Malik Akhtar is Vice President at Bayer Consumer Health Division, where he oversees a network of 5000 suppliers, including direct materials, APIs, and 180 contract manufacturers.
Speaking on the PharmaSource Podcast, Malik explains the “Three C” procurement strategy which will define the areas of greatest focus for Bayer in 2024 and beyond:
- Cost Containment
- Cash-Flow improvement
- CO2 De-carbonisation
Listen to the full interview here:
Cost Containment
“Inflation has been rampant over recent years.” say Malik. “There’s been many contributing factors to that whether it’s energy wage costs, the demand, boom, as we come out of COVID, and supply chain disruptions that we’ve seen in China and other other places. “
Malik explains that Bayer are looking to consolidate suppliers where appropriate and standardise the products they are buying.
“Anything that we can do to streamline and simplify the supply base makes everybody’s life easier in terms of managing it internally. But also it means that we can consolidate more of our spending activity with fewer suppliers, which means they will also win through through this process.
“What we buy is also sometimes unnecessarily complicated. There’s many things that we buy, which are unique to us. Reducing complexity makes us more resilient because it gives us more freedom in the market and makes us more resilient.”
“The most important things for me is that we treat people fairly – this is really key.” says Malik “Nobody likes accepting a price increase, and we certainly will push back on accepting excessive requests for price increases, but we have to be sympathetic and we have to support a sustainable business for our suppliers. I feel we’ve done that really well over the last couple of years.”
“In return, what we ask is, as things start to normalise that we have the opportunity to come back and say, well, now now the trend is going in the other direction. That’s a lot of the work that my team is is engaged in at the moment is, is how we make sure 2024 and beyond is a little more normal. “
Cash-Flow Improvement
Bayer’s new chief executive officer Bill Anderson recently made headlines when he said that the company expects to generate zero cash flow this year despite nearly 50 billion euros in revenue, something Anderson called “simply not acceptable”.
“As you can imagine that made an impact.” says Malik, sharing that they have “doubled down our efforts on three main areas” to improving the cash flow cycle:
- Optimising payment terms,
- Speeding up accounts receivable,
- Managing the inventory we’re holding
CO2 De-Carbonisation
Addressing Scope 3 emissions is a common challenge across the industry, and Bayer is no exception in prioritising this area.
“As an organisation I think we’ve made good grades Progress on scope one and scope two, already- and obviously, procurement are involved in scope two in terms of sourcing the green, electricity, green energy.”
Malik explains that Bayer have a ‘Scope three accelerator team’ who sit within their central governance and enabling procurement team.
“They are working to engage with the top suppliers, those that are the ones that are contributing the largest carbon footprint to understand what they are already doing.”
“In some cases we’re learning from the suppliers, who might have a more mature and sophisticated approach that what we’re doing. So we can learn and equally they can they can learn from us. The collaboration is really strengthening supplier relationships.”
Malik Akhtar will be speaking at CDMO Live 2024. Make sure you to sign up for the event here.
LIVE on June 13 2024 
