Owens & Minor Finds a Purpose in Promoting Supplier Diversity in the Healthcare Industry

by LP Green, II

With a 30-year track record of promoting supplier diversity in healthcare, Owens & Minor definitely has an edge when it comes to fostering women-, minority-, and veteran-owned businesses. Viewing supplier diversity as an important solution for its hospital and manufacturer partners, as well as for the health of the supply chain, Owens & Minor has a well-deserved reputation as a leader in the healthcare industry.

“Owens & Minor enjoys a leadership position today that stands for something more than just revenue generation,” said Dannellia Green, PhD, Director of Supplier Diversity for Owens & Minor. “Owens & Minor is a purpose-driven company, and our supplier diversity program is a crown jewel in our purpose driven culture.”

Thanks to its long-term commitment to developing diverse suppliers, Owens & Minor is seen as a champion in this area. “We are viewed as a trusted partner. We respect our small suppliers just as we respect our larger suppliers,” said Green. “We have built trust and respect in the healthcare industry over more than 130 years. That’s something valuable that our customers see in us.”

There is a loyalty among the core group of Owens & Minor’s diverse suppliers that is multiplied when the company adds new suppliers. Diverse suppliers come to Owens & Minor, knowing that the company is able to help them move into the ranks of the big-time through its mentoring programs and customer relationships in healthcare.

“One of the most important things we have ever done to garner the success that we have had is nurturing our relationship with Owens & Minor over the last 25 years,” said Joseph “Joe” Reubel, Chief Executive Officer of Kerma Medical Products, the inaugural protégé in Owens & Minor’s supplier diversity program.

For the smaller diversity suppliers, “It’s a beneficial thing to able to say you are a supplier to Owens & Minor. There is an intangible equity that has grown from our long-held position in this space,” said Green.

Why do hospitals in the U.S. want diverse suppliers? Green explains that some hospital systems serve communities that have significant challenges associated with population health, economic stability and economic opportunity. Owens & Minor has found that its diverse suppliers are especially diligent about investing in their own communities. One such supplier, Century Hosiery, invested in its city’s water and sewerage systems for its own manufacturing plant, and in turn, made these infrastructure improvements available to an entire neighborhood. By supporting this one supplier, Owens & Minor indirectly helped an entire community.

“Owens & Minor has been a great partner with Century Hosiery since 2003,” said Kathy Martin, Chief Executive Officer of Century Hosiery, Inc., a woman-owned manufacturing company based in North Carolina. “They are very professional and they have an excellent team force. We have developed a lot of business and personal relationships. Their long history in supplier diversity and in challenging us and helping us has benefitted Century Hosiery in our continued growth.” Century Hosiery is fast becoming a leading U.S. manufacturer of medical footwear.

What’s more, “diversity hires diversity,” said Green. “Often, a woman-owned business will use other women-owned businesses. We are an advocate for a diverse supply chain, and we leverage and promote the idea to our business partners consistently.”

Additionally, Owens & Minor serves a direct customer need by providing a reliable stable of diversity suppliers. U.S. hospitals and health systems often have federal or state government contracts—or they may be governmental entities themselves—that have specific goals for diversity spending.

One way that Owens & Minor helps these customers meet their goals is through its private label line of products called MediChoice®.  In fact, a strong percentage of Owens & Minor’s MediChoice product portfolio is supplied by diversity companies. “We have a leadership position in using diverse companies to produce our private label products,” said Javara Perrilliat, Vice President of Strategic Supply Management for Owens & Minor. “By revenues, we have the highest percentage of diversity products and spend compared to our competitors. We control who is supplier to our MediChoice brand. That is a decision we can make, and we want to maintain our leadership position.”

Owens & Minor’s Executive Vice President & Chief Commercial Officer, Marshall Simpson, fully understands that a strong diversity program is essential to the company’s business. “Having access to diverse suppliers is a need that our customers express regularly to us. Since we have a robust stable of diverse suppliers, we are able to meet that need.”  Today, nearly 20% of Owens & Minor’s revenue is derived from healthcare providers that are diversity sensitive.

With the changes taking place in healthcare today, hospital leaders say it is essential that suppliers become flexible, agile, and competent. In coping with the rapidly changing healthcare system, the triple goals of enhance, reduce and improve mean that diversity suppliers may hold the solutions to the challenges in healthcare. If smaller suppliers are innovating, and if they are in a position to lead and not follow, they may have greater flexibility than larger companies. The pace at which they can move and change is impressive. They can bring innovative products and innovative models to the table, and they will contribute to ensuring that healthcare is thriving and not just surviving.

Owens & Minor also has its “Strategic Six” suppliers, who meet the nine core competencies that are critical for diversity businesses to be successful in healthcare. For Owens & Minor to classify diverse suppliers as strategic, they need to show strength in six of the nine competencies. These suppliers must be strategic partners, they must align with our market priorities, and they must have a stable revenue stream that is diversified beyond just Owens & Minor. “A unique product portfolio, mind share and aligned strategies make a diversity supplier the ideal candidate for our support,” said Green. “All in all, our strategic suppliers give us win-win opportunities. In growing these suppliers, we better serve our provider customers.”

As the leader of this effort, Green also spends considerable time and effort on internal and external advocacy. “My goal is to arm the broader community, our sales force, and our category managers, and then create the resources and tools—training guides, FAQs, or briefing documents—for them to sell these products. We focus on trying to empower them to answer questions and look to bid business. We want these diversity suppliers to be on the list of consideration. When we hire new people, I walk them through an introduction to supplier diversity. Internally and externally, we have things that can expand the mindset,” said Green.

Looking back, the program initially started with the Department of Defense’s mandate that federal contracts allocate a certain percentage of revenues to minority firms. Owens & Minor took up the challenge and began its formal mentor-protégé program with Earl G. Reubel of Kerma Medical, a Virginia-based company. Because of the great start with Kerma Medical, Owens & Minor fully embraced the opportunity to mentor diversity companies, and with the added bonus of a good partner with great business skills who wanted a hand up and not a hand out, the program flourished. The Kerma relationship became a model for success, and Owens & Minor has successfully mentored a variety of other companies since.

To celebrate the success of its supplier diversity efforts, Owens & Minor hosts a national symposium each year that brings together diverse suppliers, healthcare executives, supply chain experts and academicians to discuss the pathways to success. The popular symposium is a stimulus for strategic discussions by leaders across the entire healthcare eco-system about how dynamic industry changes are affecting patients, providers and players throughout the supply chain.

By Truitt Allcott


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