Unlocking hundreds of millions USD trapped in redundant POs with rigorous supplier negotiations

Vision

Following a post-pandemic rapid decline in sales, a leading global pharma needed to prevent millions in cash and inventory losses through supplier PO cancellations with minimal damage to relationships.

Challenge

• A lack of transparency and agreement between supply chain (SC), procurement, and finance on the scale of the problem and solution options.
• Damaged relationships with suppliers following previous order cancellations.
• Inconsistent demand forecasts in SC and finance affecting decision-making confidence.

Solution

The CFO partnered with us for our cross-functional experience in inventory management and supplier negotiation and together we:

• Connected Finance, SC, Procurement in a workshop with an external procurement specialist to improve cross-functional transparency, collaboration, and get alignment from all key stakeholders.
• Ran diagnostics on the data models to uncover and correct discrepancies in demand forecasting.
• Fully assessed the PO database and situation in 4 weeks to identify potential reductions and prioritize suppliers and actions.
• Partnered with clinical teams to assess clinical demand and identify opportunities for PO extensions, uses for excess materials, and possible shelf-life extensions
• Coordinated a 3-month end-to-end approach to enter into discussions with suppliers, agree a way forwards, secure exec committee approval, and complete follow up PO cancellation administration.
• Drafted communications and coached and supported the teams through renegotiation through PO cancellation.

Impact

• Cross-functional workshop led to alignment on a 60% potential loss reduction in POs and excess inventory.
• Collaboration with clinical teams uncovered an existing clinical study which enabled 50% of total reductions to come from shelf-life extensions. 
• Guided successful end-to-end communications and renegotiations with suppliers limiting damage to supplier relationships.