Establish Collaborative Strategies to Better Manage a Global Vendor Network Devise a Proper Float Plan

Transcription

1 Establish Collaborative Strategies to Better Manage a Global Vendor Network Devise a Proper Float Plan CBI s Biopharmaceutical Forum on Clinical and Commercial Global Supply Chain Excellence Sandy Onorato Pfizer Inc. July 24, 2012

2 Discussion Summary The Principles of Safe Boating Can Be Applied to Managing a Global Vendor Network 1. Choose the Proper Vessel Vendor Segmentation 2. Assign a Captain Relationship Manager 3. Be Aware of Who is Onboard Internal and External Stakeholders 4. Know the Rules Vendor Governance 5. Know Where You Are and Carry a Chart Onboard Performance Management 6. Be Aware of Changing Conditions Risk Assessment 7. Comments / Questions 1

3 Related Experience 20 + years in various roles within procurement, marketing, and project management. Last 9 years in Pharma industry. Lifetime Certified Purchasing Manager. Technical operations and business roles. Developed successful supplier relationship management programs and preferred supplier strategies. Relationship Manager for several global strategic Vendor relationships for Pfizer. Boat enthusiast. 2

4 Background - Context Pharm Sci Vendor Management Program A significant portion of what is being presented today is a result of Pfizer s Pharmaceutical Sciences organization being tasked to develop a Vendor management system that: Integrates Operations, Quality, & Procurement / Strategic Sourcing functions and objectives globally Provides clarity of roles and responsibilities internally and externally Develops communication strategies and transparency initiatives to ensure a collaborative and agile partnership Builds the relationship strategy with Vendors PharmSci Operational Line (DP,P,L,D, API, EA) Integrated Outsourcing Management Quality Assurance Strategic Sourcing Procurement DP = Drug Product Manufacture, P = Pack, L= Label, D = Distribution, API = Active Pharmaceutical Ingredient, EA= External Analytics 3

5 1. Choose the Proper Vessel Vendor Segmentation 4

6 Vendor Relationship Continuum Strategic Alliance Transactional Basic Vendors Integrated Partners Collaborative Vendors Strategic Vendors Specialty Vendors Vendor management should be variable and appropriate to the specific Vendor relationship. Proper Vendor segmentation is critical to understanding the level of collaboration needed. Not all categories need to receive the same level of Operational, QA, Procurement and Leadership oversight. 5

7 Vendor Segmentation Vendor is used in the broadest sense, inclusive of: Vendors Suppliers Service providers Contract vendors Contract manufacturers Contract test lab CRO / CMO Top Tier Strategic Vendor Collaborative Vendor Specialty Vendor Basic Vendor O v e r s i g h t Vendor segmentation is multi-dimensional and should be appropriate to your company/industry. Pfizer s Pharm Sci Vendor categories were based on value / risk of work; strategic value and anticipated length of the relationship; and the relative frequency of use. 6

8 Vendor Segmentation Definitions 4 Tier Approach Basic Specialty Collaborative Strategic Value / Risk of Work Low risk purchases (e.g. readily available materials & components; routine services) Project specific business value Very important to business Critical to meeting company objectives Relationship Short term (i.e. transaction based) Short to mid term Mid to long term Some strategic value Continuous improvement on service, cost, quality is a focus Long term High strategic value (e.g. multi disciplines, sites, programs, etc. Collaborative engagement with shared benefits Relative use QA Oversight* Frequent and Infrequent possible GMP and GMP/GCP Interface Contractors: As needed basis, short term focus during use. Infrequent Frequent Frequent GMP & GMP/GCP Interface Contractors: As needed basis, short term focus during use. GMP & GMP/GCP Interface Contractors: Proactive, ongoing. GMP & GMP/GCP interface Contractors: Proactive, ongoing. Material Suppliers: QA assessment based on material type & intended use Material Suppliers: QA assessment based on material type & intended use Material Suppliers: QA assessment based on material type & intended use Operational Oversight Tactical; sufficient to ensure terms of purchase agreement and applicable compliance requirements are met Short term focus during supplier operations based on risk assessment Proactive and ongoing relationship management Level of review of tactical work is greater than for strategic supplier Proactive and ongoing relationship management Procurement Oversight Tactical only Procurement Tier as applicable Health Check (annual) 360 Survey; Health Checks *QA oversight includes ongoing risk assessments, performance monitoring & reporting, periodic site visits, quality review meetings 7

9 2. Assign a Captain Relationship Manager 8

10 Relationship Manager Similar to a captain who is responsible for the safe and efficient operation of their vessel, a Relationship Manager is responsible for steering the Vendor in the right direction in order to maximize current and future opportunities. Advocacy Provide a voice for the Vendor and act as a resource for team members Help ensure cultural compatibility Communication Facilitate transparent and open lines of communication Establish alignment on joint deliverables/commitments Decision Making Ensure alignment of priorities and resources across parties Resolve disputes with mediation skills Monitor and Feedback Drive performance management Perform regular risk assessments and address issues 9

11 Relationship Manager Responsibilities Work with Leadership to set strategy and direction for the relationship to build competitive advantages Participate in negotiations of agreements to qualify vendors, ensure favorable business terms, and GMP compliance - CDA / MSA / Pricing Grid - Quality Assurance Agreement (QAA) - Technical Plan Identify opportunities for further collaboration and identify opportunities for mutual value and continuous improvement Oversee Balanced Scorecard - Monitor performance, identify trends and areas for improvement while assessing overall risk Attend monthly Operational Review Meetings Provide agenda topics Ensure alignment of deliverables Escalate issues Chair Business Review Meetings (3x) Highlight accomplishments Evaluate financials Assess high level QA and operations metrics Review forecasts Discuss initiatives and CI activities Organize Annual Leadership Meetings Identify opportunities for future collaboration, investment, and continuous improvement Serves as the final resolution forum for significant unresolved Operations or Quality issues 10

12 3. Be Aware of Who is Onboard Internal and External Stakeholders 11

13 Internal Stakeholders Operations Your internal stakeholders are anyone who has interests that may be positively or negatively affected by the performance of a Vendor. Fish carefully to ensure everyone s interests are represented. Vendor Pfizer Sites Relationship Manager Leadership EH&S Commercial Supply Sourcing Business Units Study Teams Legal Quality Alliance Partners IT Procurement 12

14 External Stakeholders A strategic external stakeholder for most companies, and the focus for discussion today, are Vendors supplying contracted goods or services. Vendors support an organization s objectives while fulfilling their own interests in the growth and prosperity of their business. The closer the alignment in goals is between organizations the healthier the collaboration will be. Vendor relationships can be very straight forward or complicated depending on the mix of work and number of Vendor locations involved. Vendors can provide: Durable goods Simple to complicated services Subject matter expertise Extra pair of hands Geographic reach Any combination of the above 13

15 Managing Stakeholders It is essential for all stakeholders to be swimming in the same direction and working towards equitable business opportunities. Value can only be derived from collaborative relationships that maximize joint outcomes. Key Elements to Consider for Managing your Stakeholder Network: Conduct a global evaluation of Vendor capabilities, risk and performance to set realistic expectations Ensure there is goal alignment to help manage multiple and conflicting priorities across groups Establish Service Level Agreements and collect the appropriate metrics Deliver a unified message and direction to set clear expectations Solicit feedback on stakeholder satisfaction to construct a productive environment Highlight accomplishments and how they can be applied more broadly Practice proactive damage control when an undesirable event occurs 14

16 4. Know the Rules Vendor Governance 15

17 Critical Elements for a Successful Strategic Relationship Governance Structure Senior leader involvement Issue escalation routes Strategy/Vision Defined teams responsible for day to day activities/deliverables Dedicated Relationship Manager Communication Forums Defined frequency, attendees, topics Face-to-face where possible Separate meetings with specific focus (e.g., operational, strategy) Adjustments Changing nature of business needs will require that relationships with Vendors evolve Know when to recalibrate goals, strategies and metrics so there is proper alignment Monitor your Vendor s investments and emerging capabilities to ensure that they support the direction of your business 16

18 Communication Forums Example Leadership Review Meeting Objective: Leadership discussions on key strategic direction and priorities of overall relationship. Review of all joint businesses and opportunities; milestone reporting and resolution of escalated issues Frequency: Annual (minimum) Attendees: Leadership Team (Executive level and senior leaders from Operational line(s); senior leaders from Quality & Procurement; Relationship Manager) Innovation Forums Objective: Joint discussion on new technologies, platforms, or white space opportunities Frequency: 1-2 times / year Attendees: Operational line manager & SMEs; Quality; Relationship Manager Business Review Meeting Objective: Balanced scorecard & highlights review of all vendor sites in use; identification of trends & mitigation plan review / status Frequency: Target 3 times / year Attendees: Relationship Manager; Operations line manager; Quality POC; Procurement; Leadership Team members Quality Review Meeting Objective: Review of quality metrics; learn vendor systems & identify/mitigate gaps; resolution of escalated issues Frequency: Based on risk assessment Attendees: Quality POC, Relationship Manager Features shorter, focused meetings Monthly Operational Review Objective: Ongoing site-level updates on operation & quality performance, contract management, and issue resolution ; metrics review; Attendees: Operations Team members (includes Quality POC & Relationship Manager) Weekly Operational Review Objective: Drive Project Deliverables, (projects, work load, scheduling, & issue resolution Attendees: Operations Line Manager, SME s; Quality Operations as needed 17 17

19 5. Know Where You Are and Carry a Chart Onboard Performance Management 18

20 Performance Management A formalized performance management process that continuously maps the needs of the business and measures the Vendor s ability to meet those needs is critical to managing a global Vendor network. Effective performance monitoring: Increases the flow of communication between your organization and the Vendor Allows for better insights into a Vendor performance Helps to identify, prevent and mitigate supply risk Rationalizes Vendors based upon performance information Weeds out low performers and high-risk Vendors Provides opportunities for top performers to grow their business Assists with uncovering continuous improvement opportunities In order to monitor performance, meaningful metrics based on performance expectations need to be established and should be site and operations based. Metrics can be rolled up further into a Vendor Scorecard for an overall score to capture the holistic value of the relationship. A balanced scorecard approach that integrates metrics for operations, quality, and value perspectives is recommended. 19

21 Metrics Approach Example Supplier Name Green % Monthly Rating YTD Rating Scorecard Frequency Monthly Yellow % Performance Period Jan-12 Red <70% 100.0% 100.0% MONTH 2011 YTD Wgt* Category Metric # Total Perf Wgt* Rating # Total Perf Rating Substantiated Complaints % 6% 6.0% % 6% 6.0% Commitments completion on time % 3% 3.0% % 3% 3.0% Quality 30% Investigations & Deviations - no reportable events % 5% 5.0% % 5% 5.0% Investigations completion on time % 3% 3.0% % 3% 3.0% % CAPA completed on time % 3% 3.0% % 3% 3.0% Batch Record Conformance % 5% 5.0% % 5% 5.0% PharmSci Vendor QA Risk % 5.0% % 5.0% Dashboard On-time delivery performance % 7% 7.0% % 7% 7.0% Operations 30% Quantity Accuracy % 5% 5.0% % 5% 5.0% Quality Right First Time % 7% 7.0% % 7% 7.0% EH&S Risk Rating % 5.0% % 5.0% Operations Survey % 6.0% % 6.0% Technology 20% Technology Survey % 20.0% % 20.0% Value 20% Overall Value Contribution (Survey) % 20.0% % 20.0% *Weightings shown are for illustrative purposes only and not necessarily reflective of Pfizer process. 20

22 6. Be Aware of Changing Conditions Risk Assessment 21

23 Changing Conditions Periodic risk assessments based on the knowledge of activities, performance metrics, and information available at the time of the assessment are vital to managing your business risk and the health of your Vendor relationship. Possible Vendor Risks to Watch Include: Quality Trends Leading indicators Quality Events Investigations or complaints Audit and Inspection Results Findings Performance Metrics Systemic performance issues Organizational /Business Model Changes to business mission Turnover Layoffs and voluntary resignations Service Levels General state of account management, overall communications, response times Financial Health Investor changes, financial statements, Dun & Bradstreet, global newswire information Security Breaches News Media such as Dow Jones Supplier & Risk Monitor Adherence to Agreements Pricing, confidentiality, service levels 22

24 Risk Mitigation Once Vendor risks are identified, a proper oversight plan is needed to address any potential adverse impacts. An effective mitigation plan requires close collaboration with the Vendor and all the relevant stakeholders. Both organizations should work in partnership to develop and monitor mitigation plans to reduce identified risks to an acceptable level and track and address areas of non-compliance. Lastly, mitigation plans should be fair, reasonable and fit for purpose. Parameters for evaluating, categorizing, and prioritizing risks should include the following: Risk likelihood (i.e., probability of risk occurrence) Risk consequence (i.e., impact and severity of risk occurrence) Thresholds to trigger management escalation and activities For any given risk, techniques and methods should be explored to avoid, reduce and control the probability of risk occurrence. However, some risks may be accepted and simply monitored. 23

25 7. Comments / Questions 24