In the Medical Device Industry, and especially in smaller and highly regulated countries, Multinationals companies rely heavily on Distributors for reasons of practicality and quicker market access.
Scanning the Market to select the Right Partner is a time consuming and tedious exercise as companies need to make sure they end up with a right match. As this process has become demanding and requires full time focus, companies started looking at a dedicated Role within to Select and manage the various partners. This became a critical role, under different titles ie “Channel Manager”, or “Relationship Manager”, requiring full evaluation followed by a thorough Due Diligence process. Long gone are the days when Multinational Companies used big Exhibitions like MEDICA or ARAB HEALTH to select and sign up local dealers to represent their interest in the respective market.
But was this enough to optimize the Relationship?
Was this really “Partnering for Success?”
The Wikipedia definition for Partners is:
A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests.
And there lies all the difference, it is not anymore about a Supplier-Distributor Relationship, it is an Agreement to advance Mutual Interests, and this will involve from the Principals, a lot of Active Listening and a Creative Approach in understanding their Partners Strengths to build on them, but also Weaknesses, to help them Upgrade.
This is not anymore a Role dedicated to One Person, but more or less the whole organization, whether it is the Finance Department, Supply Chain, Legal, compliance, and others….
In Summary, Partnership is all about
Mutuality which is a common purpose with mutual benefit
Commitment where Partners are prepared to Commit Resources to the Mutual Endeavor
Clarity where each party is clear about who is doing what
Openness to be prepared to raise issues concerning the Quality of the Working Relationship
The “Effective Relationship” is there when both Partner and Principal have a high dependence on each others, as opposed to “Apathy” when there is little in common. How many times did we see situations where the Principal had a high dependence on a Partner, who in turn had a low dependence on the Principal, with this resulting in a “Hostage” situation
Medical Device Companies are more and more contemplating a “Direct” approach in some Priority or Focus Markets in the Middle East , and we are even seeing straight and flat buyouts of Distributors by their Principals thus acquiring the Expertise, Legal Footprint and in some cases, Manufacturing Facilities with the benefits that come with it when it comes to Government Relations and a favorable impact on Tender Participation.
The “Hybrid” Model is also followed by Many companies having an “Implant” in some of the High Potential Markets to guide and coach the National Team for higher growth, but also in situations where the Margins are getting thinner and thinner and Distributors are simply not able to invest in Senior Headcount to Lead the Team on the ground.
As many Models see the light, we need to keep in mind that Distribution Channels may be our biggest assets if managed properly. However, be aware of the risks if the wrong partner is selected. Risks are huge on company Image, difficulty in exiting the relationship, and the failure to achieve development and financial strategies.
A Win-Win Relationship built on Transparency, Trust and Compliance, is what Partnering for Success is all about!