Last week I had the pleasure of attending ProcureCon Pharma. The two day event in Philadelphia presented an opportunity for Procurement professionals in the pharmaceutical industry to come together to gain insights from one another and network among their peers. This year’s agenda was focused primarily on transformation of the procurement organization and developing procurement strategy as well strategic supplier relationship management. The following were some of the key challenges pharmaceutical procurement organizations are facing today based on feedback from the conference this year.
One of most noted challenges facing the pharmaceutical procurement professional today is determining how to effectively bridge the gap between global strategy and local resources. Within the Pharma industry category management in many organizations is still incredibly siloed and regional. As companies in this space expand and contract the business is not focused on procurement, obviously they are focused on R&D and Marketing, and other elements of the business that will support their bigger corporate strategy. Procurement is the last thing on their minds, until they turn around and realize it is a function that has gone neglected and even at times non-existent. All of this benign neglect in the establishment of the function leads to locally driven strategies and processes that do not align with one another, let alone with the business.
Another area that procurement professionals indicated as a concern was aligning business unit strategies with category strategies. The business is focused on running the business, and procurement is focused on procurement – at least in an ideal scenario that is the case. Considering this ideal situation, a good example might be where Marketing is focused on the launch of a new product in the market. The Marketing team is NOT considering how the procurement team’s strategy aligns with their strategy to launch the brand. The effect – Marketing does not engage Procurement at the right time, or at all in some cases, to ensure they align on the category strategy. This creates a potential loss for Marketing to align with top suppliers, at competitive costs, with critical performance measures built into the contract – all based on procurement best practices that Marketing does not have the time or expertise to focus on.
A poll conducted at the conference asked participants what they saw as the largest barrier to positively impacting stakeholders’ business strategy. The results were interesting and a bit all over the board.
- 5% indicated barriers are a results of Procurement Leadership
- Senior Leadership in the business was highlighted by 14% of participants
- 17% of participants said it is the Stakeholders themselves
- The capabilities of the Procurement Organization were cited by 25%
- The highest number of those taking the poll at 37%, indicated barriers are based on Goal Alignment
The topic of procurement strategy overall and how to align most effectively with the business was also noted by several presenters and attendees as a challenge. In Procurement we hear the phrase, “getting a seat at the table”, quite often when we talk about engaging with the business. Procurement needs to align its strategy with the broader corporate strategy and long term business plan. In order to do that we need to be a part of the discussions at the planning phase. Furthermore, it is not just about getting a seat at the table, but having the right seat (having an influential position), keeping that seat (demonstrating the value brought by Procurement), and maximizing the impact at the table (as a trusted advisor to the business).