Make your pharmacy supplier relationships work well for you

To have the products on the shelves that customers want and that help to drive business, a pharmacy team needs to maintain great relationships with suppliers. This can involve some tough decisions.

Successful supplier management is all about establishing and maintaining mutually beneficial and collaborative relationships that deliver value beyond just maximising profits. However, it is imperative that both the pharmacy management team and the suppliers understand the value of partnership and want the relationship to be one that is reciprocal.

Insights from the Learning Pharmacy

Farah Ali, general manager of the Warman-Freed Pharmacy, explains how this is important to her business. “We know that successful relationships with suppliers are paramount to effective small business management. While we have many excellent supplier relationships, a few issues that presented themselves in the last year made us realise we needed to review some of the companies we were working with to ensure we remained proactive in our approach.”

Supplier relationships – the good and the challenging

The retail team at Warman-Freed recently found themselves in a few challenging situations with suppliers. For example, one large non-healthcare supplier decided to pull out of the pharmacy, with little consideration for the impact it would have on the pharmacy’s business.

Another supplier terminated the contract with little consultation or consideration for the future and mutual potential the pharmacy could offer. Other suppliers took advantage of the change of management to try to re-negotiate the terms of the relationship.

The team also noticed a clear divide between suppliers: those who obviously wanted to work with Warman-Freed and who would proactively pursue listings and added value to the business, and those who were impossible to get hold of, seemed reluctant to take pharmacy orders or appeared to work solely to fulfil their own needs.

Ms Ali explains, “For a while we tried to meet these demands and negotiate with the suppliers to rethink their costs or sales figures. However, ultimately, we didn’t feel in control of our own business – specifically, we had concerns over lost sales and felt vulnerable”.

Taking back control

It was at this point with certain suppliers that the Warman-Freed team decided they needed to reclaim control of the conversation. Ms Ali explains, “We worked as a team to calculate the potential financial hit that we’d face if we walked away from particular suppliers and formulated a plan to use alternative products or services that could fill the void.”

By taking the decision to walk away from some challenging relationships, the team were then free to put their efforts into creating healthy partnerships with new suppliers and strengthening those with valuable vendors. It was also a chance for the pharmacy to look at other complementary options growing in popularity, which previously would have been out-of-bounds while old supplier contracts were still in place.

No supplier relationship is set in stone and there isn’t a one-size-fits-all approach to managing them. The five tips below share suggestions for navigating your way through the tricky pathway of supplier relationships.

  1. Decide what a successful supplier partnership looks like to you. A partnership is exactly that, a relationship that involves two parties working together collaboratively to build success.
  2. Keep lines of communication open. This is the most basic rule, but also the most important – to communicate! Invite your suppliers to your pharmacy, include them in relevant business events and share information to make them feel a part of the pharmacy’s success. Be honest and upfront with your suppliers about your needs and drivers so they can support you appropriately. Remember that, ultimately, their support for your business will add value to their business as well.
  3. Know when to say no. Don’t be afraid to walk away from an existing or new supplier if their demands are unfair or they are unwilling to compromise. There needs to be a win-win in the relationship if it’s to be mutually beneficial and successful. Before you make any decisions, take time to identify the main areas of concern and meet with the vendor to see if there is a way around any issues that you both may have. Consider planning from the get-go what you would do should a relationship become rocky and untenable.
  4. Demonstrate you’re a good customer. Remember that both you and the supplier have a business to run, so just as you are measuring their performance, they will also be measuring yours. Take an interest in understanding the pressures they face and be up front about what you can deliver for them.
  5. Evaluate your vendors. To ensure you are getting what you need from your relationships with suppliers, take the time to objectively evaluate the performance of each. Undertake annual reviews looking at reliability, costs and how well they communicate. Supplier relationships can vary greatly, but pharmacists or pharmacy managers should never feel at the behest of any one supplier. Ms Ali concludes: “Now that we’ve reached a point where we’re in control of our supplier relationships, we can look forward to strengthening them and reaping the benefits. For our customers, this means new brands, range extensions and competitive prices, and for the pharmacy it’s about realistic targets and a profitable business.”

 

Success with suppliers

The key factors are:

  • Two-way communication – from opening the account, to daily working, knowing who to speak to, to the close of the relationship
  • Honesty – including objectives, brand performance, future planning and what you are trying to achieve
  • Give and take – at times the partnership will involve concessions and compromises from both parties
  • Mutual success – an understanding that you’ll work hard to make the brand a success within your pharmacy: measured through agreed metrics, for example sales or return on sales.

 

To download Warman-Freed’s supplier review template click here

Real-time learning from Warman-Freed Pharmacy, London

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