Managing Vendor Relationships

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Managing Vendor
Relationships

• Pamela Hale, CPhT, BBA

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Program Objectives

• Outline a process for managing vendor
  relationships in the pharmacy
• Explain the process of communicating your
  priorities with your vendors
• List steps to create competition among your
  vendors

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What do you expect from your sales rep?
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Sales Reps Provide

• Better products and methods
• Clinical information
• Product sourcing
• Market information
• Solutions to problems
• Savings
• Remember Reps are important to
  your success

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Which way do you deal with sales reps?

• REACTIVE
• Inaccessible
• Uninterested in products, services or technology
• Have favorites
• Leave change to clinicians and physicians
• Sales reps are uncontrolled

• PROACTIVE
• Accessible
• Inquisitive
• Forthright and candid
• Even-handed, fair
• Champion for change
• Managing sales process

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Managing the Sales Process

• Be Inquisitive learn
• YOU map the course of action
• YOU advocate when beneficial to the hospital
• Restrict access to staff and physicians before
  the determination of benefits of the product

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Determine the Benefit

• Could the product/service save money?
• Could the product improve patient care of their
  outcomes?
• Does the sales rep product support your GPO
  commitments?
• Do you have the necessary comparative data? Is
  this data valid?
• What is the best way to champion this product to
  others?

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Communicate with your Rep

• Impose yourself as the Point Person
• Promptly return phone call, e-mails
• Be candid yet cautious
• Inform them of progress and problems

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Rep misrepresentations

• Your staff likes, Dr. Healer wants
• We have/ will have your GPO contract
• Your GPO treated my company unfairly
• Your supplier has problems
• Clinical studies find my product
• All other hospitals have converted.
• You will save 50
• Going over or around you
• Starting with CEO or CFO
• Selling to end users
• Courting physicians

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Rep misrepresentations

• Discrediting the competition
• Recalls, bankrupt, production problems
• They cant deliver
• They were thrown out of Getwell Hospital

• Discrediting YOU (the buyer)
• Buyer doesn't like me
• Youre in ABXs hip pocket
• Your buyer isnt fair
• _____ is on their payroll
• The buyer us planning on substituting their
  product, for mine

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Defusing misrepresentations

• Be accessible and forthcoming to vendors and
  internal customers.
• Perform accurate and timely analysis
• Place the hospitals interests first
• Remain impartial at all times maintain a level
  playing field
• Share success give credit to others

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Buyers Objectives

• To represent their hospital to the business
  community
• To lead the hospitals cost containment program
• To search for products and services that improve
  your value
• To support the hospital and GPO contracts and
  commitments

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Reps Objectives

• To represent their companys business and the
  professional community
• Sell their product or service for the maximum
  return to their company
• To introduce new products that have greater
  profit margins than current ones
• Meet or exceed sales plans and quotas
• Support GPO agreements if they have them
  circumvent, if they do not

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When the two objectives conflict?

• Product choices
• Price and terms
• Contract compliance
• EDI or manual purchase orders
• Fill rates and invoices
• Regardless, relations should be
• cordial and professional

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Dont be afraid to share your priorities with a
vendor

• If a vendor can help, they will find a way to get
  you the best solution.
• If they cant help, let them no they are not part
  of your priorities but continue to share with
  them your needs and how they may be able to help
  you down the road.

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Create a competitive environment

• Vendors that know they have secured your business
  are better able to seize control of the
  negotiations. Be wary of "partnerships." They are
  vendor's way of making sure you are going to use
  them.

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Use vendors to help build a business case

• Vendors often have white papers and ROI analyses
  that can help you build a business case and are
  very willing to help persuade your team. Using
  them to help you build support also helps them
  understand your business and refine their
  proposal so it better meets your needs. In the
  best cases, you become partners where success
  makes both parties look good

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Treat potential vendors as partners

• There is a real need to drive contract terms and
  legal conditions, but in the end, no contract in
  the world will adequately cover your long-term
  goals and expectations. Build a solid, true
  collaborative partnership with your vendors. It
  will pay off in the long run. When things go bad,
  and they most certainly will, who would you
  rather have at the table? A vendor or a partner?

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Find a way to build relationships

• Price isn't the only aspect of the relationship.
  Find creative ways to go beyond the transaction.
  At the university, we involve vendors with the
  students via executive speaking events,
  scholarships, internships and recruitment.
  Further, the faculty seek sponsored research with
  the vendor. We have a person who works to manage
  all aspects of these relationships so dealing
  with the University of Miami is pleasant and easy
  to achieve.

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Ask for ongoing responsibility

• To be a partner, both parties must act like
  partners, which means helping each other beyond
  the cash exchange. Will the vendor continue to
  help you succeed after the sale? How and where
  have they done this before? What can you do to
  help them be successful beyond just buying their
  products? If they cannot think of ways for you to
  help them, then the only value they will get is
  money, and this means you will spend more for
  their products or services.

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Always get competitive bids

• From the outset, be clear that they have to put
  their best price on the table. No one will get a
  second chance to rebid. And never, ever give one
  vendor's bid to another to beat.

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Be respectful of your vendors

• If you have no intention of giving them your
  business, don't ask them to participate.

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Negotiate with the top two

• After evaluating a number of vendors, conduct
  contract negotiations with the final two, not
  just the final one. That enhances competition,
  and you may discover a deal-breaker with the top
  choice.

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See the other side

• Make sure you understand the value at the other
  side of the table of each negotiation point.
  Sometimes you'll learn that something you find of
  minimal value is of major value to the vendor,
  and often this learning comes away from the
  negotiating table.

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Make it a win-win

• I have found that when vendors commit to a result
  rather than a sale, their success is directly
  tied to my organization's success. It's not just
  about selling me the best product, or about a
  vendor getting the best margin. It's about two
  organizations getting into a collaborative and
  mutually beneficial business outcome.

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Offer to help

• If you don't buy from the vendor, help them build
  relationships with the people you know that may
  face the issues their products address. This also
  builds the relationship without a transaction
  involved. When you go to negotiate with them,
  they will be more amenable because of all the
  help you have provided in the past.

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Dollars and cents

• Don't pay for features you won't use. Offer to
  pay for them later, if and when you grow into
  them.
• Start by defining what the "best deal" means.
  There are business objectives associated with
  every technology-related acquisition. There are
  lots of techniques for driving toward lowest
  cost, but you need other approaches when the
  requirements involve tight time frames, continued
  support or total value. In most cases, metrics
  with contractual remedies should be included to
  be sure the goals are clear and measurable and
  that the deal was, in fact, the right one.

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Dollars and cents

• Tie guarantees to money. Guarantees aren't worth
  anything unless there are monetary penalties.
  They must be spelled out in the contract.
• Focus on value, not price. Before a negotiation,
  determine what is of value to your firm -- for
  example, the successful implementation of the
  system, with users gaining 20 improvement in
  time reductions. Use this value analysis to drive
  the discussions with the vendor -- can they
  deliver this value and then align their price to
  this?
• Demand proof of concept. If you are seeking
  value, then you need to see it firsthand. So make
  the vendor prove it can be done, hopefully by
  implementing something at your location with your
  people and data. Often this works with
  appliance-type systems or infrastructure. If the
  situation is for something more complex, then you
  must meet with users of the firm's products and
  really do due diligence to see if they are
  getting the values you seek.

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QUESTIONS?