TechnologyAstraZeneca aims for £600m e-procurement saving

AstraZeneca aims for £600m e-procurement saving

Pharmaceutical company AstraZeneca is aiming to cut at least £600m a year from its purchasing bill by using electronic procurement.

It will take the company between two and four years to implement the system globally, with the UK operation set to be the first site to use it by the end of this year.

AstraZeneca has chosen a ‘spend management’ suite from Ariba that includes modules for electronic sourcing, analysing and buying.

Chris Keep, global e-procurement development manager for purchasing strategy at AstraZeneca, would not reveal how much the project will cost but told VNU News Net the company is aiming for savings of at least 10%.

‘Experience has shown us a conservative view looking at 10 per cent. If you do it well you can aim for considerably more than that and in the long-term, 10-20% would not be unreasonable,’ he said.

The e-procurement system will be used for the purchase of indirect goods including R&D equipment for clinical trials and engineering, which currently account for around $6bn (£4.12bn) of AstraZeneca’s global annual spend.

‘We need to leverage our buying power for a lot more than just stationary,’ said Keep.

The company has spent two years looking at e-procurement and evaluating the major vendors including Ariba, Oracle and Commerce One, and Keep admitted it was difficult justifying the project to the board.

‘We looked back then at exchanges and marketplaces. We looked with 13 other pharmaceutical companies at an exchange but that did not fly.

‘But we aligned this to business transformation rather than just buying the software and figuring out what to do with it as we do along.’

The sourcing module will allow the company to negotiate better contracts with suppliers while the procurement module will physically do the buying transactions.

Both functions will be linked to a global purchasing data warehouse by the analysis module to give a company-wide view of how the money is spent, explained Keep.

The project will affect the company’s 55,000 users and has already begun in the US, with the UK rollout beginning later this year. Sweden will follow in two years.

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