The COVID-19 pandemic wreaked havoc, disrupted supply chains, and biotech procurement operations for thousands of companies around the country.

The current biotech procurement challenges being faced by Chief Procurement Officers and their teams are colossal.

In this post, we’re going to discuss some of these issues and see how some enterprises have chosen to respond.

But first, just what is biotech procurement?

What is Biotech Procurement?

Biotech procurement can be defined as the process of sourcing and purchasing raw materials and services needed by biotech enterprises for their manufacturing processes.

Biotech procurement can be direct, indirect, or agile.

Direct biotech procurement refers to the process of securing all the goods needed by the biotech company to produce products that will be sold to the public.

Indirect biotech procurement focuses on the purchase and acquisition of raw materials and services that are required for internal use by the biotech company.

Agile biotech procurement involves a less strict, less rigid, less orthodox approach to procurement and this is what distinguishes it from traditional biotech procurement.

Now that we know what biotech procurement is, let’s now talk about the challenges.

Challenge #1 The Lack of Experienced Teams

One of the leading challenges faced by companies in the biotech industry is that of finding and hiring suitably qualified internal procurement staff.

Small-to-medium enterprises find this exercise to be the most challenging and consequently end up having to outsource their biotech procurement operations.

Large biotech companies typically rely on internal procurement teams for all their biotech procurement requirements.

These teams generally consist of people fulfilling the following roles:

The Procuring Buyer – sources new vendors and creates a list of potential suppliers which must be approved by the manager before RFx can be issued.

The Purchasing Officer – is responsible for sending the Requests for Proposals to the pre-selected vendors and generates the purchase orders

The Procurement Manager – supervises the entire procurement team, organizing, and leading team biotech procurement efforts

The Purchasing Director – has manifold duties including development of new procurement plans, negotiation of high-level tenders, and setting purchasing goals

The Purchasing Analyst – keeps senior management informed about the work being done by the entire procurement team. They also track and monitor biotech procurement spending.

This is one of the ways bigger biotech companies are able to remain competitive and out-perform their smaller competitors.

Challenge #2 The Lack of Digital Transformation

Prior to the COVID-19 pandemic, technology adoption by biotech companies was rather slow. However, COVID changed all of that when it proved that technology can no longer be overlooked in biotech procurement operations.

When countries closed their borders and lockdowns were imposed upon cities, biotech companies were forced to move operations online.

And like the majority of employees in other businesses, remote working was adopted by biotech employees whose jobs allowed for this.

Remote working is of course a key part of digital transformation.  And for most Chief Procurement Officers (CPOs) digital transformation is a top-three priority.

At every level, whether sourcing, requisitioning, issuing purchase orders, or contract management, the use of procurement software is now standard practice.

While there is certainly less resistance to integrating more technology in biotech today, there is still a long way to go in matters of digital transformation. And it is this lack of progress on the digital transformation end that’s one of the main challenges facing biotech procurement.

Challenge #3 The Lack of Key Performance Indicators

The late management expert Peter Drucker has often been quoted as saying, “You cannot improve what you do not measure.” When applied to business, this maxim would be referencing a lack of key performance indicators (KPIs).

If biotech companies do not have metrics against which they can evaluate their procurement efforts, how can they know what to improve?

Leading biotech procurement teams have KPIs against which they evaluate:

· The sourcing processes

· The vendors

· The RFQ documentation

· Reverse auction results

· Contract management

· Purchase orders

· Supplier delivery times

· The 3-way matching process

· The accounts payable process

Without such metrics, it can be complex trying to see whether or not key deliverables were fulfilled, how engaged the supplier was, and whether cost-savings were realized.

Challenge #4 The Lack of Internal Procurement Visibility

In this age, data is king.  Data visibility is absolutely critical in making sure biotech companies meet their cost targets.

Without a centralized ERP or procurement software, enterprises might find themselves making numerous requests for the same products but at different times.

When data is visible, departments with similar needs can consolidate their requirements into a single requisition order.

Not only does this save procurement teams time (they only have to process a single purchase order) but bulk buying can qualify you for discounts from suppliers.

Biotech companies cannot afford this lack of visibility. By making concerted efforts to improve data visibility you’re inadvertently also working to better your vendor supplier relationship.

Challenge #5 The Lack of Regional Suppliers

The biotech industry is heavily reliant on foreign suppliers for most of the raw materials used in manufacture. In fact, China dominates the landscape as the biggest supplier of biotech raw materials being imported into the U.S.

This lack of regional suppliers leaves the U.S. vulnerable and open to attacks along this supply chain. The COVID pandemic showed us just how important it is to diversify suppliers. More needs to be done to address this critical lack of vendors in the region.

The Bottom Line

Thankfully, the challenges being faced by biotech companies in regards to biotech procurement can be improved. 

With well-thought-out strategies, CPOs can bolster procurement operations, mitigate costs, and improve the efficiency of the purchasing process.

As highlighted, one of the biggest resources available to ameliorate the biotech procurement process is digital transformation and integration of procurement software.

If you’re looking for reliable, robust, and innovative procurement solutions look no further than ProcurePort. Our software is trusted and used by enterprises and organizations such as UNOPS, HUD.GOV, and conEdison.

To discuss procurement software with a consultant or to schedule a demo of our solutions, contact us today.

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