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Managing a Network of Preferred Suppliers

The Challenge

Managing and maximizing value from a network of preferred CRO service providers.

The Solution

A relationship management blueprint provided structure around activities for maximizing the value of relationships. A customized, web-based SRM portal created transparency around the information required for doing so effectively.

Background

Five years ago, the corporate sourcing group within “PharmaCorp”, a Fortune 500 pharmaceutical company, launched an initiative to reduce costs, improve quality, increase innovation, and reduce cycle time in its clinical research activities.  Pharmacorp began by identifying a subset of preferred CRO (Contract Research Organization) service providers and negotiating global contracts with them.

Once the new contracts had been executed, the sourcing group turned its focus to ensuring that negotiated discounts translated into actual savings.  This, in turn, required that a significant percentage of clinical outsourcing spend to be shifted from dozens of other suppliers to the new preferred CROs. However, with no authority to mandate that business units move spend to the selected service providers, and absent a process or tools for systematically tracking and managing the shift in spend, there was little assurance that even basic negotiated cost savings would materialize.

Moreover, the sourcing group hoped that by working more closely with fewer CROs, significant ongoing improvements could be realized in cycle time, operating efficiencies, and internal stakeholder satisfaction.  However, capitalizing on the preferred CROs’ expertise and capabilities required business units to start working with providers with whom many had little or no experience, and to begin operating in fundamentally new ways.  In other words, the change required to capitalize on these opportunities posed significant downside risks in terms of perceived business disruption.  Not surprisingly, the business units were reluctant to change. 

Approach

PharmaCorp partnered with Vantage Partners to develop and implement a strategy to make the most of their CRO relationships.  The goal was to maximize realization of short-term gains by shifting spend to preferred providers, and to drive longer-term strategic benefits by capitalizing on preferred CROs’ expertise and capabilities to drive improvements in process efficiency and quality, business practice innovation, and the capture and dissemination of best practices across business units.

Creating a Relationship Management Blueprint

Working closely with PharmaCorp’s sourcing group, and in close consultation with key stakeholders from the company’s business units, Vantage Partners developed a CRO relationship management blueprint, a map specifying key internal and joint relationship management business processes and activities. Key components of the blueprint included:

  • A sequence of Program Launch Activities to explain to internal stakeholders and CROs the vision for the CRO relationship management program, to solicit input from those constituents, and build their buy-in and commitment to new ways of operating 
  • A process for Joint Implementation Planning between cross-functional teams (led by a member of the sourcing group) from PharmaCorp and each of the preferred CROs 
  • A Relationship Management Governance Committee (with cross-functional representation from the business units) to manage the “portfolio” of preferred providers (identifying and resolving systemic problems, analyzing overall performance and value delivered, reviewing performance and marketplace changes and determining whether and how to add new providers or drop existing ones) 
  • A formal process (supported by tools and templates) for Joint Relationship Review and Planning Meetings to discuss with CROs their performance, diagnose causes of, and joint contribution to, performance gaps, explore opportunities, and exchange best practices 
  • An annual Qualified Provider Summit to convene high-level stakeholders from participating business units and CROs to review and discuss company business strategies, marketplace and technology trends, and align plans to capitalize on opportunities to enhance or expand collaboration


Enabling Transparency and Collaboration: Partnersmith®

After aligning stakeholders around a vision for CRO relationship management, and refining it in response to feedback, Vantage then led the development of software tools, business templates, and other job aids required for implementation. Vantage’s Partnersmith® software platform was configured to enable efficient tracking, analysis, and reporting of information about CROs and other outsourced projects.

Each of the CROs was provided a portal into the system through which they could submit their contract-mandated business and project metrics, escalate issues that required cross-BU attention, nominate opportunities for innovation, and maintain updated information about their capabilities.

As data was entered into the system, the corporate sourcing group was able to build a sophisticated understanding of overall outsourcing activities and trends across business units — e.g., which services were being outsourced and in what magnitudes, which providers were being employed at what volume and for what purpose, which business units were doing more or less outsourcing of different activities,  and the like — which enabled more informed strategic planning, and helped guide decision making about how best to utilize and manage relationships with CRO providers.

Partnersmith Modules

  • Database of provider information and capabilities that facilitates the identification and selection of preferred providers for projects
  • Provider Portal to enable collaboration and allow providers to efficiently enter and maintain their profiles, project data, and metrics
  • Project Tracking Tool to record and analyze data on services provided and budgets, including change order tracking
  • Standard corporate, business unit, and CRO dashboards, as well as configurable graphical reports
  • Indexed document library for secure information sharing and the dissemination of standard templates and reference material
  • Issue escalation and resolution engine
  • Innovation opportunity submission and tracking engine
  • Time and condition based alerts
  • Administrator-created announcements 

Results

Increased Preferred Provider Utilization

  • Utilization of preferred CROs and other selected providers has increased by over 72% over 36 months, and continues to increase as business units voluntarily move spend to preferred CROs

Improved Decision-Making

  •  Visibility across business units into information about outsourcing by service type and therapeutic area has enabled better strategic decision making  
  •  Decisions on clinical trial contract awards are made based on comprehensive information about provider capabilities and performance  

Financial Benefits

  • Volume rebate payments received from providers have increased by 280% over 24 months
  • Total realized cost savings have increased by 250% over 24 months

Increased Sourcing Group Prestige and Enhanced Collaboration with Business Units

  • Because the sourcing group successfully persuaded business units to drive business toward preferred CROs — rather than mandating those decisions — business units have come to view the sourcing group as a strategic business partner
  • Process and policy compliance continue to increase
  • The mandate of the sourcing group has been expanded to additional categories of spend,  including laboratory services and laboratory equipment

Best Practice Identification and Adoption

  • Cost and time-saving processes have been developed, such as common RFP templates, bid grids, and supplier scorecards
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