The dollars and sense behind:
Bringing Innovative Medical Technology to Caregivers

In today's tough health care market, merely designing and manufacturing an innovative medical device won't ensure its acceptance in the market. The manufacturer has to identify key customers, educate them on the technology and proper utilization, then demonstrate its efficacy and cost-effectiveness.

The manufacturer can hire its own sales force to do these things. But that's an expensive proposition, considering the cost of sales -- salaries, T&E, benefits, sales management and the logistical costs of storing and shipping products. These costs have to be passed on to providers.

The manufacturer has another choice: It can outsource sales, marketing and distribution to a specialty distributor.

In his groundbreaking book Managing Channels of Distribution (American Management Association, 1998), Kenneth Rolnicki -- president of the Channel Marketing Institute and professor at Northwestern University's Kellogg Graduate School of Management, says that by using distribution channels, the manufacturer can transfer some of the costs of doing business to distributors and resellers. These costs include warehousing, sales and accounts receivable headaches

But they do more than just transfer costs. In fact, says Rolnicki, distributors can help lower total supply chain costs. Because they sell multiple product lines to the same customer group, they spread the cost of sales and distribution over several product lines. The end user benefits from lower costs, the convenience of one-stop shopping, excellent customer service and technical support, logistical support, and greater channel efficiency and ease of doing business.

Do the Math

Suppose that you are a manufacturer that has just made an innovative device for hospitals. Do the math and see how specialty distributors lower your costs.

Click here for the ROI Calculator Form.

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