25 May 2011 | Lindsay
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."
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,
In 2009 the drug company won the CIPS SM Award for best purchaser-supplier collaboration.