The Value of E-Commerce
For much of the past year, the promise of Internet-enabled e-commerce to deliver savings seemed just that: a promise. But a new study from Novation and Arthur Anderson goes a long way to finally putting some figures on the value and potential cost savings of a web-based supply chain.
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For a variety of reasons, product companies have responded to the B2B supply chain phenomenon with reserve, wary of high transaction fees and little real benefit. B2B companies, in turn, have teamed up with leading hospital groups to overcome such resistance. But such a strategy only works where suppliers place a high value on GPO contracting. Where group contracting isn't well established, the approach works less well because there's no pull-through for the Internet program. But one group, Novation Inc., is in the early stages of an Internet program that would begin with one of the most challenging of group contracting markets: orthopedic suppliers.
One of the last of the major hospital groups to commit to an Internet strategy, Novation has leaped into e-commerce with both feet through its recent deal with Neoforma. The company faces a host of challenges, not the least of which come from uncertain hospitals and reluctant product companies. For suppliers, the alliance of leading groups and dot-com companies raises questions about the future of the hospital marketplace.
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