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
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BJ
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TIV
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4© 2016, GEP. All Rights Reserved.
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:
5© 2016, GEP. All Rights Reserved.
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*
6© 2016, GEP. All Rights Reserved.
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
7© 2016, GEP. All Rights Reserved.
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
8© 2016, GEP. All Rights Reserved.
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
9© 2016, GEP. All Rights Reserved.
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
10© 2016, GEP. All Rights Reserved.
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
11© 2016, GEP. All Rights Reserved.
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
12© 2016, GEP. All Rights Reserved.
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
13© 2016, GEP. All Rights Reserved.
Contact information
Phil Sampona
Global Senior Category Manager
FMC Corporation
Teja Kappagantula
Director - Consulting
GEP
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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
Teja Kappagantula
Director - Consulting
GEP