Supplier development improves AstraZeneca's time to market

25 May 2011

25 May 2011 | Lindsay Clark

Pharmaceutical giant AstraZeneca has improved the speed of product development by reducing the time it takes to swap data with R&D suppliers by 70 per cent.

Collaborating with suppliers to develop their capability has allowed the drug company to reduce time to market for new products, a business metric which is key in the sector.

Donald Ferguson, head of procurement operational excellence at AstraZeneca, told delegates at this morning’s Ariba Live 2011 event in London: "The faster we can get data in, the faster we can understand that and the faster we can run clinical trials and get products on the market. These are huge changes. We're taking weeks out of processes."

In working with suppliers, AstraZeneca went through risk, performance and relationships. "Once we've got those things in place, we can focus on the interesting part which is really about supplier development."

After consolidating and benchmarking suppliers, while managing the profit margin and reviewing specifications, Ferguson asked: "What do you do next? A lot of companies stick in that cycle, expecting to get more and more. Eventually the return on that gets less and less. We have taken a strategic decision to break out of that model and move into supplier development."

Optimising value, eliminating waste, all play a part in the process, he said. It involved joint investment between AstraZeneca and its suppliers, including incentivised structures to share gains. "We look for something that helps them in their wider business model - such as free intellectual property," Ferguson said.

Critical to this is the technology that underpins the process. "Technology is something that helps us have a different type of relationship with our suppliers," he said.

AstraZeneca has invested heavily in supplier collaboration software from Ariba for the last two years, he said.

In 2009 the drug company won the CIPS SM Award for best purchaser-supplier collaboration.

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