Pharmaceutical company centralizespurchasing with help from Pcards
By Maria Varmazis -- Purchasing, 11/16/2006 7:00:00 AM
When Sue Gadsby joined Apotex Inc. in 2000, her job was to create a formal purchasing department with complete standards and procedures that simply didn’t exist yet at the company. Six years later, as director of procurement at the Toronto-based pharmaceutical company, Gadsby says her purchasing team of 15, which handles all of Apotex’s indirect spend, saves the company more than 5% in spend per year.
One of the first things Gadsby did upon joining Apotex was bring P-cards into the picture. “The first thing I recommended to senior management was implement the use of P-cards,” she says. “We were in a huge growth mode and we would have had to hire new people to keep up with the purchasing demand, so we moved a lot of categories over to P-card. The challenge was that the suppliers in those categories had to be Web-enabled, so we had to work with our suppliers to even get bank cards enabled and then allow us to actually do the ordering via the Web.”
Gadsby set a goal to distribute the P-card to as many requisitioners as possible, so staff working in labs could place their own orders for lab materials for example. Six years ago, she says, when P-cards weren’t as popular as they are today, fast turnaround dissolved much hesitation about using P-cards, as orders came in next-day instead of five to ten days later.
Within her own procurement group, Gadsby set up business rules that monitor and control daily spend flow through P-cards. These controls are facilitated in part by the level of P-card data required on transactions, either level three or four, no less. (Level four data shows the cost center in addition to all level three data.)
Getting suppliers compliant with P-card standards presented another challenge to Gadsby and her team. While the benefits and efficiencies of P-card use were clear within the company, many suppliers, she says, were not set up to accept P-cards at that time. “We did what we’d call reverse marketing. We told suppliers if they work with us, we will be their guinea pigs and at the end of the day, they will be able to go to other clients with this offering,” says Gadsby.
She says there’s plenty of room to grow in Apotex’s P-card program, but right now, close to $9 million of the company’s indirect spend goes on P-cards. The fact that the P-cards allow the procurement team to manage spend with fewer touch-points in the procurement cycle keeps the program moving forward, Gadsby says.
Another big issue facing the company was how suppliers interacted with Apotex’s many branches in 20 different locations. Because many of the branches are either business units, affiliates or subsidiaries of the company, suppliers did not treat them as part of a whole; instead, they asked different prices at different locations.
“We review the overall spend and ask the other groups to tell us what they’re spending and which suppliers they’re buying from,” says Gadsby. “Suppliers weren’t treating us all as one company, so we needed to have one face to suppliers.”
Gadsby credits extensive employee training initiatives for getting procurement where it needed to be. She ran workshops for purchasing teams at different locations—it meant, to some degree, starting with the basics. But once Gadsby set the foundation with procurement teams around the company, she could more easily push new goals, such as P-cards.
“We went out and established strategic sourcing teams, and I had to train people on how that process worked, but once we did, we started saving significantly [by] putting official commercial agreements and statements of work in place,” she says. “It’s been a growth or maturity of procurement within the company. We’re taking it to where it should be.”
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