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12 June 2012 | Adam Leach
Global pharmaceutical manufacturer AstraZeneca is working more collaboratively with suppliers and driving their performance through incentives.
Last April, the company announced that it was to cease its seven-year outsourcing agreement with IBM for its IT infrastructure and instead contract with multiple suppliers. Key to the new sourcing approach was identifying suppliers that would collaborate and share the principles of the company.
“One of the key things we understood was that having a cultural match with your suppliers so that you are all working towards the same goal and in the same way is really important,” Sam Covell, head of IS procurement at AstraZeneca, told SM.
One reason behind the collaborative approach by the company was that by outsourcing its entire IT infrastructure management to IBM, it had limited transparency internally on how the services were provided or could be improved. “We didn’t have a very detailed view of how our services were delivered so we had to take a very collaborative approach with the suppliers from day one,” said Covell.
Before starting the formal procurement process, the purchasing team held a number of workshops with potential suppliers and consulted with them on the RFP documents, in order to better understand what was on offer and how they could replace a sole provider with multiple suppliers delivering different services. To participate in the tender process, suppliers were expected to sign an agreement outlining a number of principles around how they would work with suppliers.
Following the tender process, the company contracted with five suppliers - three new and two who already worked with the company. Covell described the new structure as an “ecosystem”, with the five suppliers and AstraZeneca as six equal elements. Within the arrangement, there are a number of guiding principles and agreements, such as when problems arise: “fix first, settle later”.
Covell told SM: “If there is a problem and we need to put something right urgently, what we expect is the suppliers to work together to resolve that and then we will negotiate the costs to resolve that fairly after the event.”
There is also an independent arbiter who is responsible, among other things, for reporting supplier performance. AstraZeneca has also set up a discretionary fund to reward suppliers for good performance.