Industry and agencies pour cold water on global procurement
pharmafile | May 19, 2005 | News story | Medical Communications |Â Â Â
Global procurement processes don't deliver best value and are frequently flawed, according to speakers at the Pharmaceutical Society's annual Question Time.
The five panel members, speaking at London's Reform Club, were unconvinced by the global argument, stressing deals were not working and that better returns would come from a more local approach.
Ben Davies, managing director of PAN Advertising, said: "Global procurement does not work as there is no ownership at local level."
His view was broadly endorsed by other panel members, including Andy Davis, managing director at Takeda UK, who argued that too many global procurement decisions were made reactively.
He said: "If I were to look into the future, global procurement departments would have to justify their existence and procurement decisions would be left to local affiliate companies."
AstraZeneca's global category manager medical and marketing communications David Pilley said his company was developing a global strategic approach to working with communication agencies.
But he warned that a global approach to procurement was not always ideal, and that decisions should be based on whichever delivered best value.
"A pan-European PR programme delivered by a network of agencies is feasible but a global printing deal is not," he said.
The event, chaired by Ogilvy Healthworld UK's chairman Gloria Gibbons, also debated the cost to agencies of pitching and the value of procurement.
As cost pressures tighten, the buying of goods and services has become a viable alternative for pharma companies and healthcare agencies.
PAN's Davies, who said that procurement now represented 20% of his job, said that agencies should embrace procurement as it could improve profitability.
"We have evolved systems: resourcing, costing structures, put in new software, as procurement is not going to go away, and this has made us more competitive in the procurement arena," he said.
Davies said that product and marketing managers didn't have time for contract negotiations, purchase orders and invoices, and that the use of outsourcing and procurement groups had alleviated this workload.
Speaking from the industry's perspective, Pilley said that for procurement to be successful, its departments needed to understand what marketing is about, the needs and drivers of marketers, and the services they buy.
He called for a joint working relationship, whereby marketers and procurement departments agreed a strategy for engagement which "ensures the right agencies deliver the right programmes in an optimal way".
He said a mutually trusting and proactive relationship would provide the best results but stressed this was still a far way off.
"Many people talk about transparent relationships but more are opaque," he added.
Questioned about who should run this relationship, Pilley said it depended on who was best placed to do so and that this could be the marketer or procurement person.
"The important point is that both have good visibility across organisations. The marketing manager can look at touch points between the agency and organisations and procurement has a view to. If you get the relationship right then each will understand how these organisations interact with each other."
Meanwhile, regarding the cost of pitching, Gibbons said: "There seems to be an increasing number of agencies being asked to pitch. It used to be three or four, now it's often seven or eight."
Louisa Pau, managing director of Woolley Pau, said her agency never agreed to take part in pitches involving more than four agencies and dismissed agencies who got involved in seven or eight-way pitches as "absolutely crackers".
