Even Roger needs a good racket to win
Change and action usually starts with either inspiration or desperation.
Either you are inspired and intrigued by the opportunities and possibilities that something offers. Or you are desperate and disappointed about the fact that things do not go the way you want them to go and you are almost forced to change something.
This also applies to Tendering.
You can easily be inspired by the big opportunity that this channel has to offer in terms of revenue and growth. (cite numbers?) You can also be intrigued by the untapped potential in areas like tender screening & planning, predictive pricing, scenario-management or tender value proposition that can result in better pricing and therefore higher revenues and margins. Or in better tender supply planning that will result in less stock-outs, less penalties and an improved reputation and partnership with your biggest customers. And most importantly, ensuring patients get the medication they need in time.
Or you can feel some sort of desperation because you are constantly running behind tenders, instead of managing them strategically as it would be adequate for the size of the opportunity. Or even worse: You are winning tenders, but cannot supply and therefore immediately destroy valuable customer equity which you have built up so carefully over the last years. You feel you need to change something.
Be it for inspiration or for desperation, there seems to be a common understanding amongst pharma companies that there is value and a strong ROI in investing in this significant and growing channel. My experience whilst leading the tender business worldwide for one of the biggest pharma companies fully supports this: Yes, you can improve visibility and planning-lead time on tenders and therefore improve your resource allocation. Yes, you can make much more strategic and better pricing decisions. And yes, you can improve supply planning and at a next level even improve your manufacturing capacity and therefore production cost and margins on a global scale. It’s possible and it’s worth it.
However, even though most pharma companies understand the opportunity, only few seem to have acted upon it. A recent study by EPP and CubeRM shows that only 15% of pharma companies are using a software/tool to manage tenders. A tender-tool might not be the first and is certainly not the only thing you need to manage your tender business more strategically. But in my experience, if you want to get serious about it you definitely do need one.
Looking back at building up and leading the global Tenders business, there were 4 key drivers for success: Dedication, strong sponsorship, talent and a good tool.
Let’s start with dedication: You need somebody to be fully dedicated and takes full ownership to build and improve your tender business. Somebody doing it 30%-40% on top of his or her daily job is in my experience not going to make it. You also need sponsorship from senior management as processes might need to be adapted, incentives to be changed and resources to be re-allocated. Depending were you currently are with your tender business, this will be a change-project more than anything else. For change-projects you need strong sponsors. And you need good talent to drive and lead this initiative: A highly motivated person or team who can mobilize and connect people from different departments, who wants to continuously improve the status-quo and is resilient and disciplined in the execution of the project.
And you need a tool. Why?
To a big extend, your tender business is plannable. Tenders have a start date, a contract duration and therefore a predictable end date. And then the cycle starts again. That means for the major part of your biggest opportunities you can plan ahead around 12 months upfront. A tool can help you plan, manage and track your tenders including dates, prices, volumes and probabilities to win. Amongst many other things, this will allow you to:
- Have a local, regional and global overview over your biggest upcoming tender risks and opportunities for your business for the next 12-24 months. It will inform your operating plan and allow you to strategically allocate resources towards the biggest risks and opportunities.
- Access relevant tender data points from different countries such as bidding & winning prices and award criteria in order to inform your bidding strategies and improve pricing decisions.
- Systematically improve your understanding of why you are winning and losing tenders across your markets and your portfolio and where your biggest hurdles are to win more business.
- Inform your demand management team about the biggest upcoming tender volumes and probabilities to win in order to improve your supply planning. As most companies have a global supply network, you also need a global tender volume overview to make an impact.
- Use the aggregated volume, price and probability-to-win information to simulate different scenarios of manufacturing capacities and realize opportunities for cost reduction on the products with the most impact.
There might also be additional very useful features such as integrated approval flows, document management or advanced analytics.
As mentioned before, just the tool alone will not be sufficient. You will need an empowered and talented colleague or team behind it to make sure all the great data, the increased visibility, the improved communication between the departments and the increased planning lead time is all translated into clear business value and measurable results.
It’s a bit like in tennis. You can buy the best tennis racket in the world. That does not mean you can immediately play like Roger Federer. Like Roger you still need the above four: Dedication, Talent, Sponsorship… and a tool. Because even Roger needs a good racket to win his games.
by Nico Bacharidis