What is the Importance of Strategic Procurement in Pharma Industry?
Every industry has transformed exponentially over recent decades due to rapid technological advancement, higher consumer awareness, more global interaction and communication, and the rising use of digital platforms among companies and individuals. This has led to a dire need for robust systems, streamlined supply chains, well-trained employees, and strategic procurement. In the pharma industry, the approach to healthcare has changed significantly, and companies are focused on providing a consumer-centric experience that promotes customer loyalty, improves consumer satisfaction, and helps acquire a respectable position in the market. Strategic procurement helps companies achieve various crucial improvements to their supply chain, business strategies, and offerings by implementing robust plans and company-wide approaches that help reduce costs, increase efficiency, identify and mitigate risks, and stay ahead of competitors. Utilizing this process is crucial for growing pharma companies, particularly due to the rising prevalence of chronic diseases, increasing demand for innovation and differentiation, and surge in demand.
What are the Benefits of Strategic Procurement in the Pharma Sector?
Cost-Reduction: The pharma industry value chain is highly complex, and often faces various challenges due to the sensitive nature of various medications and products, need for multiple sources, and varying regulations across the globe. As demand rises, pharma companies have needed to increase their focus on strategic procurement, and implement this process to reduce costs. Having to source and procure crucial raw materials from various countries, and work with multiple partners can lead to high expenses, complex contracts, and unnecessary losses if not appropriately handled. By leveraging strategic procurement, companies can develop clearer and more dependable procurement strategies, address the various challenges that may occur, and develop strong business partnerships leading to significantly reduced costs, and a more robust supply chain.
Improved Partnerships: The rising need for innovative and unique offerings has caused many companies to find themselves struggling to develop and maintain strong partnerships. A well-developed partnership can provide companies with quicker resources, new perspectives, insight into changing trends, and robust strategies that utilize the combined knowledge of both parties. Strategic procurement provides companies with crucial insights and dependable systems, that enable a comprehensive understanding of a company’s needs, expectations, and requirements. Subsequently, this awareness helps them develop partnerships that are founded on honesty, transparency, and clear objectives, giving rise to sustainable, reliable, and long-term partnerships that are highly crucial in the challenging pharma industry.
Higher Efficiency: The main focus of the strategic procurement process is to address inefficiencies, target shortcomings, and develop sustainable alternative solutions to ensure improved functioning. The result of this process is lower costs, better partnerships, and most importantly, higher efficiency. An efficient and stable supply chain can significantly transform business for any company, and in the growing pharma industry, implementing robust strategies and data-driven systems can enable long-term growth and success. This process provides CPOs with necessary data and information regarding their operations, helps tackle obstacles, identify risks, and mitigate any challenges, which provides unparalleled efficiency in the long-run.
Risk Management: Every supply chain is susceptible to a wide range of risks and challenges, including supplier risks, sudden industry developments, changing regulatory policies, and other potential supply chain complexities. As the pharma industry continues to expand, the value chain becomes increasingly complex, prone to various risks and challenges. Strategic procurement focuses significantly on identifying, evaluating, and potentially mitigating major risks to the industry. This process is based on mitigating all challenges, inefficiencies, and risks to develop the most successful, resilient, and efficient supply chain possible within a company. Risk management is a crucial tenet to achieving a resilient supply chain, and companies often fail to address potential risks efficiently, which leads to major losses, customer attrition, and reduced market share.
Better Decision-Making: Strategic procurement is a highly data and information reliant process, that encourages businesses and stakeholders to gain a comprehensive understanding of their market, company, and needs. Having detailed insights into the needs, expectations, business objectives, and factors in a market can help companies significantly mitigate the various risks, develop more comprehensive strategies, stay ahead of competitors, and remain prepared for various industry developments. As the pharma industry grows, making the right decisions can propel companies to leadership within their market, or cause massive losses as an increasing number of competitors enter the market, and the rapid pace of transformation provides opportunities for new entries to suddenly succeed.
A renowned pharmaceutical manufacturer was struggling to keep pace with the sudden transformation in the industry caused by the COVID-19 pandemic, and suffered significant monetary and market share losses, causing it to lose reputation and customers. Inefficiencies impacting their supply chain, strained supplier relationships, and unnecessary rising costs led to a weak supply chain, and an inability to adapt as the market changed. The company sought to improve their procurement processes and improve overall performance, therefore, they sought our expertise in the strategic procurement process. Our SpendEdge experts provided the company with detailed insights into the necessary changes required for their company to succeed, and guided the company on the significant benefits and crucial best practices of strategic procurement. By implementing the data and processes provided by our experts, the manufacturer successfully addressed their challenges and shortcomings, implemented necessary changes, and ultimately reestablished themselves as industry leaders.