The marketplace for PPE products has been fraught with an epidemic of asymmetrical information and mistrust, bad actors and layers upon layers of intermediating forces that act as both advocates and gatekeepers, with varying levels of capacity to help facilitate successful engagements. This should be no surprise. The gaps in the supply chain are the result of a number of factors – all related to health, logistics, manufacturing, and economic issues – all combined to create a decentralized sh**storm.
Why Transactions Fail
Having directly participated in hundreds of failed engagements over the last 16 months, it’s important to note the characteristics and lessons-learned that lead to eventual pitfalls that drive both buyer and seller to abandon the process. The successes, though fewer and further in-between, do provide a consistent profile that makes it much easier to chart the trajectory towards a successful engagement where product is secured, delivered and all parties are paid.
The 2 Most Important Factors
Like any learning environment, we strive to understand the various factors that drive both success and eventual failure so that we can develop a system of requirements and procedures that can lead to a model that empowers us with the necessary information to facilitate the alignment that leads to a successful engagement.
Ultimately there are two issues that drive success or failure.
The buyer does not wish to disclose the mechanism of how they transact and they mis-represent their position or capacity in the transaction which not only leads to mistrust, but it may prevent the design of the transaction and the proper vetting of funds and compliance with anti-money-laundering provisions, etc…
Most structures and mechanisms can be worked out as long as there’s a level of transparency.
Poor transparency ultimately leads to poor timing. Timing is the issue most mistaken for a lack of product or lack of funds. The acquisition of funds, the securing of product, is often a just-in-time endeavor as risk goes up as capital is exposed, so the orchestration of steps and the timing of those steps is quite important. When the window opens to transact, all of the steps are expected to fall in sequence.
The mechanisms that are carefully synchronized to drive a successful procurement transaction are varied and no single factor demonstrates a buyer’s ability to purchase. Combined, however, these factors offer a profile that significantly improves the probability of a success.
Engaging with Decision-Makers
There are a lot of layers in PPE transactions. They all serve a purpose to bridge the gaps in a fractured supply-chain to build the connections. However, once connected, the decision-makers need to be engaged so that the requirements can be clearly defined. Key to this success is protecting everyone’s interest and then stepping out of the way so that the material information can flow-freely and accurately without delay or misinterpretation.
Understanding the Flow of Funds
Does the buyer have the funds? What format are the funds in? Where are the funds? How will the buyer demonstrate that they have the authority to use the funds? What’s required to release the funds?
It’s about that simple.
The procedures are in place to minimize risk. When the steps follow in-sequence, all parties receive their mutual assurances to proceed to the next step without friction of any kind. A frictionless process flows easily to its terminal point, without intervention or surprises.
Requirements: It’s not that Complicated
The Mothership Qualified Engagement Model [QEM] strives to align the varied parameters of the buyer’s mechanism for transaction with the ability of the seller / supplier. Without these clearly defined features, there’s an increased probability that problem 1 (transparency) or problem 2 (timing) become serious issues.
An ounce of Prevention
Engagements fall apart when they are poorly designed, poorly managed, or both. That being said, the procurement environment for medical products and PPE is “protective”. And the challenge is that there are trade secrets and confidential information that must be protected and the financial interests of the varied parties involved. The QEM process is, by design, focused on making sure that the necessary protections are in place so that the essential elements can be extracted and protected.