Here are two interesting stories of middlemen inserting themselves into supply chains. The first concerns products — or, more accurately, produce. The Globe and Mail has a profile of 100 Mile Market, an Ontario-based firm that is the go between for farmers and locavore foodies (Linking the farmers to the foodies, Jul 6).
Despite the proliferation of farmers’ markets and community-based local co-operatives, food industry observers say a dependable link between producers of farm-fresh products and local customers is often lacking. Becoming an efficient middle man is the strategy behind 100 Mile Market Inc., a new Kitchener-based venture.
“There are some fantastic producers out there and there is a big demand for local food, but there is a gap in the middle,” says veteran sales and marketing executive Chris McKittrick, co-founder of 100 Mile Market with former tobacco farmer and business professor Albert Knab, and Paul Knechtel, the former president of Knechtel Corp., a family-owned grocery chain sold to Oshawa Group in 1990. …
So far, 100 Mile Market has partnered with more than 135 producers who supply more than 1,400 fresh food products to about 100 clients, including chefs, caterers, and a large Toronto convention centre.
So 100 Mile Market solves an operational problem driven by a lack of scale. No one farm can supply everything to, say, a restaurant and one restaurant is not so big that farmers fall over themselves to win itsbusiness. Enter the middleman to aggregate both supply and demand. 100 Mile Market can be close to a one stop shop for a restaurant while having enough demand to take a large share of a farmer’s crop.
The second story is also about creating scale, at least on one side of the market. It, however, is in a service supply chain. NPR’s Planet Money had a report (Medical Billing, A President’s Cousin, And The Pain-In-The-Butt Index, Jul 1) and a podcast (The Tuesday Podcast: The Pain-In-The-Butt Index, Jul 6) on athenahealth, a firm that specializes in collecting money from insurance providers on the behalf of doctors.
Jonathan Bush, the company’s CEO, got into the health-care business in 1997, when he became co-owner of a birthing center. But he quickly figured out what doctors and hospitals already knew. Getting paid is a huge pain. Say the patient is covered by Blue Cross. Which Blue Cross? Did she need a referral? What’s the right billing code?
“It became our obsession,” Bush says. “We thought nothing about women’s health. We thought nothing about birth. We spent all our time screwing around with trying to get checks.” So Bush got into a different part of the health-care business: He launched athenahealth, a company that handles billing for doctors’ offices.
So it might not seem that American medicine needs another party taking a slice of the available dollars, but arguably part of the problem in American medicine is a lack of scale — at least on the provider side. A small clinic has limited resources to sink in managing its billing processes and must therefore maintain flexibility in handling the various insurers it deals with. One is potentially left with an inefficient, paper-based process. Bush claims that the average doctor gets 1,000 faxes per month. I am not sure how one could ever verify that number, but it makes for an interesting bit of trivia. Part of the way athenahealth can create value is by working with insurers to have more work done electronically and they have had some success along those lines; fully two-thirds of their payments are now done electronically. However, dealing with some insurers is still time-consuming. Check out athenahealth’s Pain-in-the-Butt index that ranks the ease of working with different insurance providers.