Strategic Value Beyond Savings

Transcription

1 Strategic Value Beyond Savings Procurement & Supply Chains Role in Delivering Sustainable Business Success Paula Gildert BSc(Hons) FRSA FCIPS MIET CEng VP Head Global Development Strategic Sourcing, Novartis Copenhagen 28 th October 2014

2 Tesco procurement practices exposed and it s not pretty Posted on September 29, 2014 by David Atkinson For years we have been bullied and browbeaten by Tesco s buyers, who demand d a lowball ll price for our goods then keep screwing us for more as the contract goes on. Now compare that with Aldi. Don t get me wrong, Aldi drives a very hard bargain, but once you ve agreed a deal for a year, it sticks for a year. They don t come back demanding new bonuses, discounts and every other trick. As a result and this news will not go down well at Tesco HQ we ll offer Aldi a better price at the outset. Yes, that s right: for all its aggressive behaviour and demands for retrospective rebates and discounts, Tesco actually gets charged more than its bitterest rivals. 2 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

3 3 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

4 Strategic Value Beyond Savings Procurement & Supply Chain Professionals driving i sustainable business Why future business success depends on strategic sourcing & supply chain performance What do we need to do differently going forward How can we make it happen 4 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

5 Our focus is on patients Our purpose is to care and cure. We provide medicines to treat and prevent diseases, ease suffering and improve quality of life. 5 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

6 14 years and >2 billion USD to develop one drug Overview of drug development process 6 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

7 Pharma Sourcing have a strong track record in delivery : $2.6Bn since 2010 at ~7% per annum Significant Savings are reinvested into: Development & Manufacturing ( pipeline ) Marketing Corporate Spend 6.3% 8.5% 7.4% 7.3% Cost reduction Actual % 7 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

8 What does Value Beyond Savings look like? Corporate responsibility Quality & Service Assurance of supply & risk mitigation Innovation & Insight Cost

9 Biologics Bags a complex solution 9 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

10 Bags to Bottles a $m value decision Packaging & logistics design was totally t re-engineered Freezing at - 60C Ship under Dry Ice Thawed in situ Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

11 Bags to Bottles a $m value decision Total Product Cost Reduced d by over $140m Challenge New Drug Substance primary packaging in Bags had high failure rate, high unit cost & complexity 10 out of 21 bags thawed leaked 45% of thawed material lost ($2.7m per batch) Single sourced with high equipment & consumable costs Solution Change of process & materials from Bags to Bottles Identified new process for filling, freezing, shipping, thawing & storing product Material loss reduced from 45% to 0% Reduced campaign size by improving campaign efficiency Elimination of bag freezing, thawing & storing equipment & consumables Set new standard for future projects Freezing at - 60C Ship under Dry Ice Thawed in situ Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

12 New Oncology Drug High Risk & Cost Sourcing & Business re-engineered chemistry working with new suppliers to reduce Target Product Price by 500% Chemistry Team Pharmaceutical Development Team Drug Supply Team Clinical Trial Team Raw Materials Drug Substance Drug Product Packaging and Distribution Patients Sourcing Team 12 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

13 New Oncology Drug High Risk & Cost Sourcing & Business re-engineered chemistry working with new suppliers to reduce Target Product Price by 500% Chemistry Team Pharmaceutical Development Team Drug Supply Team Clinical Trial Team Raw Materials Drug Substance Drug Product Packaging and Distribution Patients Sourcing Team Challenge Initial cost of drug substance was >$750m (peak sales) Custom molecule opportunity to develop new market / new suppliers Solution Cost Optimization by developing simpler route of synthesis with cheaper raw materials & IP process cost reduction >40% On-time Drug Substance Supply to Meet Clinical Demand Reduced supply-chain risk (technical & geographical) Built a diverse, quality supply chain for commercial supplies 13 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

15 Being a Partner is at Heart of the Challenge Pharma surveyed 400+ Sourcing Associates to understand d their reality 90% Sourcing associates are doing business partnering > 68% on a daily basis 32% have one significant relationship 68% have multiple relationships 54% have not had any training in business partnering. 9% had training in last year; 14% in the past three years Lack of easily accessible, well-understood tools, systems and processes Misaligned objectives Sourcing behavior is driven by goals that t may be counter to good business partnering Weak communication of a compelling Sourcing Value Proposition Lack of time and resource 15 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM 55% of interactions are with a business role rather than an individual person 7% usually interact with a specific individual & 37% work with a continually shifting mix of people and roles Sourcing gprofessionals believe they depend on their Functional Business partners more than the partners depend on them

16 What they wanted was... 77% want a compelling, easily communicated value proposition for Sourcing 74% want more formal training in business partnering 73% want a Best Practice toolkit Improve business knowledge, e.g. through h job rotations ti and shadowing 16 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

17 Supplier Relationship Management Global Survey Survey of 425 organisations and 522 individuals id in 2013 A discipline of working collaboratively with those suppliers (and business leaders) that are vital to the success of the organisation, to build trust and maximise the mutual value of those relationships 17 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

18 Supplier Relationship Management Global Survey Survey of 425 organisations and 522 individuals id in 2013 Risk Cost reduction Cost avoidance Customer of Choice 34% Leaders see >+6-8% of the contract value 18 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

19 Supplier Relationship Management Global Survey Survey of 425 organisations and 522 individuals id in % respondents have a value proposition expressed but only 14% have communicated this Not even Leaders have >50% engagement across executive, senior or operational stakeholders or suppliers 19 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

20 Supplier Relationship Management Global Survey Survey of 425 organisations and 522 individuals id in 2013 Increasingly single point accountability for development & implementation of SRM through appointment of process owners Supplier segmentation & increasing proportion of external spend is within scope of SRM (typically half of spend) Robust supplier performance & contract management is still missing for 52% of respondents 20 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

21 Supplier Relationship Management Global Survey Survey of 425 organisations and 522 individuals id in 2013 Investment in training & development for talent and organisation is still a major challenge Nearly 7/10 buy-side organisations use cross functional teams to manage key supplier relationships Biggest gaps are in relationship management: influencing, communication & strategic thinking 21 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

22 Supplier Relationship Management Global Survey Survey of 425 organisations and 522 individuals id in 2013 Technology: systems, software or applications as a key enabler remains a concern FCMG companies appear to b making most use of IT High Tech and IT sector making the least use 22 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

23 Supplier Relationship Management Global Survey Survey of 425 organisations and 522 individuals id in 2013 Truly innovative relationships are rare Successful relationships are described as being open, transparent, innovative, strategically & culturally aligned, trusting, collaborative & behaviourally mature. Trust being identified as most important attribute The type of information being most openly shared is operational Yet Innovation remains one of most important elements of the SRM value proposition Less than 1 in 5 use 360 degree relationship assessment tools to baseline & improve 23 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

26 From being Procurement people who happen to be in Business to being Business people who happen to be in Procurement Permission i and Confidence Stand as equals belief and confidence Seeing and committing what it takes to be a Trusted Business partner Show up as expert through entire cycle of identification of opportunity, contracting through to delivery Change Agency Supporting the business in a new way of working - blow up the conventional wisdom, assumptions and habits that limit Experts at shifting the perception of the business Skills to lead the agenda s Strategic Thinking, based upon business insight and organisational savvy Able to gain ownership of the agenda through listening to customers and weaving in sourcing agenda in a seamless way Able to jump between modes expert, facilitator, t coach, trainer Executing the agenda Overcoming and navigating the dynamics of implementing change Creating an environment for innovationi Turning resistance into a positive force going forward - enrolment 26 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM

27 The goal is to develop a number of skills Change Management skills to drive outcomes that need behavioural change Facilitating working with groups and teams to design and manage interventions that are future-focussed and actiondriven Coaching uncovering people s concerns and fears and reframing action based on a future commitment Presence of a true partner Active Listening Understanding di different styles and flexing Managing your own selforientation or agenda Business expertise understanding strategic drivers and issues for the organisation, to get buy in at right level and align on visions and priorities Consulting skills understanding how to use the right mix of tools listening, questioning, communicating, influencing to create a trusted advisor presence

29 Thank you 29 Strategic Value Beyond Savings Paula Gildert 28th October 2014 Den Danske Logistikkonference SCM