Please login to the form below

Are reverse auctions the best way to procure marketing services?

Managing Director Martin Brass discusses what a reverse auction is, and whether it truly is a good way for healthcare companies to drive efficiencies when procuring marketing services.
Many years ago I was invited by a friend, who was working at PWC at the time, to a demo of an innovation in enterprise purchasing technology. I have to be honest that at the time, Fred Bassett and I were working with Robbie Williams and his managers developing a new strategy and business model for music artists, so this invitation wasn’t exactly “rock and roll”. Nonetheless, I decided to attend. What I experienced that day was a reverse auction.

Fast forward 13 years. Blue Latitude Health is now a 70 person company with global and regional clients from some of the largest companies in the healthcare sector. These companies have developed very sophisticated procurement departments whose role is to purchase products and services in various categories at an optimal price.


An invitation to race to the bottom

What is a reverse auction? Well, simply put, it is the same as an auction except that, instead of a group of buyers bidding up the price on an item, a group of vendors are bidding down the price. In a regular auction, the market value of an item is based on the highest price that a bidder is willing to pay for it. In a reverse auction, the value is decided by the lowest price that a vendor is willing to sell it for.

Several weeks ago, I received an invitation from an agent of one of our clients to participate in an auction for market research services. On reading the small print I became aware that this was, in fact, a reverse auction. We had been selected as one of 20 or so companies to bid to become a preferred global partner for research services. What was being auctioned was our rate card. The two companies with the lowest average rate cards would be chosen to join their panel of vendors. 


I was intrigued enough to accept the invitation and complete the comprehensive RFI documentation that would qualify us in or out of the process. However, it made me question whether a reverse auction would actually work for the procurement of services at all. Sure, if you are buying a commodity, where the quality of the product is standard (or within a range) then a reverse auction will simply choose the most efficient vendor. If the vendor is efficient and has a high profit margin, then they can afford to sell their product for a lower price. But services are different, right? Services are performed by people who are experienced and expertly trained and the output, or ‘product’, is not standard, and in the case of research, is often unknown!  


Download the full article from Blue Latitude Health

10th October 2016

Share

Tags

Company Details

Blue Latitude Health

+44 203 328 1840

Contact Website

Address:
Blue Latitude Health (UK)
140 Aldersgate Street
London
EC1A 4HY
United Kingdom

Latest content on this profile

Report: Customer experience, shaping digital healthcare
In this issue of ‘Perspective’ we speak with industry experts to learn about the world of digital healthcare, and how pharma is beginning to utilise these modern technologies to enhance treatment and improve patient and stakeholder outcomes.
Blue Latitude Health
The changing face of pharma in the precision era
Blue Latitude Health speaks to Nancy Brandt, a Senior Leader in Global Medical Information at a top 20 biopharma organisation. Here, she reveals what pharmaceutical companies need to do to prepare to bring precision medicines to market and how she is ensuring the patient is consulted every step of the way.
Blue Latitude Health
Creative problem solving, solved
Customer Experience Consultant Eimear Power explains how pharma teams can unlock their creativity and foster truly innovative ideas.
Blue Latitude Health
Three strategies for managing loss of exclusivity successfully
Claire Taylor, Senior Associate Consultant at Blue Latitude Health explains why you should be strategically planning your LOE strategy years in advance.
Blue Latitude Health
Empowered patients: shaking the foundations of healthcare
Precision medicine represents a new paradigm in healthcare.This new approach to treating and preventing disease views the patient holistically, analysing their genes, environment and lifestyle, and using this information to make a more accurate treatment decision. Here we discuss the barriers, opportunities and potential outcomes of the precision medicine era in healthcare.
Blue Latitude Health
A uniquely English genomic medicine service
The UK National Health Service is developing one standardised approach to embedding precision medicine across the whole of England. Blue Latitude Health speaks to Dr Tom Fowler, Deputy Chief Scientist and Director of Public Health at Genomics England, to find out how the NHS is achieving this goal.
Blue Latitude Health