From spend chaos to cost control: pharma company unlocks 16 percent in cost savings
Prokura helps global pharmaceutical firm not only achieve major cost savings but also empower its procurement function to operate more effectively.
A global pharmaceutical company had set its sights on making commercial improvements by boosting its procurement functions to deliver crucial in-year profit-and-loss savings. With Prokura’s help, the company captured cost savings of 16 percent across a variety of categories, empowering procurement to operate more strategically and more efficiently.
Diagnostic
Working in collaboration with Kearney, Prokura conducted a comprehensive spend analysis to gain a detailed understanding of our client’s expenditures and identify cost-saving opportunities. The process began with?data gathering and cleaning, ensuring a structured and reliable foundation by collecting, refining, and organizing data into a detailed spend cube.
After we established a solid baseline, the focus shifted to?identifying opportunities. To uncover potential savings, we developed category fact packs and assessed the feasibility of addressing various spend categories. To ensure alignment and assess the practicality of each opportunity, procurement and other business stakeholders participated in workshops to validate our findings so we could adjust the opportunity pipeline. This cross-functional collaboration strengthened buy-in and improved the likelihood of a successful implementation. Finally, we consolidated the insights into a?high-level road map, aligning the savings targets with clear implementation responsibilities and ensuring a structured and practicable execution plan.
By the end of this phase, we had qualified more than 100 cost-saving initiatives across various categories, including biomaterials, chemicals, consulting, consumables, IT services, lab services, and facilities management.
Implementation
The implementation phase focused on executing the identified cost-saving initiatives and ensuring sustainable procurement practices. This phase was divided into two main parts: Prokura-supported categories and client-only categories.
The main activities in this phase included the following:
Cost control tower. Implement a cost control tower to enhance spend governance and reduce maverick spending. This involved flagging high-value tickets, introducing zero-based budgeting, and setting authorization thresholds based on contract value.
Capability building. Deliver extensive training programs to elevate procurement knowledge and capabilities across the organization. This included on-the-job coaching, targeted training sessions, and co-created tools and templates for both the project management office and spend categories.
Savings tracking. Introduce savings trackers for each category to rigorously monitor project progress and savings realization. These trackers were updated weekly and stored on a central content management solution for live reporting.
Throughout the implementation phase, Prokura collaborated closely with the client’s category teams, following a “one team, one target” mindset to deliver the identified savings.
Key initiatives and outcomes: enhancing cost control and supplier strategies
To create cost efficiency and optimize procurement, we implemented several targeted initiatives that improved compliance, reduced spending, and strengthened supplier relationships.
The cost control tower?addressed procurement inefficiencies by identifying unchecked spending and ensuring compliance. By flagging high-value requisitions, implementing zero-based budgeting, and enforcing procurement policies, the initiative created transparency, reduced maverick spend, and improved adherence across business units.
A?global-first supplier strategy?enhanced cost savings and operational efficiency by prioritizing partnerships with large international suppliers. This shift enabled better pricing structures, created economies of scale, and improved regulatory alignment while mitigating risks associated with smaller suppliers. The strategy also ensured access to cutting-edge technologies and standardized service quality, creating long-term cost benefits.
To further improve procurement efficiency,?optimized supplier negotiation?leveraged a structured, fact-based approach to enhance cost-effectiveness without compromising service quality. Savings were achieved through volume rebates, contract line reductions, and strategic discounting. A tiered supplier partnership model prioritized collaboration with top-tier firms, reducing reliance on smaller suppliers and ensuring business continuity. These savings were tracked through monthly spend reports and system integration.
Lastly,?optimizing the use of an external workforce?helped reduce costs by limiting non-critical external workers while maintaining service levels for essential projects. This approach led to significant cost reductions without impacting operational efficiency.
Together, these initiatives created a more cost-efficient and strategically aligned procurement function, ensuring long-term financial sustainability.
Results
This case study demonstrates Prokura’s strategic approach and collaborative mindset for delivering impactful results and sustainable value.
We helped this client achieve a wealth of benefits, including the following:
For more information on how Prokura can help your organization achieve similar results, please contact us here.
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