AstraZeneca makes step change in supplier management

AstraZeneca is making a “step change” in supplier management, providing development programmes to its top 44 suppliers including large IT vendors.

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AstraZeneca is making a “step change” in supplier management, providing development programmes to its top 44 suppliers including large IT vendors.

The London-based pharmaceutical giant, which this year merged its procurement and vendor management functions, said it needed to improve relationships with suppliers and have “tough conversations” with them. It was targeting the most business benefits from suppliers, above pure cost, it said.

Samantha Covell, head of the IS procurement division that now manages vendors at the company, told the Forrester Sourcing and Vendor Management Forum in London today: “Ten of our largest suppliers have already completed the programme and we’re seeing a dramatic improvement in relationships.” These 10 include an IT supplier for the company’s global asset management services.

“As we bring our suppliers closer and get them more involved in the innovation and business ideas, we’re also seeing much more open, honest, challenging conversations,” she said. “We’re not looking for people to just say ‘yes’.”

As part of the programme, AstraZeneca trains suppliers and advises them on their own efficiency, including areas as diverse as IT and travel. It also attempts to improve the communication of outside expertise and make better use of innovative ideas from suppliers.

Elements include supplier performance management, relationship management, risk management and development.

SAP-based AstraZeneca outsources its IT services to five main companies: IBM, Cognizant, Infosys, Genpact and BT. It relies heavily on IT and data, Covell said: “Information is the lifeblood of our business.”

Referring to the company’s multi-sourcing model for IT services, Covell said: “It has its challenges, as some deals are three to four years old. We are working to improve flexibility.” The improved vendor engagement was crucial to this, she said.

AstraZeneca has 66,000 employees, a $33 billion (£21 billion) turnover and spends approximately $4 billion annually on research and development. It runs over 5,000 business applications, 22,000 laptops, 17,000 desktops, 3,100 Blackberrys and 7,500 tablet PCs.

It spends around $500 million a year maintaining its technology infrastructure and $300 million a year procuring new technology.

In the last year, AstraZeneca chief procurement officer Jon Kriby became the company’s interim chief information officer, with his procurement responsibilities continuing. Having a CIO with a background in procurement “greatly helps” the procurement function to operate successfully, Covell said.

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