deeply the implications of such a change. Many in our industry, from manufacturers, to dealers, to clinicians and consumers, have all stepped up to the plate and worked very hard to inform the government of the real implications of competitive bidding.

The key question we have to ask ourselves is, are we really going to get organized as an industry to anticipate future government positions and really be aligned to lead the government to policies that help our industry and the markets we serve?

We must be very careful as an industry and ask ourselves, are we working in cooperation, with real genuine collaboration? We might say as a coalition, to protect and assure a healthy industry for all of us.

Dealer profitability hits close to everyone's core. The value of the dealers to our market and the health of this group is vital to all concerned. We all know the concepts that the North American automotive industry had to incorporate as a matter of survival over 20 years ago. Lean concepts, elimination of non-value added steps became prominent through all facets of the channel. The American Automotive manufacturers, the companies that supplied them components, all became part of the solution. We must think of our industry and the critical nature of the word survival and prosperity in our dealer base so that they can continue to serve the consumers within their communities.

What can we do about this? We can look inside our own houses first and assure that we are efficient, eliminate waste, bring value, and improve our processes. We all work hard as business people to do this everyday, can we improve? Yes. But what else beyond our own effort is required?

What about education in the areas mentioned to share the best practices that have been experienced by so many of us? What about being more mindful of the hidden costs that dealers must absorb to provide products and services to the market? Bringing about solutions in our products or services that could help to offset or reduce these costs must be our commitment.

Let's take a moment to talk about quality as an enabler of improving dealer profitability. The quality standards that our industry has accepted are not world-class, as we all know. The products we bring and the services we bring have significant room for improvement no matter who we are. Driving to raise the bar in our industry is an investment in our future. If we stop and measure where we are today, plan with actions on how to improve with a measurable plan, we can get there. And at the end of the day, so many will win. The savings that we would all enjoy, whether dollars or time, can be re-invested in our business and/or services. The consumer at the end of the day has a product and a service that brings them tremendous value in functionality and confidence to "get out there."

The last area that I would like to talk about is technology. A lack of innovation and creativity in our industry negatively impacts everyone. The need to use innovation, driving toward better ways to design/produce/deliver products is an investment that we must bring forth. The innovations of the future will again enable so many to win. The thoughtful and clever function of a product with a focus on quality, reliability, service, cost and value is strategic for all of us. Looking outside the industry for applications that can bring forward that next leap frog idea to improve people's lives is a responsibility and an opportunity for our industry worthy of pursuing.

Mike Hammes is chairman and CEO of Sunrise Medical.