IMCO Signs Redistribution Deal
Edition: June 2002 - Vol 10 Number 06
IMCO members unable to meet manufacturers' minimum purchasing requirements can now buy smaller quantities through St. Louis-based MMS (formerly Midwest Medical Supply), IMCO's largest member.
IMCO, the Daytona Beach, FL-based distributor cooperative, signed a redistribution agreement with MMS effective April 15, which provides for MMS to sell non-lab, non-pharmaceuticals to IMCO members in small quantities.
IMCO currently has a redistribution agreement for lab supplies with Louisville, KY-based LABSCO and for Welch Allyn products, says IMCO President Bill McLaughlin. But the MMS program ramps things up significantly.
With annual sales of $120 million, MMS is a staunch IMCO supporter, with its people participating on IMCO's acute-care, long-term-care and primary-care advisory committees. MMS President Gary Reeve also is a board member.
The company recently purchased Perigon Medical Distribution Group. (See ''Midwest and More,'' April 2002 Repertoire.)
''With MMS, IMCO can use a high-volume, computer-savvy distributor that operates in multiple trade classes acute care, primary care, long-term care and home care,'' says McLaughlin, adding that MMS can provide manufacturers with reporting and detailed product line analysis. It's important that all their sales reps get credit for their sales,'' he says.
''[MMS has] a staff of people with product knowledge, who demonstrate a sense of urgency and offer high fill rates,'' he continues. MMS has a 150,000-square-foot warehouse in St. Louis, from which products to IMCO members will be shipped.
Emphasis on Partnering
''We always work to maintain our members' independence as well as the best price and products,'' says McLaughlin. ''We will not be a reseller,'' he continues. ''Quite the contrary. IMCO works to partner with our members and support the independent. Clearly, all the IMCO programs will stay in place. We will work consistently to get lower minimum orders, lower prepaid freight amounts, lower prices, etc., for all our members.
''We will continue to concentrate on marketing for our members and vendors,'' he adds. ''Now, in addition, we can offer them a logistics program at minimal additional cost to the supply chain.''
The redistribution program will benefit IMCO members in the following ways, says McLaughlin:
They can buy in smaller units of measure.
They can combine products for scheduled deliveries.
They can have home care products delivered to patients' homes.
They can build up to minimum authorized volumes, and then go direct if they want.
They can buy truck load fill-ins.
They can minimize inventory investment.
They aren't forced to buy from a competitor.
Vendors will benefit too, says McLaughlin. ''There are vendors who would like to turn over many small accounts to a national redistribution system such as MMS, because of the operational efficiencies.'' In addition, vendors will get timely product-line analysis and sales recaps, thanks to MMS's automated capabilities.
MMS will not redistribute products that compete with IMCO's key lines, says McLaughlin. ''We're not setting ourselves up to self-destruct. On the contrary, we'll support our manufacturers.''
The program opens the door to large-volume buy-in programs, says McLaughlin. ''Let's say we decide to buy 300 EKG machines or 100 power tables,'' he says. ''The savings in doing this can come back to help our members. However, we will maintain it closely, so we do not compete with our established vendors. This is a formal agreement, and our integrity is on the line.''
The IMCO/MMS program is simply one of distribution, adds McLaughlin. IMCO remains the selling and marketing arm to IMCO members. ''We have the best of both worlds access to key vendors (and you can name hundreds through Midwest) and the ability to buy one widget.''
Beefing Up Inventory
At press time, MMS President Gary Reeve was proceeding cautiously. ''We'll get some usage history before we do too much,'' he says. But the company can afford to take some time.
With 150,000 square feet of warehouse space and more than $7 million in inventory in St. Louis, MMS has room to grow another 20 to 25 percent, says Reeve. In addition, MMS can hire a third shift to increase capacity. Because the company serves so many different markets, chances are it already inventories most of what the IMCO dealers want to buy, he adds.
For all these reasons, Reeve expects the IMCO dealers to buy frequently and in fairly healthy quantities. ''Instead of them waiting a week or two to place an order, they'll probably be placing orders with us every couple of days,'' he says. ''So their service level to their customers will be much greater.''
MMS will benefit as well. ''I'll be able to place relatively big orders more often,'' he says. ''I'm counting on getting more [inventory] turns.''
With IMCO's approval, MMS at press time was pursuing redistribution agreements with its top-tier vendors, which represent 80 percent to 85 percent of the company's business, says Reeve. After those are completed, it will pursue its other vendors.
''We're also trying to negotiate some sort of distribution fee [with the vendors], so that the redistribution customers won't pay any more than what they would be paying anyway,'' says Reeve.
IMCO's 140 members collectively sell $1.5 billion in medical products a year. Approximately 40 percent focus on the primary care market, 30 percent on long-term-care, 16 percent acute care, and 14 percent other.