As a hospital owner or manager, you need to understand not only what motivates and challenges your patients and clients, but also what motivates and challenges your suppliers. The more a practice decision-maker knows about suppliers, the more effective the companies can be during negotiations and the more likely a practice can benefit from their services.
Suppliers are willing and able to do a lot more than sell equipment, products and services. They can help veterinary businesses perform better. So take advantage of it. That part is often free.
Defining Distribution
But first, let’s distinguish manufacturer supply representatives from distributor supply representatives. For the most part, manufacturer reps work directly for the companies that make the products that animal health practitioners use. More than 500 manufacturers of animal health products serve the U.S. veterinary market.
Distributor reps, for the most part, work for distribution companies and serve as a liaison between manufacturers and the nearly 26,000 U.S. veterinary practices. Veterinary professionals are a shared customer to manufacturers and distributors. They both want to provide veterinarians with excellent products and services.
There’s another entity in the animal health supply chain referred to as buying groups. These groups aggregate purchasing power on behalf of veterinary practices in order to provide large-volume discounts. Distributors, on the other hand, aggregate thousands of products so veterinary customers can place a single order for what they need, all from one source. Distributors then pick, pack, ship, invoice and collect payment.
Generally speaking, manufacturers focus on the research and processes needed to make high-quality and often lifesaving products, while distributors focus on making sure these valuable products get to veterinary professionals and their patients. To do that, distributors employ inside sales and customer service representatives. These are people whom practice staff might talk to by phone several times a day. A good number of inside sales and customer service reps have experience as veterinary technicians or assistants. Distributors also employ outside, or field, sales reps who physically visit veterinary practices.
Who’s Who
Three national distributors — Patterson Veterinary, MWI Animal Health AmerisourceBergen and Henry Schein Animal Health — serve the U.S. veterinary market and have anywhere from 400 to 700 field sales reps. (Parent company Henry Schein Inc. announced plans in April to spin off its animal health division and merge the business with Vets First Choice.)
Another large distributor, Midwest Veterinary Supply, is referred to as a “super regional,” meaning it services almost all of the United States. And then there are several smaller, regional distributors that employ anywhere from a handful of people to 80 or more field representatives covering a region such as the Northeast or West Coast.
As with many industries, forces inside and outside the market are driving consolidation. For example, hospital staff members in the Southeast might have noticed that their Merritt rep now works for Henry Schein, or in the Northeast, that their NEVSCo rep now works for MWI. It’s important to remember that even though consolidation is on the rise, many smaller distributors are holding firm.
What Distributors Do
While some veterinary professionals believe the distributor’s role is primarily that of a logistics provider — a means of getting products from the manufacturer to the practice — distribution has evolved to be much more than that.
“When clinics, practitioners and organizations take full advantage of their relationship with their distributor and the distributor’s sales, technology and support teams, they gain a partner with a vested interest in their success,” said Doug Jones, president of the companion animal group at Patterson Veterinary. “Specifically, distribution has developed and deployed tools, technologies and programs that help practitioners and practices improve and grow their businesses, develop themselves and their staffs, and improve and enhance patient care.”
Such solutions might include practice management and digital diagnostic systems that can integrate with software to store patient histories. Distributors also provide client engagement and marketing tools as well as staff training services.
“The outcome-based, full-service approach that distributors offer brings great value to veterinary professionals,” said Fran Dirksmeier, president of Henry Schein Animal Health North America. “By working with customers as partners, we can help them to achieve greater profitability while improving health outcomes for the benefit of pet owners and patients.”
According to the American Veterinary Distributors Association, distributors strive to provide prompt delivery and ordering systems along with flexible return policies, and no minimum purchase requirements. Minimums are often required when a practice buys directly from a manufacturer.
In addition, because distributors carry a large selection of products from a variety of manufacturers, they function as neutral allies for providing advice on the products that will work best for each practice. Ideally, distributors contact their veterinary practice customers at least twice a week, but some engage more frequently.
Forming a Team
“A good distributor delivers the products the clinic uses each day in a timely, accurate manner and at a fair price,” Jones said. “A great distributor delivers positive change and innovation to the clinic, allowing practitioners to expand the services they offer or improve client engagement and patient care.”
Even greater value emerges when practices work with their distributor sales reps to form a team. At this level of engagement, distributors can do even more than identify opportunities to improve practice profitability. They can help the practice develop its staff and provide actionable, trustworthy and knowledgeable consultation and advice.
“We find that we are best able to serve customers after earning their trust such that they view us as an extension of their team,” said Mark Shaw, president of MWI Animal Health. “Earning trust through our actions is what we strive to do each day, and this happens at all levels, from the field representatives talking face to face with practice teams to the warehouse associates who are the last to touch a product before it ships out for delivery to everyone in between.”
DISTRIBUTORS ADD VALUE
Why should an animal hospital do business with a distributor? The American Veterinary Distributors Association says its members do much more than fill orders. For example:
- Inventory management: Veterinary practices can order custom quantities rather than a certain minimum. Faster inventory turns lower buying costs and free up cash.
- One-stop shopping: The average distributor stocks more than 30,000 SKUs from more than 400 manufacturers. Rather than losing time searching for products or ordering from dozens of different sources, veterinary practices can rely on their distributor sales rep to do it. In a recent survey of veterinary practices conducted by the American Veterinary Distributors Association, practice decision-makers were asked about their purchasing preferences. Seven out of 10 said they preferred to order products from distributors and have them handle the entire transaction, including billing and shipping.
- Lower storage costs: Veterinary practices don’t want to pay rent on space that is not generating revenue. Just-in-time delivery gets them a product when they need it, so there’s no need for warehousing.
- Market information and solutions: Distributors are in constant touch with market activities, trends and prices. They can offer advice and solutions on management issues and keep practices apprised of industry news and trends to help them run a better business.
- Merchandising: Distributors bring in point-of-purchase materials to help veterinary practices maximize sales and efficiently use office space.
- Regulatory compliance: Distributors maintain a supply chain compliant with federal and state regulations and relevant agencies, such as the Drug Enforcement Administration, the Food and Drug Administration, the Environmental Protection Agency and state boards of pharmacy.