Medical suppliers build exchange

An Australian company is working with a handful of New Zealand medical equipment suppliers and public hospitals to build a pilot B2B exchange.

An Australian company is working with a handful of New Zealand medical equipment suppliers and public hospitals to build a pilot B2B exchange.

The project, which was initiated by the Medical Industry Association (MIA), is expected to get under way by the end of the month, once the hospitals concerned have the necessary approval.

MIA president Rohan Williams, whose organisation represents scores of medical equipment suppliers, expects the exchange to be transacting orders by the start of next year. He says the purpose of the pilot is to establish the benefits of e-procurement, before attempting to involve a “critical mass” of suppliers and institutions in the exchange.

“The MIA has become involved because there were a number of companies interested in offering services to hospitals,” Williams says. “We’re trying to take a leadership role in e-procurement because it’s so fraught.”

The outcome of one such venture proves his point. Biolab Scientific, an MIA member, attempted to create a marketplace for buyers of its laboratory supplies. But the effort, called Onezone, was abandoned five weeks ago when it failed to attract enough buyers and big suppliers. The suppliers it did succeed in signing included stationers and other office products sellers but not the major medical suppliers with which hospitals spend millions of dollars a year.

“What Onezone came up with wasn’t practical for the medical side of the industry,” says Williams. “Its model was all-encompassing.”

But Onezone’s approach appeals more to Taranaki District Health Board, which had been a user of the marketplace. Board corporate support manager Gordon Chisnall says what the MIA is establishing might suit suppliers, but he’s doubtful it will provide buyers with much benefit.

“The MIA proposal is effectively a messaging, routing service analogous to EDI,” says Chisnall, who has been aware of the plans for some months. “It’s a bland, technical approach.”

He says buyers stand to gain from e-procurement when they can analyse sales data and aggregate purchases from different organisations. Taranaki will continue to look for a solution with such features, he says.

Whereas Onezone called itself a marketplace, and was based on Ariba software, the MIA’s initiative will be an extension of an existing Australian exchange. Called Pacific Health Exchange, run by five-year-old company Pacific Commerce, it will charge users on a commission and transaction fee basis.

Pacific Commerce business development manager Jamie Collins says the company’s origins are in the retail hardware and medical supplies markets.

“We’re taking our understanding of those industries from Australia and looking to apply it in New Zealand.”

Pacific Commerce is in the process of appointing a local partner to help buyers and sellers connect to the exchange. That’s a process of “mapping” hospital and supplier ERP systems, which might typically take two to three weeks for a basic level of integration and up to six weeks for tighter business application integration. Online payment is not part of initial plans.

“We match output and input standards of suppliers and buyers,” Collins says.

“It’s pure B2B supply chain rationalisation.”

Collins says the expected saving per transaction by trading online is put at between 2% and 5%.

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