The news that PartsSource has seen an impressive boost in revenue by selling online is hardly earth-shattering. To ooh and aah over a new e-commerce site is so 2001.
But take a closer look at the Aurora-based medical replacement-parts aggregator’s ePartsFinder from the customer’s perspective, and you’ll see the value.
“When I think of e-commerce, I think of Amazon.com or Barnes & Noble: You type in what you want, and it’s done,” says Scott Madeira, director of operations for BioTronics, a Pittsburgh-based medical service company. “The big benefit is [PartsSource’s] system talks to my [back-end] system. … In this industry, that’s more toward the leading edge.”
Madeira heads a team of 130 technicians responsible for maintaining 120,000 pieces of medical equipment in 25 hospitals and 500 physicians’ offices in western Pennsylvania. Such a fleet holds the potential for millions of parts combinations, often with options for OEM, aftermarket or refurbished models for each.
Nearly all of Madeira’s PartsSource purchases begin in BioTronics’ internal purchasing system, which automatically pushes requests out to ePartsFinder. PartsSource takes it from there, initiating a sourcing effort that draws from 6,000 vendors and
8 million parts combinations.
“If you have an obscure part, you might have to call 20 people to find it,” says Kevin Gill, (pictured at left) PartSource’s vice president of strategic products and strategic accounts. “You might know which 20 people to call, but you might not. What we’ve done is aggregate a very chaotic and fragmented industry.”
A company that’s just reached its 10th anniversary, PartsSource is hanging its hat on technology as the driver for future growth. As the company has developed its online platform over the past several years, revenues have followed close behind.
In 2010, revenues approached $100 million with 230,000 parts requests, up 14 percent and 50 percent respectively from 2008. About 8,000 registered users in more than 700 hospitals nationwide have adopted ePartsFinder, which Gill says is about 13 percent of the 24,000-technician market. Of PartsSource’s 220 employees, about 10 percent are solely devoted to customer-facing technology tools.
To achieve the back-end integration with hospitals’ enterprise management systems, PartsSource initiated partnerships with four software companies offering asset management tools for hospitals. Such partnerships have allowed PartsSource to offer ePartsFinder with back-end integration to about 50 percent of all hospitals’ and physicians’ offices, which Gill says provides added value for PartsSource customers.
“[We] minimize and eradicate the soft costs around buying a part,” he says. “We saw this as a way to leverage the richness of our data in a manner that would truly elevate us.”
Next up for PartsSource? A new portal for medical service technicians that will launch late this summer, uniting many of the online tools techs use daily on a single screen: training and education tools from trade organizations; tools for capital equipment planning and equipment decommissioning; a digest of articles from the field in trade publications and industry blogs; and, of course, ePartsFinder.
“We concept-tested [this portal] with our customer council of the 12 largest hospital systems in the country, … and the comment has been: ‘Powerful concept, but we don’t think you can pull it off,’ ” Gill says. “I can tell you, we’re now about 80 percent of the way toward pulling it off.”
Skepticism about PartsSource’s capabilities is nothing new for Gill.
“When we go into a major account and say, ‘For every 500 beds, we can save you $300,000,’ they look at us like we’re nutty,” he says.
But the company’s performance says otherwise.
“I see more and more customers that need to find radical cost reduction … acknowledging the fact that sourcing at a technician level is not value-added,” Gill says. “We’re well-positioned with [health care] trending.”
At BioTronics, Madeira and his team have experienced the kind of cost reductions Gill has promised. Pricing is better across the board with PartsSource, reports Madeira, and he’s been able to reduce his in-house purchasing manpower by a third since signing on with ePartsFinder
last year.
“I don’t have my technicians and engineers sitting here trying to track down parts,” Madeira says. “They can just go fix things.”