Here’s How GlaxoSmithKline is Innovating Its Entire Procurement Ecosystem – Starting with Marketing and Diversity
Any modern procurement professional worth their salt understands the responsibility to innovate doesn’t just sit with the supplier, the business, or the category manager. To drive real innovation in the pharma procurement industry requires all parties to work together.
There are many ways this change can be driven, and GlaxoSmithKline (GSK) is starting by aligning its marketing and procurement arms and increasing supplier diversity.
Traditionally the marketing and procurement arms of a company such as GSK are fundamentally opposed to one another in terms of the company objectives they are trying to fulfil. Marketing is always laser focused on growth while pressure is always on procurement to make savings.
However, GSK is making sure the objectives of marketing and procurement compliment one another without having a negative impact on each other’s goals. The multichannel way the modern consumer accesses media is forcing marketing to become ever more complex. This makes it even more crucial that procurement can balance the extra spend by making savings wherever they can.
“The way we can scrutinise ROI now and the way we’re being asked to work with our budgets, especially in the FMCG sector, means it has to be far more prudent than say 10 years ago,” said Consumer Procurement Lead at GSK, Emma Howcroft. “There’s an evolution towards being able to react fast to changes in the marketplace.”
Marketing and procurement departments at GSK are actively encouraged to hold joint strategy sessions at least once a year to help foster this mentality of a single company with symbiotic goals. The plan is to eventually have all teams working in a more connected fashion to help make sure everyone at GSK is aligned and working as one to achieve the aims of the business.
Another step GSK is taking to drive change in Procurement includes hiring a new global Head of Supplier Diversity, creating a UK based team also dedicated to supplier diversity, and overhauling the scope and direction of its KPIs.
The main method GSK has deployed to achieve greater supplier diversity is to change the way its procurement division creates new contracts with smaller businesses. The previous contracting process was large and unwieldy, but the new one has been streamlined to just two pages. GSK loves innovative startups but recognised that they often don’t have the personnel or resources to assign to the esoteric contracting processes of huge brands.
“We now have a contracting process that is two pages for innovative startup companies that we work with,” said Global Head of GSK’s Procurement Center of Excellence, Jami Bliss. “Some of these startups can’t even afford legal support to go through our contracting process, so this has been a big game changer for us. We were a tick box exercise for a number of years, making it just a compliance exercise which meant the firm was missing a huge opportunity for GSK, for our supply base and the patients and the communities we operate in.”
Big brands such as GSK can often forget about smaller suppliers, with too much of a focus on the big names and huge contracts. However, GSK is keen to make supplier diversity a baked in element of its company culture from both a top down and bottom up perspective.
Not only does this ethos help GSK access these innovative new suppliers and the fresh thinking they bring to the procurement table, but it also creates new levels of authenticity in the workforce and supplier base – which feeds back into the procurement and marketing alignment as already discussed above.
“It’s going to require us to tell a story and to really help people understand what insulation in our supply base can do and the fact that it’s not a charitable initiative, it’s a business imperative,” added Bliss “But I’m so excited to embark on this, seeing the support at GSK for inclusion and diversity. I know that we’ll be able to be successful.”
The need to innovate across the entire procurement ecosystem is going to be a major industry driver for the foreseeable future and it’s good to see big brands such as GSK finding ways to drive increased change, cooperation, and agility.
Driving change and agility in the procurement industry is set to be a hot topic at ProcureCon Pharma 2019, taking place in March, at the Steigenberger Frankfurter Hof, Frankfurt. Download the agenda today for more information and insights.