The Battle for National Accounts
The closing of Metro Label’s four locations in Atlanta; Santa Fe Springs, Calif.; Colorado Springs, Colo.; and Garland, Texas, is one of the latest casualties in an embattled industry, and further evidence of mounting pressures facing manufacturers and distributors. Joining forces is at least giving some industry professionals a fighting chance. In 2002, nine distributors established International Business Solutions Alliance (IBSA) to better position themselves for the future.
IBSA isn’t your typical distributorship. The Indianapolis-based network of more than 130 fully independent distributor affiliates and 119 suppliers isn’t competition for the DMIA either. “We are members of the DMIA,” asserted President Mark McKinney. “The DMIA is an educational organization that does not get involved with contracts. IBSA is a group selling organization that helps distributors sell accounts—that is our number-one goal.”
As a GSO, if you will, McKinney explained IBSA secures the national contracts, and coordinates the supplier pool to benefit both distributors and suppliers. He likened the company’s model to a GPO (group purchasing organization) such as Novation—currently IBSA’s largest national account. “Novation coordinates contracts for various hospitals and non-acute care facilities. IBSA coordinates sales for distributors,” McKinney observed.
Thus far, IBSA has secured four national accounts, and expects to announce a fifth contract by springtime. Besides Novation, IBSA is serving FirstChoice Cooperative, a health-care GPO headquartered in Tyler, Texas, representing more than 20,000 non-acute care facilities and rural hospitals. There is also the FordStar program, which is currently being redesigned to bring more value to the FordStar customers and more success to the IBSA affiliates. A Xerox partnership has been in a test phase for the past two years, but IBSA is currently working with Xerox personnel to roll out a larger partnership covering several states in 2007.
It takes patience to work with national accounts. Multiple players are involved in time-consuming decision-making processes, and disseminating contract information to end-users throughout the enterprise can be frustrating. For instance, in the health-care sector, McKinney observed communication between the GPOs and large hospitals is fairly effective, but getting the word out to vast numbers of non-acute care locations—the rapidly growing segment IBSA prefers to target—has been problematic. Unaware a contract even exists, office managers will continue to buy from vendors they’ve dealt with in the past. However, IBSA is implementing a three-month plan to capture more of this business.