Paul Keith Tells It Like It Is
It's official—IBSA is ready to rumble with the major directs for national account business.
Affiliation with Bowling Green, Kentucky-based International Business Solutions Alliance (IBSA) involves a whole lot more than simply signing up. "We are not a passive organization," Paul Keith, president and CEO, stressed. "Our success depends on the active participation of suppliers and affiliates all pulling in the same direction to accomplish our collective goals."
Because of the organization's vision to bring change and new opportunity to the industry and its determination to succeed, IBSA has been chosen as the BFL&S distributor of the year.
Keith and the IBSA management team—which includes former employees from each of the major directs—project that IBSA will move more than $500 million from the direct channel to the IBSA independent channel over the next five years. And, right on schedule to coincide with the organization's national conference—taking place July 23 to 25 in its home state—Keith and his nine principal associates will officially roll out IBSA's national account campaign and, hopefully, announce the successful signing of the first contract with a major health-care provider.
By now, many in the industry are familiar with IBSA's mission to go head-to-head with the major directs to win national account business. Here, Keith talks about how the organization intends to get the job done.
Stones in the Road
"The greatest challenge in creating IBSA has been working out the technology that will tie everything together for overall accounting and reporting purposes," said Keith. "Aside from that, recruiting and orienting distributor affiliates and selling products is pretty straightforward."
The problem is one of obtaining data, rather than using it. Issues such as invoicing and commission splits have already been sorted out, and IBSA's Xetex program is in place and fully capable of handling central billing.
But, IBSA's distributor affiliates want to stick with their own individual software programs to process national account billing. "Obviously, we want to accommodate the affiliates, so the priority now is to build the export routines that can take data pertaining to IBSA billing out of their systems and put it into Xetex, and that is being done," said Keith.
This concerns national accounts only. Local billing remains the sole domain of each affiliate. "IBSA is not interested in a distributor's customer list or profit margin," said Keith. "We want affiliates to remain independent, but not alone." It does, however, encourage—not require—affiliates to bring their local business to IBSA's vendor partners to help drive financial support to the organization.
Keith explained that initially, manufacturers' fees are what's financing IBSA. But, in the long run, it will be financed by national account sales and revenue sharing. "Right now, manufacturing fees are a means to an end," he continued. "We are strategically using our collective volume to improve our suppliers' financial pool, and for that, we receive a fee that supports IBSA." A necessary requirement for participating suppliers, then, is an accounting system with the ability to isolate and track sales that come in from IBSA affiliates.
Keith was surprised to encounter some resistance among the affiliates regarding switching their local business to the IBSA vendor pool. "It was too much to assume that everyone would immediately understand and cooperate with leveraging our volume to grow," he observed.
He went on to comment that the bulk of affiliates' local business, in fact, remains outside of the pool, but the gap is narrowing more and more each month. "Understandably, distributors have strong relationships with their suppliers, but we believe that what we are offering creates new relationships that are becoming much stronger. There is also the issue of getting the word out that procedures have changed across an entire organization," added Keith. "It will come in time, but it involves an educational process."
IBSA has established some thresholds and minimums to help drive business to the supplier pool. And, to further help improve supplier participation, the IBSA management team personally calls affiliates to ensure good communication.
Keith pointed out that affiliates become involved in revenue sharing and management of IBSA based on the volume that they are willing to move to IBSA suppliers. "Affiliates are expected to get involved," Keith commented. "That means actively working with our suppliers, as well as responding to phone calls, surveys and requests. We're not looking for people who want to wait around and see what comes in. They just wouldn't be a good fit with us."
How It Works
In addition to Keith, a former Moore employee, IBSA is managed by Executive Vice President Mark McKinney (previously with Uarco), Vice President of Finance Mark Musgrave, Vice President of Affiliates Mike Luckett (previously with Standard Register) and Vice President of Suppliers John Heybach.
National account service will be coordinated through national account managers, with assistance from charter affiliates who will oversee coverage in their particular state, ensuring that opportunities are being followed up on, and that affiliates are properly trained and understand exactly what IBSA is and is not responsible for under the terms of a contract.
IBSA created a hospital committee to handle its first national account proposal, and it has already hired a national account sales manager, Rodney White (retired vice president of Reynolds and Reynolds and former Kinkos vice president), working out of a Dallas location, around whom a core national account team will be built.
It will be up to IBSA to determine which distributors will work which locations once they are ready to be assigned, as well as how a national account is to be handled and billed. "Otherwise, the service would lack a cohesiveness, which would subvert IBSA," commented Keith. "After all, we have 105 affiliates who probably have 105 ways of doing IBSA."
He explained that IBSA has developed what it calls a Decision Criteria Award Matrix (DCAM) that is used to rate and evaluate affiliates based on warehouse space, the size of their companies and proximity to an account. "We'll look at the available affiliates in areas where a national account has offices and decide who can do the best job. It is not a case of first-come-first-served or whose turn it is next," added Keith. "It's about making the best decision to implement an agreement."
Keith bristles at the mistaken assumption that IBSA is a buying group. "We are a marketing alliance," he asserted. Keith also emphasized that IBSA isn't about making anyone do anything. "IBSA is offering distributors an opportunity, and if they avail themselves of that opportunity, we intend to see that they benefit from what we can do in proportion to how they are trying to help us."
Prospecting for national accounts will include telemarketing and direct mailing campaigns aimed at large Fortune 1000 corporations and GPOs (group purchasing organizations). "We are not focusing exclusively on health-care organizations," Keith remarked, "but the way they are structured with the GPOs makes them a perfect fit for a distributor model."
In addition, IBSA is seeking referrals from distributor affiliates. "We have gotten a few referrals, but some affiliates are playing their cards pretty close to the vest," admitted Keith. "Naturally, they want to be sure that they would benefit from that customer's becoming a national account."
Keith commented that the ability of distributors to deliver solutions nationally is a dynamic that the industry has not experienced before. "Large accounts want to reduce the number of suppliers they use nationally," he continued. "The key differences between IBSA and the major directs is our ability to bring more products and services to market quicker and with better service and lower costs."
Besides snafus with technology and vendor choice issues, Keith noted that dealing with everyone's individual expectations is something that IBSA is grappling with in its early stages. But, on the plus side, he said it's great to be making new friends and forming new relationships.
Even more rewarding is the fact that distributors are becoming excited about doing business again. "It used to be that dying markets and negative trends were all you would hear about," commented Keith. "Now, instead of talking about how bad things are, IBSA people are talking about how good it can be."
By Maggie DeWitt
- People:
- Paul Keith
- Places:
- Bowling Green, Kentucky