Speed is Greater than Savings - How Grünenthal Created a Procurement Centre of Excellence Focused on Speed

Dr. Thortsen Fallisch, Head of Global R&D Procurement at Grünenthal spoke to PharmaSource about his experience in setting up a Procurement Centre of Excellence and why speed can be more important than savings.
Thorsten joined Grünenthal at an exciting time when it centralised Procurement was a  "new, mostly unshaped  function". It meant he could make a real impact on the function and see the improving results.

Establishing a Sourcing Board
One of the first areas they identified was that there was not  a standardised process for the category managers to do sourcing activities 
“Tenders sometimes only invited three or even one vendor because it was clear from the very beginning who would be the 'Chosen One', often driven by stakeholders”
Thorsten introduced a Sourcing Board council where the category managers had to present how they are planning to run that tender. 
To support that process, they introduced the governance that for any tenders over €100,000 Euros would  need to have at least three valid offers. A methodology was agreed in advance agreed for how the offers would be evaluated. For example, procurement would want 50% of the weighted criteria to be price or costs associated with the tender.
"The category manager could the run the tender, and when they had decided which vendor to take, they had to come back to the sourcing board and get the final approval."
"This framework helped to structure the process and created a lot of transparency about what was being worked on. "
To embed this required a lot of personal energy to guide and support team members through the process and communication.
With a geographically dispersed team they put a lot of efforts on our on fostering our internal community through their intranet. “This starting off with a page and a bit of content,  over time, we developed a real plan, with a fortnightly newsletters and regular Townhalls with the teams. “


How technology was used to enable change

The process started by being managed in Excel and PowerPoint documents, with sourcing mangers completing templates to present their case to the Sourcing Board.
The next step was a tool Grünenthal developed themselves specifically to manage the sourcing process, where all information previously in PowerPoint could be put in the tool. 
Finally, they implemented an E-Procurement platform. After  evaluating a number of vendors they before decided to use Jaeger,  a platform they have been using for the last two years. 

Why speed is more important than savings


Since moving into a new role focusing on R&D, Thorsten has continued to play a role in the development of the Sourcing Board so that it partners better with his new stakeholders.
His main objective has been to accelerate the process. 
“To understand the friction with R&D and Procurement you have to understand one thing…  Speed is more important than savings”
"The faster you develop a drug, the more time you have left on the market. That's why  Grünenthal as a company deliberately took the approach to to conduct some of the R&D studies in parallel and prioritise speed."
The Sourcing Board approach was perceived as delaying the process too much, so now a faster process involves the stakeholders earlier to make decisions. 
"We now call it the 'Category Council' which is now a more stakeholder-oriented way of taking vendor decisions. So it's not only the sourcing board and procurement internal council that approves a decision on the vendor, but stakeholders are closely involved throughout"
"Prioritising speed is an interesting challenge for someone in procurement to have! Not to focus on savings but on speed makes a nice change.” says Thorsten.

https://pharmasource.global/content/podcast/how-to-create-a-procurement-centre-of-excellence-a-conversation-with-dr-thorsten-fallish/