Dr. Thortsen Fallisch, Head of Global R&D Procurement at Grünenthal spoke to PharmaSource about his experience in setting up a Procurement Centre of Excellence and why speed can be more important than savings.
Dr Thorsten joined Grünenthal at an exciting time when centralised Procurement was a “new, mostly unshaped function”, so he could make a real impact on the function and see the results improve.
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Establishing a Sourcing Board
One of the first areas he identified was that there was not a standardised process for the category managers to conduct sourcing activities.
“Tenders were sometimes only inviting three or even one vendor because it was clear from the very beginning who would be the ‘Chosen One'” with decisions often driven by stakeholders.
Thorsten introduced a Sourcing Board Council so that the category managers had to present how they were planning to run that tender.
To support that process, they introduced the governance that for any tenders over €100,000 Euros would need to have at least three valid offers. A methodology would be agreed in advance agreed for how the offers would be evaluated. For example, Procurement might want 50% of the weighted criteria to be price or costs associated with the tender, and other considerations weighted appropriately.
“The category manager could then run the tender, and when they had decided which vendor to take, they had to come back to the sourcing board and get the final approval. This framework helped to structure the process and created a lot of transparency about what was being worked on. “
Thorsten describes how embedding the new process required a lot of personal energy to guide and support team members through the process and considerable communication.
With a geographically dispersed team they put a lot of efforts into fostering their internal procurement community through their intranet. “This started off with a simple page and a bit of content. Over time, we developed a real plan, with a fortnightly newsletters and regular Townhalls with the teams. “
How technology was used to enable change
The process was originally managed in Excel and PowerPoint documents, with sourcing mangers completing templates to present their case to the Sourcing Board.
The next step was a tool that Grünenthal developed themselves specifically to manage the sourcing process, taking all all information previously in PowerPoint could be put in the tool.
Following that, the decision was taken to implement a full E-Procurement platform. After evaluating a number of vendors they before decided to use Jaeggaer, a platform they have been using for the last two years.
Why speed is more important than savings
Since moving into a new role focusing on R&D, Thorsten has continued to play a role in the development of the Sourcing Board, ensuring that it partners better with his new stakeholders in research and development.
His main objective has been to accelerate the process.
“To understand the friction between R&D and Procurement you have to understand one thing… Speed is more important than savings”
“The faster you develop a drug, the more time you have left on the market. That’s why Grünenthal as a company deliberately took the approach to to conduct some of the R&D studies in parallel and to prioritise speed.”
The Sourcing Board approach was perceived as delaying the process too much for R&D, so a new, faster process ensures stakeholders are included earlier in the process.
“We now call it the ‘Category Council’ which is now a more stakeholder-oriented way of taking vendor decisions. So it’s not only the sourcing board and procurement internal council that approves a decision on the vendor, but stakeholders who are closely involved throughout”
“Prioritising speed is an interesting challenge for someone in procurement to have! Not to focus on savings but on speed makes a nice change.” says Thorsten.
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