The Blog

Don’t Confuse “Sourcing” with “The Source”

Marc Montalto

The focus of today’s healthcare environment causes stakeholders to consider any option aiming to reduce costs, maximize efficiencies, and provide improved clinical outcomes.  As a result, most industry meetings and tradeshows provide the platform in which many speakers extoll the virtues of “sourcing” various commodity categories as a way to achieve these critical objectives. While the “sourcing” technique appears lucrative on the surface, understanding difference between a “Sourcing Organization” and an actual “Source” is key.

A “Sourcing Organization” typically exploits multiple contract  manufacturers in order to bring just one brand to market.  

The “Source” is the direct and only manufacturer thus providing security and consistence for a single brand.   

Those who opt for the lure of a “Sourcing Organization” are often unknowingly entering an agreement where many different version of the same product are sent in seemingly identical packages.  A “Sourcing Organization’s” brand(s) is most often produced in various factories throughout many different countries and interchangeably shipped to maximize the company’s profits; in turn eliminating product consistency for the healthcare facility.  Should a “Sourcing Organization” be identified as reasonable choice for a healthcare operation, the following questions should be reviewed in detail during the evaluation process:

  • Will the product being trialed actually be the same product received (on every shipment) if a conversion is made?
  • If the original manufacturer changes the selected product, what process is in place to alert customers of that change?
  •  Does the trialed product still offer the same physical characteristics as reported in the RFI/RFP?
  •  If at any time the product changes, how will the special characteristics, such as Approval for Use with Chemotherapy agents, be effected?

Maximizing efficiencies can best be met however by eliminating unnecessary variables and streamlining inventory management. Once a stakeholder completely understands the impact a commodity can have throughout the organization the “Source” is typically preferred.  Established healthcare facilities tend to deal directly with the “Source” for the following reasons:

  • Direct communication with the actual manufacturer.
  • More efficient and cost effective solutions can be found.
  • The product trialed will remain identical to the product delivered.
  • The healthcare facility will experience improved clinical outcomes due to product consistency.

Be wary of suppliers presenting unobtainable promises and be sure to understand your source before making a decision to buy.