The NAPPSA Business-to-Business Network: Creating an Ecosystem for Community Empowerment
Anthony Ikeme, PhD and Emmanuel Ezirim, RPh, FNAPPSA
The NAPPSA Business-to-business (B-to-B) network has become a staple component of NAPPSA’s economic sustainability. It has proven to be a reliable vehicle for mentorship, business skill transfer, exchange of ideas, and dissemination of best practices among Independent Pharmacy Business owners in NAPPSA. The extent of its success and value it has added to the organization have aroused interest, with many inquiring if this successful model can be replicated in other professional areas within NAPPSA.
The main purpose of this article is to present a conceptual typology of the B-to-B concept. Included in this analytical exercise is a full unpacking of the variety of consumer involvement types in supply networks to understand the conceptual landscape housing the B-to-B concept. This enables us to understand why the B-to-B system suits the purpose of NAPPSA and grasp the full scope and magnitude of its impact and potentials for community empowerment. This backdrop allows us to delve more closely into the operational structure of the NAPPSA version of the B-to-B system and the benefits it portends to the participating members, and NAPPSA in general.
- What is Business-to-business?
Every business model (BM) is designed to “provide a link between the individual firm and the larger production and consumption system in which it operates. The Business-to-business framework, also called is no different. It is a form of transaction between businesses or between a business and a cohesive group of individual retailers. The participants in a B-to-B relationship could be manufacturer and wholesaler, or a wholesaler and a group of retailers, service provider and a group of retailers, or any other combination of the participating players. The key distinguishing feature is that the business is conducted between companies (or quasi-companies), rather than between a company and one individual consumer.
Business-to-business stands in marked contrast to the business-to-consumer (B-2-C), consumer-to-business (C-2-B), business-to-government (B-2-G) and other supply transactions which businesses, consumers, and/or the governments engage in. Table 1 presents the contrasting features of the multiple supply networks and business models in the commerce world. In evaluating the best supply network for NAPPSA business owners, the question to contemplate is “which business organizational principle will allow the group to achieve the twin goals of i) economic empowerment of the participating member businesses and, ii) generate income for the NAPPSA organization?” We can immediately discount a number of the business supply systems on the table (such as C-2-C, C-2-G, G-2-C, and G-2-G) for lacking a role for established businesses or group of businesses. We can also exclude G-2-B and C-2-B because the leading actor in those arrangements are the government and consumers respectively, not business. Of all the remaining marketing models presented on the table, B2C, is probably the most common type most people are familiar with. It takes place when a business—such as a grocery, storefront retail store, pharmacy store, an online consumer legal services, or an online medical information organization—market their products or services to the public. Hence, this entails marketing to individual everyday consumers in the marketplace.
Table 1: Comparative Matrix of Supply networks
Whereas B-2-C marketers market to individual consumers, B-2-B marketers market to the business or corporate decision maker and/or influencer; and B-2-G marketers market to the responsible government contracting officer or representative, or government program manager. Both B-2-B and B-2-G supply system entail bulk buying and higher volume purchase than the B-2-C supply system. Other differences between B-2-C, B-2-B and B-2-G reside in the complexity of the purchase decision making and length of the buying process. The purchase decision usually by one consumer in a B-2-C transaction is less complex in comparison to the decision-making process in B-2-B or B-2-G. This is due to the need to understand and comply with organizational processes for requesting, approving, procuring, and paying for purchases in the B-2-B and B-2-G settings. Also the number of people involved in the purchase process for B-2-B and B-2-G makes it longer in comparison to B-2-C. Typically, the buying process is shortest for B-2-C, longer for B-2-B, and longest for B-2-G.
From the perspective of group business engagement, only B-2-G and B-2-B models merit a strong consideration for a group like NAPPSA. Both models allow the opportunity for the scale and volume of business operations that can attract the many NAPPSA Independent business owners under one umbrella. A cursory review of the B-2-G arrangement would lead one to conclude that it cannot serve as an organizing business operational principle for NAPPSA Independent business group. In the B-2-G marketing model, businesses generally respond to requirements published by a certain government entity. For example, a public, structured bidding process. These bids may or may not be successful and may not be as frequent or reliable for planning the future growth of the collaborative venture.
B-2-B is the only supply system that makes sense for a group like NAPPSA with independent business owners. Under the B-2-B framework, it is easy to understand the benefit in multiple independent businesses banding together to negotiate deals with bigger suppliers and distributors without feeling like they are in competition with each other. Securing these deals in a B-2-B framework does not negate their ability to continue operating their B-2-C relationship with their individual customers for their respective stores. The B-2-B framework also gives the business owners the control to determine the pace of their growth, which business or group of businesses to have relationship with, what products should flow through the network, as well as the scale and structure of the venture.
From the foregoing discussion, it makes sense, therefore, that the B-2-B supply system is the best fit for the NAPPSA business group to achieve the dual goals of economic empowerment of NAPPSA B2B members and generating income for the NAPPSA organization. Next, let’s now discuss the practicalities and peculiar features of the NAPPSA B-2-B framework.
- NAPPSA B-2-B Framework
NAPPSA B-2-B framework is an innovative application of the B-2-B concept. As designed, it brings a group of Independent pharmacy business owners under one umbrella to create an empowered business community for mutual interdependence and benefits. This arrangement creates a quasi-company with an enhanced capacity to negotiate deals with bigger companies as one entity. While there is a lot of focus on the group purchase element of the NAPPSA B-2-B which affords them discounts and rebates on their group purchase, leading many to erroneously refer to it as a buying group. It must be emphasized that such a characterization is misleading. NAPPSA B-2-B is not just a buying group. In addition to cost savings and bargaining benefit, in group purchase of pharmaceutical goods and services, the NAPPSA B-2-B provide other benefits to its members such as mentorship & training; exchange of best practices; group Investment & collaborative business venture opportunities; and greater voice in advocacy.
With the opportunity to be the master of their circumstance and drivers of their progress in all these areas, NAPPSA B-2-B community is positioned to be an empowered group with the capacity to be a powerful voice in all aspects of the Pharmacy Retail business and beyond. For the purpose of illustration, let us hone-in on the group purchase of goods and service. This element of group purchase in the NAPPSA B-2-B framework entail various group empowerment characteristics including (i) ability of B-2-B members to participate in customizing the nature of their relationship with the supplier, (ii) opportunity to tailor goods or services to the particular need of the participating member businesses, (iii) affords the participants the leverage to drive decision making in the business relationship.
An additional characteristic of NAPPSA B-2-B is that it promotes collaboration even among competitors. Co-opetition is a term used to describe coperative competition. This allows businesses to form mutually beneficial partnerships that make all parties more competitive. The mentorship, exchange of best practices among NAPPSA B-2-B members, are examples of the co-opetitive qualities of the NAPPSA B-2-B structure. Co-opetition is a particularly useful strategy for agile start-ups and small players in an intensely competitive business environment. Working co-opetitively with other businesses creates mechanisms for effective scaling, extends the influence of smaller businesses, and helps to widen access to the market.
An African proverb which has become popular among the NAPPSA B-2-B members goes: “if you want to go fast, then go alone, but if you want to go far, then go together”. In different words, but inspired by the same understanding, the founder and managing partner of Adventure Capital®, Stuart Richardson, posited that “as big as your dreams are, and as smart as you might think you are, you can’t do it alone.” These sayings capture the spirit behind the NAPPSA B-2-B philosophy.
- Benefits of B-2-B Network to the NAPPSA Organization
Our discussion in the previous section clearly alludes to the benefits that accrue to NAPPSA B-2-B members and the NAPPSA organization through the activities of the network. In this section, we elaborate on these benefits to enable us to understand the impact of NAPPSA B-2-B and the inherent potentials it holds for future growth and success within our professional community. The NAPPSA B-2-B yields benefits to the community in many ways:
- Wealth retention in the community: The control exerted by the NAPPSA B-2-B network on the sourcing of the group’s goods and services allows them the ability to retain the community’s wealth within the community. Wherever possible, members can access capabilities within the network rather than source it from the outside.
- Mentorship for Group Success: Mentorship is the engine for sustaining a group success. NAPPSA B-2-B network creates the opportunity for more experienced and successful business owners to provide guidance and support for new and aspiring business owners as they seek to set up their own business. Inspired and entrepreneurial minded young professionals can be groomed and prepared for business leadership which will help sustain NAPPSA’s success as a professional community.
- Training and Exchange of best practices: NAPPSA B-2-B members have become the best source of support to one another. Best practices and tips for business success are routinely exchanged between members in the spirit Co-opetitiveness.
- Collaboration and group venture opportunities: The quality and diversity of entrepreneurs in the NAPPSA B-2-B presents opportunities for collaboration and pooling resources together for new ventures. This potentials inherent in this element of the network is massive and extend beyond the full length of the pharmaceutical value chain to the entire spectrum of the healthcare and wellness sector.
- Leveraging of the best thinking and experience in NAPPSA: The NAPPSA B-2-B network prides itself in making it possible for members to be “in business for themselves but not by themselves”. This means that though they are in business for their own benefit, they enjoy the comfort and privilege of leveraging the best thinking, efforts, networks, and negotiating skills of others to their own benefit. Members are able to take advantage of the group business deals regardless of whether they are involved in identifying or negotiating those deals. The savings in cost and time for all participating member businesses is a significant benefit.
- Greater voice and influence: The strength in unity is a well-known African concept symbolized by the broomstick and the broom. A single broomstick is of no consequence and is easily broken. But several broomsticks banded together become a broom which is not only a great tool for sweeping but a fortified structure that cannot be broken. Working alone, independent business owners are voiceless and powerless. But working together, they are a force with greater voice and influence within the retail pharmacy space.
- Mechanism for the financial sustainability of NAPPSA: NAPPSA B-2-B is structured to generate rebates to the participating members as well as an administrative fee to NAPPSA for creating and managing the platform that sustains the B-2-B network. This administrative fee has been growing over time but the pace of growth has jumped significantly with the NAPPSA B-2-B Roadshows that gathered momentum from November 2018. Figures 1 and 2 show the exponential increase in NAPPSA’s B-2-B income in the last 3 years with over 250% increase achieved between 2018 and 2020. This income from the NAPPSA B-2-B has been the financial engine for NAPPSA and is designated to serve as the fuel behind NAPPSA’s Endowment fund established to sustain NAPPSA now and beyond.
The scale and dimensions of these benefits are bound to grow as we continue to identify new ways to harness the immense potential in our B-2-B network.
The NAPPSA B-2-B is a visionary project in NAPPSA, designed to take advantage of the evolving trends in global commerce and business. It is futuristic and original in its adaptation of a business concept into a framework for transforming the economic fortunes of a non-profit while providing a platform for the economic empowerment of the participating independent pharmacy owners. When asked about why he scored so often, Wayne Gretzky, viewed by many as the greatest hockey player ever, would say: “I skate to where the puck is going to be, not where it has been”. Same can be said of NAPPSA B-2-B. It is a norm-shattering concept that hinges on the principles of collaboration and co-opetition.
We hope that our discussion has enabled you to understand, not just the underpinnings of the NAPPSA B-2-B, but the conceptual landscape within which it is situated. This understanding allowed us to arrive at the conclusion that the B-2-B system is best suited for NAPPSA and explains its positive impact on NAPPSA’s financial performance and its potential for the economic empowerment of the NAPPSA Independent business owners.
Finally, the success of the NAPPSA B-2-B is instructive and suggests that it is high time to revise radically how we perceive inter-business relationships. Our analysis suggests that it is time to break out of some straitjacketed traditions and transform the focus of inter-business linkages to relationship management and ecosystems orchestration