Our “Procurement Experts on CPO Rising” series continues today with Part Two of an excerpt from my 2022 episode of the Procurement Rising Podcast – John Dickson, Chief Procurement Officer at AstraZeneca (click to listen to the full interview). Note that this excerpt has been edited for readability.
Last week, John Dickson shared that his vision for procurement is to support the ‘growth through innovation’ agenda by optimizing its ecosystem of partners across the value chain to maximize patient outcomes.
Andrew Bartolini: I know that you recently launched a new five-year strategic plan. Tell us about that process and some of the decision-making involved.
John Dickson: Our R&D organization connects strongly to our operations organization, which strongly connects to our commercial operation, which is then underpinned by very strong enabling function’s set up. It’s an end-to-end value chain not specific to one dimension. Maximizing patient outcomes is the reason and rationale for us to really turn up to work — it’s the vision.
Supporting that vision are four distinct elements that drive our approach from a procurement perspective.
Generate financial value. The first is generating financial value, which is obviously one of the critical elements of what a procurement organization is looking to deliver. We’re looking to support the delivery of sustainable growth through increasing cash flow and bringing savings, but also in how we help the organization maximize its budget efficiency. Procurement sometimes is affected by conversations we have with CFOs in that the function only recognizes the bottom line. As a procurement organization, we need to be motivated beyond that. The bottom line is obviously important and critical. I would expect a CFO to feel that way. But if you work in an R&D organization where you can get more for your budget, or you can reinvest into a program, that’s in addition to the budget that you are specifically spending against. It’s a critical part of what we do as a value proposition in R&D.
Then we’ve got cost avoidance, which has divided opinions, but in certain parts of the procurement world, we are engaging cost avoidance. If we didn’t engage in those areas, then the cost to the business would increase. First of all, you have to recognize all value elements that exist within the value you bring and position them accordingly. Generating financial value is obviously important.
Optimize supply collaboration. The second element, is optimizing supply collaboration. Generating innovative thinking as well as collaborating with our strategic external suppliers is critical for us. It’s connected to the financial value because sometimes innovation and creativity may actually cost you more, but in the long run, it may drive a revenue stream. This is different to what we may have had in the past. Thus, optimizing supply collaboration is very much in service of creating the most competitive supplier ecosystem that we can across the enterprise-wide landscape described earlier.
Achieve sustainable business. The third element is achieving sustainable business. Obviously, sustainability is on the minds of many. We don’t just look at sustainability as greenhouse emissions and carbon footprint; there are more distinct elements to it than that. How do we assess our sourcing decisions with ethical suppliers as well as enabling our ambition toward zero carbon?
AstraZeneca as an organization has an ambition to be carbon zero by 2025 and carbon negative by 2030. If you’re looking for connectivity, there’s a strong connectivity between the element of achieving sustainable business and the element of optimizing supply collaboration. How you bring those together is very important. As we move toward scope three, it’s not just about AstraZeneca’s standing from a sustainability point of view, but rather the tier one, tier two, and tier three supply base externally. There’s a big challenge in that area for procurement and we intend to step up and support the organization.
Enable business agility. The fourth element is enabling business agility. How do we create a best-in-class procurement environment that really anticipates and reacts to changing business requirements? We leverage innovative digital solutions. How do we streamline and simplify the processes we are responsible for as a procurement function? Answering that question and others engages our procurement professionals on a day-to-day basis. Those processes also extend to ones with a broader impact on the wider organization. Because some of the user community across AstraZeneca utilize processes that procurement engages with, such as third-party risk management. For example, how do you onboard vendors and manage your purchase to pay? There’s a whole range of processes that procurement brings to support the organization and ensure it is lean, agile, streamlined, efficient, and effective.
Those are the four distinct elements that comprise our value proposition. We also have an enabling segment called ‘great place to work,’ which is the people focus. How do we focus on engaging with the talent in our organization? How do we attract and retain folks? How do we drive diversity and inclusion across our organization to make sure that we are getting the best from our people, but also providing equal opportunity regardless of who you are or where you come from?
We don’t get hung up on whether you’ve got procurement experience on your CV because a business background is critical, too. Our head of the R&D element came out of R&D and is doing a fantastic job by bringing a slightly different perspective to the way that we view the procurement agenda. She understands how to walk the corridors of R&D, and that’s been a significant part of our ability to move forward. A great place to work is something that’s not specific to procurement, but across the whole of the AstraZeneca organization. We believe this is a really good breadth of a value proposition. We then supported it with a five-year strategic plan, which gives us a glide path over the next five years within each of those elements on key programs and projects that we need to deploy.
MORE CPO TOPICS
Procurement Experts on CPO Rising – Maximizing Patient Outcomes
Procurement Experts on CPO Rising – Hardwiring Sustainability into the Business
Procurement Experts on CPO Rising – Furthering the Mission in Higher Education
Procurement Experts on CPO Rising – Transitioning Into a New CPO Role
