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Big suppliers generate standards, pushing out small competitors?

I just sat through a meeting knowing that I’m getting screwed. On the surface I’m being told that everyone must meet new standards and bear the responsibility for carrying them out. These standards were developed in conjunction with the large suppliers to a hospital I serve. I had no input at all. The large suppliers can easily meet the new standards. I’m a very small company—a mom and pop shop. We deliver the same product, but while the large suppliers can easily manage to meet the additional requirements, I can’t. I don’t know if the administrators are deliberately trying to squeeze out the little guys like us or whether they have no idea about the power squeeze tactics I see. How can I get the hospital administrators to listen to me?

Dave's Answer:

In this case my first question is, “Why should they listen to you?“ Hospital administrators, like everyone else, first tune in to WIIFM: What’s In It For Me? But I'm going to turn to my business ethics colleague Laurie Weiss, PhD, for her thoughts:

There could be a good reason for them to listen—or you could just be trying to play in a league where you no longer belong.

Good reasons could be:

They have a stated policy of using small suppliers and they are now violating their own policies;
The new standards don’t contribute anything to the effective delivery of the service and actually add a layer of unnecessary complexity;
Maintaining relationships with large and small suppliers gives the administrators flexibility they need;
You have a long-standing relationship with them that they consider valuable.

A poor reason would be that they aren’t being fair to you. While their interests and yours have been complementary up until now, business needs do change and some businesses do lose out. If this is the case for you, it’s time to start looking at new opportunities.

So, in order to get any administrators to listen to you, you need to approach them thinking about their best interests. Hopefully, their interests and yours actually are complementary.

If you already have rapport with one administrator -- rather than “the administrators” -- approach that person and ask for a private meeting to clarify your situation.

Start your conversation by referring to the reason you think it’s important for the hospital to learn about the (possibly) unintended consequences of the new policy. Ask if she is aware of those unintended consequences.

If she has not thought things through, you can help the administrator to do so. If she tells you they know and don’t care about the impact on you, all you can do is refer to one of the “good” reasons that might cause them to reconsider.

This situation may really be outside of your control. If it turns out to be that way, your best move might be to ask the administrator for suggestions about other ways you can serve the institution. Be prepared to retreat gracefully. Good luck.

Learn more in The Integrity Course, an online, multimedia course to help you say what you think without getting fired or losing your friends. Laurie Weiss, Ph.D., is an internationally-known executive coach, psychotherapist, and author.

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Categorized: Business and Management (Article 6757)
Tagged: business ethics, business suppliers
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Comments

Not much detail there, but having dealt with large and small hospitals and hospital systems, there are a lot of things that are important to them, which small suppliers may have a hard time dealing with. Often it's accounting changes and other internal issues driven by regulatory issues (HIPPA, SOX, etc.) that cause the change.

There are many reasons why you would negotiate changes with large suppliers, mainly that you need the large suppliers to be able to implement on time, so they need to be involved. If a small supplier can't keep up, it's easier to replace them or even tolerate their variance. With large suppliers, it's very expensive to switch, and much more disruptive if they don't comply with the changes.

In any event, even with a very large organization, it's likely that one or two people are managing the whole change process, and likely that whatever you're supplying is only a tiny piece of the big picture they have to manage.

In many cases, when we dealt with changes like this, small suppliers had an easier time implementing changes. For example, whe a large chain went to e-procurement with XML billing, the small guys could buy cheap desktop software, but as a large supplier (with our own SOX, GLB, HIPPA etc. compliance to consider) it was much more difficult for us to move quickly, and we actually dropped some customers who were trying to force too much change all at once.

This kind of thing happens everywhere. Wal-mart dictates a lot of standards down their supply chain, and little guys can't always keep up. They "consult" with their largest suppliers but that's only about "how" the supplier is going to give Wal-mart what they need. :D

Posted by: Dan Thies at January 11, 2007 8:12 AM

I have a lot to say, but ...

I have a lot to say, and questions of my own for that matter, but most of all I'd like to say thank you for all your efforts on this Web site by buying you a chai!

I do have a comment, now that you mention it!