How to Create True Value When Sourcing Professional Services

How to Create True Value When

Sourcing Professional Services

FMC

Phil SamponaGlobal Category Senior Manager - Professional Services

GEP

Teja KappagantulaDirector, Consulting Services

sig.org/eval

© 2012, GEP. All Rights Reserved.© 2012, GEP. All Rights Reserved.

Presenters:

Phil Sampona, Global Senior Category Manager – Professional Services, FMC Corporation

Teja Kappagantula, Director – Consulting Services, GEP

How to create true value when sourcing professional

services (R&D services)

3© 2016, GEP. All Rights Reserved.

Context and Session Objectives

Typical challenges associated with managing external spending associated with R&D

services/Innovation services

How procurement is uniquely positioned to partner with the R&D/Innovation team stakeholders

What does it take to drive the change

What benefits can organizations reap by this R&D/Innovation – Procurement partnership

FMC’s R&D & Procurement organization recently developed a strategic partnership

to drive the best cost and service levels with it’s R&D 3rd party suppliers. We intend

to demonstrate this through real life examples as to how procurement can create

true value when sourcing complex professional services such as R&D.

Using FMC – GEP partnership as an example, this session will provide insights into:

CO

NT

EX

TS

ES

SIO

N O

BJ

EC

TIV

ES


A global leader in procurement services and software (Gartner, Everest, HfS, NelsonHall, Kennedy Vanguard, Forrester, Hackett, Spend Matters, Ardent Partners)

Focused exclusively on sourcing, procurement & supply chain

Billions in spend managed annually

Comprehensive, end-to-end Procurement Solutions – Consulting, Outsourcing, Software

Innovative source-to-pay platform – Native to Cloud, touch, mobile | SOC 1, SOC 2 (Type 1 & 2) certified

Large repository of best practice workflows, tools and templates

More than 200 Fortune 500 & Global 2000 Customers | NMSDC certified minority owned enterprise

Offices and operation centers in Europe, Asia & Americas, supporting multiple languages

Mexico City

Costa Rica

Princeton, NJ

Clark, NJSão Paulo

London Prague MumbaiHyderabad

ShanghaiSingapore Sydney

Reducing costs and driving savings to the bottom line gets us excited.

GEP PEOPLE are distinguished by their drive to do better, go further and

achieve more for clients.

GEP – Company Introduction:


FMC – Company Introduction

Latin America

30%

Asia Pacific

23%

North America

28%

Europe, Middle

East & Africa

19%

Agricultural

Solutions

69%

Health and

Nutrition

24%

Lithium

7%

*2015 financial information excludes FMC

Alkali Chemicals division, which was sold

to Tronox Limited on April 1, 2015 and

includes proforma effect of Cheminova

acquisition that was completed on April

21, 2015.

Revenues: $3.3 billion*

Employees: Approximately 6,000

Business segments:

Agricultural Solutions

Health and Nutrition

Lithium

Manufacturing facilities:

More than 30 in 18 countries

Leading specialty company focused on

agricultural, industrial and consumer markets

with innovative solutions, applications and quality

products

Sales Mix*

Revenue by Region*


FMC Agricultural Solutions FMC LithiumFMC Health and Nutrition

• Supplier of microcrystalline

cellulose, carrageenan,

alginates, natural colorants,

pectin and omega-3

• Renewable, naturally derived

ingredients that have high

value-added applications in the

production of food,

pharmaceutical, nutraceutical

and other specialty consumer

products

• Three major crop protection

categories: insecticides,

herbicides and fungicides

• Products used in high-value crop

segments, control a wide

spectrum of pests and target a

large variety of difficult-to-control

weeds

• Developing Plant Health

platform that include biologicals,

seed treatments and

micronutrients

• Producer of lithium carbonate,

lithium hydroxide, and butyl

lithium

• End-use applications include

energy storage, polymer and

pharmaceutical markets and

other industrial markets

FMC – Company Introduction


External R&D services spend is an integral part of FMC Ag.

Solutions’ business strategy – fastest time to market and

superior customer service with asset light operations

Speed to Market

Customer ServiceCost Leadership

• Organization:

• Decentralized field testing– some studies

managed by local commercial

organization

• Decentralized regulatory program –

study execution

• Program Management:

• Parallel-tasked efforts to shorten the time

to market

• Supplier Engagement:

• Peer-to-peer relationships with supplier

scientists

• Engagement with large number of

boutique consultants/CROs


This setup however had inherent limitations and issues,

providing the necessary impetus for procurement

transformation in this area

Operations

Sourcing

Supply BasePricing/

Negotiations

Budgeting

Contracting

“One study at a time” approach –

scientists spending significant time

sourcing, negotiating, and

contracting this studies

Decentralized operations:

Inconsistent payment terms,

invoicing schedules, study

tracking, etc.

Limited visibility into medium/long term plans –

inability of CROs to become strategic

partners (FMC seems like a transaction client

due to 200+ scientists individually reaching

out to CROs on a one-off study basis vs.

developing strategic partnerships with

CROs)

Scientists negotiating with CROs – Focus on

“getting things done” instead of getting best

value (cost & service level)

Spend/budget management in silos –

Limited visibility into “global R&D

budget”, spend not leveraged

Multiple contracts/MSAs with same CROs

No standardized and centralized contract

management – Complex contract

framework for CROs


Such transformation in operating model would yield

significant tangible and intangible benefits for the

organization

Better control through CRO performance management

Efficient process through requirement aggregation

Actively engaged strategic partners (CROs)Cost savings through procurement’s sourcing expertise

Central visibility & ability to leverage global spend

Standardization and centralized contract mgmt.

Anticipated Benefits


With a newly defined operating model, GEP support and

process rigor, FMC’s R&D and procurement organizations

are well positioned to implement the transformation

R&D Function Procurement

GFD

NAC LATAM EMEA APAC

GRS

Mamm.

Tox.Ecotox eFate Field Chemistry

Global Category

Manager (Incl. NA)

Regional

Proc. LATAM

Regional

Proc. EMEA

Regional

Proc. APAC

GEP

Category/

Market

Expertise

GEP Analytics

R&D Services Sourcing & Supplier Engagement Platform

R&D Role:

Technical expertise, business

requirements, service level

requirements

Procurement Category Manager

Role:

Change management, defining

procurement strategy

GEP Role:

Outside-in perspective,

category expertise, analytical

rigor


Well thought-out change management plan ensured that

the transition is successfully initiated

Ground work for data collection & analysis

1

• Legacy archives of R&D team and the invoice data

• Budget/forecast for 2016 planned spending

• CRO capability/Utilization matrix to identify potential strategic partners

Identifying opportunities for immediate collaboration

2

• Standardization & consolidation of MSAs/contracts – commercial & legal

• Improving data visibility across the organization

• Educating on benefits of centralized sourcing/procurement

Tailoring process to meet business objectives

3

• Simplifying the PO process and sourcing process

• Understanding and addressing questions/concerns

Conducting change management workshops

4

• Developing the vision & roadmap for R&D – Procurement partnership

• Educating the R&D scientists on what will change and how will it benefit

them


Initial results are early signs of the successful R&D

function <-> Procurement collaboration (Case Example)

Scope: 84 Field Trials across EMEA, multiple crops, and several products

New Process:

Close collaboration between R&D stakeholders & Procurement

First time negotiations led by procurement with inputs from R&D stakeholder

CRO A

CRO B

CRO CR&D

Procurement

RFP

2 Negotiations after RFP

CRO A XX trials

CRO B YY trials

CRO C ZZ trials

CRO D AA trials

Final Award distribution:

CRO D

Previous Process:

CRO A

CRO B

CRO C

R&D

CRO D

Benefits Achieved:

• 7% - 10% cost reduction vs. budget

• Mitigated risk through award distribution

• Competitive sourcing process w/o

compromising the speed of execution

Process Highlights:

Awarding scenarios analyzed to identify the best cost <-> Lowest risk award


Contact information

Phil Sampona

Global Senior Category Manager

FMC Corporation

[email protected]

Teja Kappagantula

Director - Consulting

GEP

[email protected]

mailto:[email protected]


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How to Create True Value When Sourcing

Professional Services

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Phil Sampona

Global Senior Category Manager

FMC Corporation

[email protected]

Teja Kappagantula

Director - Consulting

GEP

[email protected]



How to Create True Value When Sourcing Professional Services

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