What is the Role of Supplier Benchmarking in the Pharma Industry?
Over the past decade, the pharma industry has changed significantly, and the need to identify the ideal strategic partnerships, right vendors, and optimal resources has given rise to the common use of supplier benchmarking, performance management, and relationship management. As pharma companies struggle to keep pace with the surge in demand due to the impact of the COVID-19 pandemic, supply chains have suffered severely, and the need for supportive, collaborative, and sustainable supplier partnerships is undeniable. Choosing the best fit suppliers is a challenging task that requires the use of data and analytics, research-driven approaches, and a comprehensive understanding of the company’s market and suppliers’ market, among other things. With supplier benchmarking, companies can gain insights into supplier performance, delivery time, quality of service or product, price compatibility, compliance rates, business ethics and regulatory compliance. Decision-making without this data can lead to ineffective and harmful partnerships that may lead to losses, business shortcomings, wasted resources, and loss of customers or profits. Supplier benchmarking also helps companies significantly improve relationship management, performance management, overall business performance, and more. The performance of a supplier can make or break businesses in certain aspects and circumstances, especially during times as strenuous as these.
How does Supplier Benchmarking Help Performance Management?
Establish Expectations: Assessing and understanding the general industry standard for supplier performance, lead time, delivery time, prices, compliance rates, and other crucial metrics helps companies develop accurate and realistic expectations. Consequently, the company can then establish clearer goals and targets, and provide potential or current suppliers with comprehensive insights into the company’s needs, enabling improved communication, better compliance, sustainable and effective strategies, and meet industry standards. Additionally, with the data procured from supplier benchmarking, companies can mitigate various risks, preemptively identify high-performing suppliers, and provide their partners with clarity regarding combined goals and targets.
Facilitate Communication: Clarity, precision, and data-driven strategies help companies establish robust communication networks, strong relationships, and sustainable partnerships. With data from supplier benchmarking, companies can identify partners and suppliers that utilize similar ethics, approaches, and strategies, communicate their needs better, and create an honest space. Additionally, with information regarding factors such as prices, supplier market dynamics, and obstacles impacting their business, pharma companies can develop a common, transparent, and collaborative space for decision-making and future implementation. Clear communication can create space for a sustainable business model that is beneficial for both involved parties, and helps the company meets all business goals and needs.
Drive Performance Improvement: Clear insight into the company’s needs and expectations, suppliers’ potential deliverables, and the industry standard helps procurement, sourcing, and production departments to implement data-driven strategies for improved performance. Additionally, data procured from supplier benchmarking provides a clear industry standard, a point of reference, and relevant information to rely on when implementing improvements or changes within the business. Another crucial tenet of benchmarking is the ability to understand one’s own market better, analyze relevant strategies, implement stronger plans and approaches, and drive significant improvement in performance for both parties involved. Knowing the capacity and possibility of a company’s and a supplier’s skillset helps both parties aim for better performance.
Acquire Useful Information: The supplier benchmarking process is highly reliant on procuring, analyzing, understanding, and implementing relevant information regarding the market of the company and supplier on current and upcoming goals. Every business aims to achieve an unmet standard, and surpass competitors, and with relevant data, high performance, and continuous cooperation, companies may successfully do so. The information acquired includes crucial insights into the current and upcoming market trends, major industry developments, changing regulations, competitors’ strategies and expectations, suppliers’ standards, and price fluctuations. It also helps companies identify their best fit suppliers, develop a clearer understanding of their needs and expectations, and stay a step ahead of potential risks or challenges.
Enable Tracking and Improvement: Once a best fit supplier has been chosen, companies can utilize the data procured during the supplier benchmarking process to continuously assess and track the performance of their partners and the supply chain. The information can also help track changing market dynamics, preemptively strategize for potential challenges, develop novel strategies before competitors, and choose better suppliers in the future. Tracking and assessing performance and other factors can also provide companies with the ability to improve their approach, communication, strategy, or performance when required. Relevant data helps companies continuously improve their performance as per major industry metrics, minimize the possibility of stagnancy, and create a performance-driven and ever-evolving workspace.
In the pharma industry, staying ahead of the changing industry, constantly tracking evolving market dynamics, identifying and collaborating with the right suppliers, and implementing novel strategies can be challenging without relevant data. A pharma manufacturer was struggling to identify and partner with the right suppliers as the demand for vaccinations and strong medication rose during the second wave of the COVID-19 pandemic across North America. Changing government regulations, uncertain political and economic atmospheres, and fluctuations in raw material price and availability led to a steady increase in business challenges, and the manufacturer suffered major losses. With the crucial need to partner with the best suppliers, the company chose to partner with SpendEdge and employ supplier benchmarking solutions in a rigorous effort to keep pace with demand and regulations. Our experts provided the company with unparalleled insights, strategies regarding conducting and implementing the findings of the supplier benchmarking process, and novel business approaches. With the guidance from SpendEdge experts, the pharma manufacturer successfully identified their best fit suppliers, implemented strategies that kept pace with the changing market, and recovered from the impact of the COVID-19 pandemic to help North America during the second wave. They also began regularly reviewing and improving performance as per benchmarks, and developed a robust, resilient, and collaborative supply chain.