Caroline Briggs is the Managing Director at Amici Procurement Solutions, with over twenty years experience in the industry she reveals here five key purchasing perils from within the biotechnology community, in partnership with the BIA business solutions programme.
You’ve worked really hard to secure customers or investment for your company. Taking time to optimise your purchasing processes will reward you many times over to ensure your money is well spent and your resources are focused on the business objectives.
Having worked in the industry sector for twenty years, I know what organisations need to make the most of their procurement. Amici have fine-tuned PO to PAY processes to solve the five deadly sins of purchasing for our biotech customers…
Deadly Sin #1 – Wasted talent
You’ve recruited an amazing scientific team – tick. Do you then want them spending time negotiating discounts and chasing down orders when they could be discovering cures to life threatening and debilitating conditions?
There are lots of angles to purchasing, all of which require different skill sets. You need to be bolshie and pushy to get the best deals, yet need great administration to keep on top of the order process. In my experience it is better to separate the two roles as the administration will always swamp one person in a fast-moving SME.
Deadly Sin #2 – Taking a lackadaisical attitude
Create a company culture where cost is well managed and you’re well on your way to saving lots of money! We work with many companies and those with an eye on the cost have had significantly better prices.
Biotech’s are a far cry from the old Major Pharma but not everyone has woken up to this yet. Get to know what you spend and use all the buying power you can to get the best prices. The BIA Purchasing Programme is a great way to immediately gain the leverage of larger organisations.
Deadly Sin #3 – Financial control breakdown
Be clear about who is allowed to spend the company money and how you’re going to control supplier choice and authorisation. I once visited a company and had to step around boxes and boxes of HP paper, when quizzed, a Junior Scientist told me there had been an offer with Viking Office Supplies to get a free radio, coffee maker, all manner of random objects. The fact they had paid £10 per ream compared to the normal price of £1.75 had completely missed them. Who allowed this to happen?
Shopping around however, can also have hidden costs, sometimes it may not even be worth it when you consider the resource costs and it takes a minimum of 30 minutes of finance time to set up and pay a new supplier. Have you got the controls to avoid random supplier additions?
Deadly Sin #4 – Very inefficient processes
Why spend hours processing twenty invoices per month from a supplier when many are more than happy to send you just the one at the end of the month? Happily, this also extends your payment terms! It takes about 15 minutes to process an invoice. In this example, you could save Finance almost five hours per month by switching just one supplier to monthly invoicing.
There are untold processes involved in the PO to Pay process which can all be improved. How do you order commonly used items? How do you track and record spend? How do you limit the resource to create and approve a PO? How do you make sure the invoices match the PO first time? There’s a lot to consider.
Deadly Sin #5 – Over purchasing
Nothing stresses me out as much as waste! It’s frightening to calculate the cost of your facility per sq ft so you certainly don’t want to be wasting space and holding stock “just in case” when suppliers can typically deliver within 1-2 days and most will guarantee a reserve stock in your name at their cost.
Not only are you tying up cash, you might end up throwing away expired products or products you no longer use (just your fridge at home!). If you buy special kits at £1000 and suddenly stop your project then I’m afraid you’re stuck with it because the supplier is unlikely to take it back.
I need help! How do I find out more?
I will be running a webinar with Steve Bates, BIA CEO, 27 February, 11am, where I will be examining how Amici through the BIA business solutions programme can guarantee to save you time, money and resources.
Find out how we can help you grow your organisation effectively.