From reducing costs and assuring supply, to streamlining your PO-to-Pay processes, effective procurement in the life science sector can make a massive impact to your company…and to your bottom line.
The urgency and pace of high growth, combined with the need for good financial practice, makes it necessary for biotech companies to access world-class procurement capability. Increasingly, many life science companies are seeking support via a technology-based approach, which may include dedicated outsourced support. Options include purchasing tools within finance or ERP software, and cloud-based procurement platforms as a service.
It’s easy to see why. The right support with your procurement can save you time and money, reduce your headcount, streamline your processes and add specialised skill sets to your team, freeing up your employees to focus on the day job.
With so many options out there, it’s more important than ever to be fully informed and ask the right questions to find a solution that works for you.
- In-house or outsource?
Whether you decide to manage the software and function in-house or by outsourcing, it’s worth spending some time understanding the needs of your organisation’s procurement function. Stakeholders may have responsibility from finance to the lab, IT and quality. Many fast-paced companies find a cloud-based plug-and-play is the fastest and most cost-effective solution.
- Cost vs Savings.
It’s important to establish exactly what you will save in relation to any fees. Savings derived from buying procurement solutions include; Material savings if the provider can access better pricing for you; reduced headcount and resource costs; savings from operational efficiency. A reliable provider will help you to evaluate this and be able to determine exactly what you will save across your basket of spend at your current prices.
- Are there limits in place for product range or supplier choice?
Does the provider make it easy for you to buy any product, any category, from any supplier? Is anything out-of-scope? The greatest time and efficiency savings will be made through the use of a single platform or service. Ideally, you want all of your POs to be placed and tracked via a single platform – from standard consumables to expenses and service contracts.
- How does the provider make their money?
If you’re buying empty shell software, it is a simple transaction based on licence fees. With the move to software as a service (SAAS), combining cloud software with support can get you so much more for your money. Increasingly, SAAS options can offer data management, price management, order management and financial processing in addition to a range of other options. The breadth of offering comes with a variety of fee structures. Some providers offer a free service to customers because they are charging suppliers a sales commission, whilst others take no revenue from suppliers and have transparent customer billing models. Some providers take a revenue from both customer and supplier. Before concluding a contract, ensure that you understand the motivations and independence of your provider in their provision of advice and solutions to you.
- Order management and assurance.
Getting good prices is an important fundamental of procurement. However, getting the right goods to the business on time is often critically important. In planning your procurement solution, you should consider the pace of your organisation, the stock holding capacity, and the predictability of your demand. About 70% of biotech purchases are one-off orders to support the nature of research. Speed of delivery can therefore become a rate limiting step for R&D and service providers alike. You’ll want to check if the solution provides an order management function. A best-in-class procurement solution will deal with any issues impacting supply and take proactive measures to ensure that you don’t run out of key materials. Some platforms may even show live stock availability directly from the supplier.
- Financial controls, process and reporting.
Financial controls and reporting requirements tend to grow with a company. Start-ups tend to track expenses by type and build up to project and department-based tracking. Service-based biotechs, or those claiming grants or R&D tax credits, also need to have a good system for separating out these types of expenses. Integration of the purchasing solution with the bookkeeping or finance software will save significant time on re-keying data such as the items, prices, cost centres and the delivery details.
- What support is available?
Purchasing is about more than just price, and support is about more than just a helpline. A best-in-class procurement solution can act as your entire purchasing department, reducing your headcount and leaving you to focus on your core business. Ask whether the solution can provide all of the expert support that you would expect from a fully-fledged purchasing department i.e.
- Are all products negotiated regularly on your behalf?
- How can you be confident that you are paying the best possible price?
- What happens when the quotes expire?
- Is total cost of ownership accounted for – from delivery and dry ice charges to software licences or equipment installation?
- Is support available for issue resolution including late deliveries, crisis management or invoice queries?
- How will you be supported to manage complex projects including budgeting, CapEx and stock management?
- What expertise is available? High quality support will include highly trained Purchasing Professionals, Project Managers and Category Specialists.
- Simplicity of use and separation of duties.
A good system will be intuitive for users without lots of training. You will also want to look for a solution which allows separation of duties for the different controls you need. For instance, the solution should enable the right approval mechanisms to be set up ensuring privileged access for the systems administrator and secure access for financial processing.
- How can I ensure continuity of service?
Look for an experienced and well-established provider who can leverage strong group buying power and good supplier relationships. It’s important to vet any potential providers. Ask whether they can provide testimonials from long-standing customers.
- Will the solution grow with me?
What works for you now may have significant limitations further down the road. Look for a customisable solution that ticks all of the boxes both now and into the future. The best platforms can be customised to your requirements. From dedicated approval workflows, to add-ons which can capture key operational functions in a single platform. Can modules and options be easily added in the future? Ask whether software can be integrated with your Finance or ERP solution. Some providers may even design and build functionality for your specific requirements.
At Amici, we are passionate about providing best-in-class procurement capability to the life science Sector. We also believe in making life easy.
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