Procurement: Clever Leverage - Pharmaceutical Executive


Procurement: Clever Leverage
Don't be afraid of sourcing consolidation—the benefits outweigh the challenges.

Pharma Meetings

Today, companies have already experienced or are considering the benefits of purchasing the services of the most appropriate suppliers for each job, undertaking the coordination between suppliers internally. For example, medical communications companies provide the meeting content and materials while events management companies plan and manage meeting logistics. A drawback to this strategy is the need to coordinate more than one vendor for a meeting. One way to address this issue is to add a supplier performance measure specifically around their ability to collaborate with one another.

Does that contradict the part about turning away from a one-stop-shop approach?

It actually supports it, because when you turn away from the one-stop-shop and determine that you want a medical communications agency to be doing content, you create a preferred supplier program for that specific area, and another one around meeting logistics. The two are really stand-alone strategies.

Preferred supplier programs are increasingly common strategies across numerous categories because it reduces the number of suppliers you need to manage. That enables you to spend more time really developing them to clearly understand your needs and culture. Both clients and suppliers benefit from that expanded communication.

Another advantage is that it gets departments to share best practices and agree on standard procedures, which makes it easier for suppliers to succeed.

For example, if I have a supplier whose performance surveys are saying that they're getting top ratings on nine out of ten projects, and there's a low rating on another one, the first thing I do is find out what's going on with that particular event. Perhaps it's a disconnect in communication or an unreasonable expectation on the part of either the supplier or the customer, or there's a misunderstanding in terms of what services should be provided.

Often the result is that clarity around service or approach is required, rather than either party doing a bad job. Without a preferred supplier program with established performance management tactics, clients and suppliers don't necessarily resolve the conflict.

What impact does a preferred supplier program have on leveraging volume?

There's a double layer in meetings. The first is that a lot of people, when they talk about preferred supplier programs for event management companies, for example, there's the assumption that it's strictly focused on fees. And yes, it is focused on fees. And the idea is, if I'm now going to have you do twenty, thirty, forty meetings for me, rather than three meetings, and I'm going to simplify your engagement process so you don't have to do twenty, thirty, forty proposals and contracts and go through the competitive bid process, then I'm looking for a reduction in cost from you. Because I'm really making it more streamlined and increasing your revenue stream without significantly increasing your marketing activities.

The second is that event management companies are purchasing on behalf of the company, so now I'm also going to ask you to go purchase wisely for me and actually document that to tell me what's been achieved. For example, if you're buying ground transportation, or food and beverage, or activities, I want you to negotiate with those third-party suppliers and reduce the level of spend.

What's the bottom-line value of monitoring all of this?

The ability to capture company-level data offers a few benefits. First, the obvious, is leverage. But the more dominant ones are enhanced compliance tools and better demand management. As a compliance tool, software systems can help facilitate companies' specific policies around meetings. [See chart.]

Many companies have instituted mandates that regulate where physician meetings may be conducted. Some differentiate by city or property, sometimes disallowing resorts, spas, or five-star hotels. Most make that decision by putting the site selection up to the "New York Times test," asking, "Will this destination stand front-page scrutiny if it's perceived as a luxury destination?"

Demand management addresses concerns including:

  • Do we need to hold this meeting?
  • Are the right people attending?
  • Are we spending the right amount?

It also examines questions about size and attendance. For example, if we've always had a thousand people at a particular internal meeting, do they all need to be there? Questions come up such as:

  • Do they have an active role?
  • Is it a direct impact on their job?
  • Do they need to know the information and is this the only way to get it?

You may realize that instead of a meeting of a thousand you may need one of five hundred. Many pharma companies have taken steps to reduce costs through supply strategies, so the next logical step is to either reduce the number of meetings or the number of attendees, or change the way they do meetings.

The ability to capture data and analyze it enables management to make informed decisions.

What are the policy implications of these consolidation initiatives?

Although most companies have formal corporate travel policies, few have formal meeting policies in place. Travel policies, when implemented, are approved by the most senior levels of management and communicated to individual employees.

Meeting policies are gradually emerging at many companies, though, to put tighter controls on things, including, but not limited to:

  • meetings approval processes
  • use of travel and/or preferred supplier programs
  • types of destinations and venues

Any other general comments about sourcing strategies?

First, getting the right people around the table is critical to success. Those who sponsor, manage, plan and otherwise support meetings have a tremendous amount of knowledge and expertise to lend to the process of developing strategies. Second, preferred programs and consolidated sourcing activities are only effective when the model also accommodates the differences from one meeting type to another. For example, physician meetings versus large product launches can benefit from consolidated programs as long as the resources and execution are appropriate for each meeting type. When both are inherent in the sourcing models, the result is the right quality, service, and cost for the company.


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