Guest post by Sammy Rashed – a procurement strategist with over 20 years experience, who has penned the widely followed Beyond Procurement series. In this new 4-part series he explores an innovative approach for businesses seeking to move beyond SRM (Supplier Relationship Management) to tap into its supply bases full potential, exemplified through the Healthcare and Pharmaceutical industry
Beyond SRM Part 1 – Understanding the Healthcare Value Chain
There is widespread acceptance of the growing imperative to evolve Procurement from its current position to meet the aspirations from its leaders, internal stakeholders and team members.
In uncovering the top options for growing the function’s contribution and equipping it with new tools, I usually run into incredible enthusiasm from buying organizations keen to investigate what’s next. There is certainly a sense of change and while many are keen to dive into new strategies, not everyone follows-up with concrete actions as they are often swamped with their day-to-day workloads or confined by the remits of their scope.
The good news is buyers are not alone when it comes to looking beyond SRM. They are supported by innovative vendors who are also keen to elevate the dialogue, leverage the buying organizations’ need to do more for showcasing their unique capabilities, and help clients address our key challenges and opportunities.
The concept of buyers and suppliers working in collaboration covers of course most industries and companies, and I’ve been applying this at all levels of the pharmaceuticals and Healthcare environment. The processes involved in developing and delivering medicines are long and complex, and also facing growing challenges, which if addressed correctly, will undoubtedly benefit the innovative players in the game. This environment offers some unique characteristics given the complexity to reach patients who are the ultimate beneficiaries of drugs.
For simplicity, we’ll group the players in the value-chain under 3 overall categories:
- End-Customers: patients obviously, but also physicians, payers/regional authorities, institutions
- Pharmaceutical companies: traditionally providing prescription, over-the-counter, and generic medicines, as well as diagnostics tools and services
- Suppliers: whether focused on the pharma industry (such as R&D, active ingredients, …) or supporting broader industries with general products and services
For each group in the value-chain there is a distinct process to manage relationships, monitor performance, and provide value-added services:
- KAM (Key Account Management) is becoming an imperative for the pharma industry given the strong trend to centralize the delivery of products and therapies through institutions
- SRM (Supplier Relationship Management) is of course used by the industry with it’s strategic vendors to manage performance, reduce value-leakage, and enable VAS (Value Added Services)
- CRM (Customer Relationship Management) is the approach adopted by vendors for managing and growing their large accounts
In a perfect world all three processes would align nicely to deliver maximum value to the end customers, benefiting all the players. But that’s not the case. Why not?
From procurement’s standpoint, trying to answer this brings out new questions about the functions’ role and potential contribution such as:
- How can Procurement correctly identify its company’s specific challenges and opportunities?
- How do we best assess the unique capabilities within the supply base which help address our unmet needs?
- How can we capture best ideas, communicate them internally, and get senior management to endorse their implementation?
Over the next few months this blog will look at each of those elements, understanding how they work and what new imperatives must be addressed to succeed in this fast changing environment.
To support this effort we will also be launching the second edition of our “Productivity in Pharma” focus group, inviting 10-12 large, medium, and small-size pharmaceutical companies along with academia and supply base partners to advance the discussion around these questions. I’ll capture the group’s outcomes and findings in this blog and offer some insights on how to leverage the new opportunities this creates, particularly emphasizing how all three stakeholders and approaches can work together and integrate seamlessly to create an unmatched value-proposition.