3M CANADA MEDICAL DIVISION

 3M Canada Health Care Group was committed to supplying

innovative products and solutions

 Its Major Product Categories included skin and wound care, infection
prevention, stethoscopes, medical devices and Dental etc.

 Medical Division sales to Canadian hospitals were approximately $9

million per month, or 65 per cent of the Medical Division’s revenue,
while the remainder went to the out of hospital market.

 Sales to hospitals were channeled through specialized distributors

called value-added resellers (VARs). There were five VARs
distributing 3M health care products to approximately 350 hospital
customers in Canada

 The out-of-hospital market, which included 5,000 organizations

across the country, such as home care agencies, walk-in clinics and
private physician offices, was serviced by both VARs

 Hospitals were free to choose their channels to purchase 3M

products. The hospitals could elect to buy their goods directly from
3M (for full case shipments only) or through one of the VARs. In
either case, the unit price for products remained the same.

 VARs received an agency fee, which averaged 8 per cent, based on

sales to hospital customers for performing value-added services such
as storage, transportation, product handling

 some VARs offered small lot shipment quantities and just-in-time

(JIT) deliveries

 Because VARs wanted to gain 3M hospital contracts so they were

providing value-added services to the hospital.