Amazon model for supply chain service

“Our focus is to make it much more efficient for buyers and sellers to come together.”
By Paul Cerrato
09:24 AM
Troy Kirchenbauer, vice president and general manager of aptitude

Amazon.com revolutionized the online buying experience for millions while giving sellers an expanded market that brick and mortar merchants still envy.

Now a new online direct contracting service called aptitude is attempting a similar coup, letting hospitals and other healthcare organizations negotiate with suppliers in an attempt to speed up the contracting process and reduce costs.

“Our focus is to make it much more efficient for buyers and sellers to come together,” said Troy Kirchenbauer, aptitude’s general manager.

The Irving, Texas-based company, which is owned by Novation, one of the nation’s largest group purchasing organizations, brings more transparency to both the buyer and seller, said Kirchenbauer. Aptitude has a database that covers about 40 percent of products bought and sold in U.S. healthcare, so “we are able to tell buyers whether their spend is contemporary with the market … And when they receive a bit back, we can tell them whether that offer is competitive with the kinds of prices that the supplier offers to other customers ….”

[See also: 3 ways IT helps supply chains.]

The service also offers some advantages to suppliers. Aptitude provides them with intelligence to determine if buyers actually perform in line with the commitments they make. “The vast majority of contracts contain a market commitment component,” which in practical terms means Aptitude receives monthly data submissions from the buyer’s invoicing system for all of their purchases, not just those with the supplier that they have just contracted with.

Kirchenbauer said the benefits for both buyers and sellers include an accelerated bidding process – as little as 30 days – a process that ordinarily would take six to nine months. Average savings range between 10 percent and 15 percent, said Kirchenbauer.

Aptitude “changes the supply chain dynamic,” said Rich J. Sherman, a consultant with management consulting firm Trissential.

[See also: 6 opportunities to keep hospital supply chain in line.]

Marketplaces like this provide sellers with scale, he said, extending their reach to a much broader market, which translates to more revenue, while buyers are getting more negotiating power because they have more choices.

The additional choices require sellers to be more competitive and deliver a better service, Sherman said. Additionally, by putting the entire process online, the whole procedure is accelerated. “It’s a win/win/win scenario.”

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