Five steps to transform the procurement organization to drive revenue and get medicines to market faster.
Right now, many life sciences companies are struggling to find new and quicker ways of getting their drugs to market and to the people who need them the most. Accenture analysis suggests the payoff could be significant. If companies could lengthen the exclusivity period for new blockbuster drugs by just one quarter they would realize, on average, an additional $1.4 billion in annual revenues.
One key to success: strategic collaboration between the business, its suppliers and its procurement organization—with procurement acting as a bridge between the business and its suppliers, and in a unique position to capture and help drive revenue-generating ideas. The idea that procurement is purely transactional and narrowly focused on internal objectives, such as cost reduction and supply risk mitigation, is no longer viable. Instead, life sciences players need to recognize and encourage procurement’s strategic potential.
To enable this value, life sciences companies need to formalize both the value creation objective and the processes through which value is delivered. They could do this by adopting a new innovation infrastructure that not only harvests the best ideas from across the enterprise, but also harnesses a much wider universe of initiatives.
Digital technologies and collaboration platforms can help, by stimulating ideas, facilitating idea collection and fostering new partnerships and forms of collaboration. Accenture research shows that companies are currently least likely to use analytics in procurement (only 40 percent), relative to other business areas: 59 percent use analytics in finance and 55 percent deploy analytics in customer service. But we expect that in time more life sciences players will leverage digital technologies as enablers of better decision-making and thus new value generation and new growth.
For companies looking to maximize the potential long-term benefits of transforming the procurement organization, we offer five practical steps:
Align procurement’s objectives with those of other business areas, and focus resources on identifying and enabling growth, innovation and cost reduction opportunities.
Build procurement’s organization and operating model around the skills needed for this new focus.
Implement a talent development program that embeds business partnering and strategy development expertise in each business area.
Establish a preferred supplier program that virtually integrates key suppliers with a mutually beneficial value proposition into your business.
Define a digital procurement strategy and future roadmap to leverage supplier analytics and collaboration platforms.
A more strategic and collaborative procurement organization is an urgent necessity for the life sciences industry.