- Strategic Positioning
From being a Supplier exchange, GHX positioned itself to be become one of the leading internet based healthcare marketplaces.
They followed predominately a Need-based positioning so that they could make an efficient and cost effective supply chain management system for Healthcare products and services along with providing greater customer value based on trust, fairness and transparency achieved by integrating the global supplier and customer base.
At the same time, they also followed Access-based positioning to reach the global marketplace through the power of internet technology.
- Aligning IT Strategy with Business Strategy
- In order to eliminate the inefficiencies in the supply chain of individual healthcare entities, there was a need for consolidation of such entities and integration of operations between the merged entities. This led to high utilization of internet technology to redesign the entire supply chain.
- Initially, GHX gained technical know-how from third party supply chain solution vendors, like i2, IBM and Ariba, for faster penetration in the target market.
- Acquisition of CentriMed helped GHX to utilize CentriMed solution to enable the customers to browse an integrated supplier catalog and obtain product descriptions, pricing and order details.
- Later on GHX developed functionality within the Centrimed solution to effectively connect to its global suppliers.
- The unique approach that GHX adopted to offer a good customer value was by acting as a bridge, leading the customers to the suppliers but never interfering with the internal system operations of its suppliers, distributors or manufacturers.
- An application was developed to connect the internal purchasing and billing systems of the buyers to the supplier’s internal order fulfilment and billing systems. A system integration consulting service was also initiated for their supplier’s network.
- Another application was developed to connect alliance partner marketplaces with the GHX system. This allowed efficient supply chain management between GHX and independent healthcare providers.
- Fit of Activities
GHX was able to maintain its fit of activities by building unique capabilities across its various offerings. It not only integrated different business models and cultures but also enhanced customer value through technology, services, efficient healthcare supply chain and logistics.
8. Value chain analysis
The approach of GTX in providing the solutions to its stakeholders was very different from others. While other dot com players wanted to influence and dominate almost at every position in the value chain, GTX was never interested in taking over their customer’s systems. What they wanted to provide is a network to connect all parties but “stopping at the door of their organizations”. Allow individual customers to handle their own business, manage their own data, but, on an integrated and interconnected value added centralized platform.
Apart from the 5 founder firms and many other healthcare industry players (OEMs, service providers, product vendors, technology partners) taken in the network by mergers or alliances, GTX has large business value network which included the large clientele.
The main stake holders in the health care market place provided by GTX are the providers, suppliers and distributors. GTX is connecting 3,900 healthcare providers to more than 350 manufacturer and distributor divisions. The networked system provides different customized solutions to increase the stakeholder’s value and integrates and simplifies the process of business interactions between all the stakeholders.
The value chain includes a web based health care market place with many value added and customized software solution which brings potential customers in direct contact with providers and suppliers. It reduce operating costs, order cost, transaction cost, helps to utilize employees more effectively, improve financial results and allows the stakeholders focus more on patient care.
Distributers/Supplier’s value chain - GHX has leveraged e-commerce technology and customized software solution to create an EDI infrastructure which enables suppliers to connect directly with potential custtomers and receive 100% direct orders from customers electronically. It is minimizing the order processing cost and time. The solution is platform independent and makes the supplier’s supply chain most efficient, making inventory management simpler and giving the suppliers better visibility to their market ecosystem to take better business decisions. The ultimate value is in reduction of operation cost, better resource utilization and better financial performance by reducing operating cost.
Provider’s value chain - It starts with handling content management strategy efficiently by GTX solutions and ends at automating the financial transaction overheads, thereby reducing the processing cycle time, transactional discrepancy and improving internal control.
The total value chain interconnects the manufacturers to suppliers and healthcare providers directly with each other by technically integrating their individual systems by some standardized solution of GHX with an objective to make the total supply chain efficient and perform better financially by reducing operating costs for all members of the healthcare value chain. Its ROI depended on the customer to customer depending upon the rate of penetration of different GTH solutions into their core systems.
- Trade Offs
GTX is a diversified player, it provides technology solutions, it is a services company and also a logistic and healthcare supply chain provider. It is always a challenge to develop a perfect business model in such a blended plethora. Mergers and acquisitions were definitely served strategic business objectives but came at a cost of complex overhead of assimilating different company cultures. It was difficult to streamline the different cultures brought in and practiced by different partners into a shared culture.
The founders of GTX were also competing giants, so defining a common business interest was complex enough to handle. Resource management was again a major trade off as all the founders needed to part with some of their best employees’ at least temporarily.
The inherent nature of any online business model is that the users don’t expect to be charged for the services provided online. The complexity rose when GTX needed to attract buyers and they did not charge them and Medibuy needed to attract suppliers and it could not afford to charge them. They needed to compromise on conflicting business interests to have a viable pricing model where all stake holders pay for mutual benefits and to take the health care industry forward.It also has to decide whether to gain more critical mass in Europe or concentrate on dominating US markets as different investors have different priorities.
