By Vic Nunes | 11/02/2020 | Vic’s Views

To start, most young Spine Ortho companies have a small product line offering and most are also focused in a small territory of the country probably expanding their customer footprint, one hospital or one surgeon at a time. Depending on revenue size and territory presence, they’re usually working with a couple of independent distributors handling their product line along with other companies’ products.

Here’s the challenge:

Many of these young companies struggle with the ability to financially manage the high commission rates these distributors charge and the incredible capital outlay to outfit these distributors with the right amount of field inventory. Then there’s the whole discussion on how to maintain a mutual beneficial relationship with your distributors while keeping them supplied with the right amount of inventory without getting caught up in arguments over lack of inventory in the field.

As an investor, you should be concerned over the demands of a small Spine company. Building inventory is extremely expensive but building inventory and allocating to distributors without the visibility to properly manage that inventory is madness.

I’ve had several clients state that they feel they are deploying inventory into a black hole, deploying hundreds of kits to distributors, only to have distributors request more kits within a short period of time.

Is it legit? What is happening to the inventory that was allocated? Is it getting the appropriate turns or is it stuck in consignment at a hospital when it’s supposed to be in the control of the distributor? These are common questions that executives have ongoing. The Spine company’s number one frustration is the excessive inventory costs and not knowing where it is and how it’s being used. Their number one wish is the ability to have checks and balances in place to help manage distributors and their allocated inventory.

Fortunately for the industry there is Quest, an autonomous inventory tracking device available on the market made by QMed Innovations that will report on a daily basis its location, number of surgical events or inventory turns, plus many other features. The key here is that as a Spine company you now have the analytical tools to be able to better decide what you build and deploy and the allocation of new inventory. The days where you struggle with inventory builds or deployment are over with Quest. It’s really going from being totally blind to your inventory location and turns to having full 20/20 visibility to all your inventory with daily updated data at your fingertips. As an investor you should be concerned if you don’t have a proper way to manage inventory deployment, but you should also know that there is a solution in Quest.