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Digg It - Suppliers as Your Partners in Cost Reduction
This article is one of the many articles still to come in which I will discuss very basic yet proven techniques that you could use immediately in your encoun
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
ters with your suppliers.
Oh but wait, to find any value in this article, you must be a firm believer that Purchasing strategies have evolved from just 1) f
Oh but wait, to find any value in this article, you must be a firm believer that Purchasing strategies have evolved from just 1) f
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
ocusing on price and 2) focusing on quality, reliability, responsiveness and total cost to a much broader focus of building supplier relationships.
Did you
Did you
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
now that for each $1.00 you save in your “total cost of ownership” reduction efforts, you will improve your bottom line profitability by $1.00? And did you
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
also know that most companies do not get this concept and continue focusing their resources in all the wrong places?
Now is the time when I want to share wi
Now is the time when I want to share wi
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
th you 4 basic rules that have proven to work and work very well to help you create the partnership relationship with your supplier and allow them to equally
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
benefit from the experience as well.
Rule #1: Getting direct cost savings is really a thing in the past. Getting savings has become increasingly difficult
Rule #1: Getting direct cost savings is really a thing in the past. Getting savings has become increasingly difficult
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
to achieve as your suppliers face similar predicaments themselves and operate with very little room in their margins to wiggle.
Rule #2: To affect your bott
Rule #2: To affect your bott
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
om line, using 80/20 rule, work on reasonable incentives to approach your top 20 suppliers with and build a “preferred” supplier base.
Rule #3: Communicate
Rule #3: Communicate
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
o your suppliers on “how to” earn a “preferred” supplier status and what is required of them to remain a “preferred” supplier.
Rule #4: Tell your suppliers
Rule #4: Tell your suppliers
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
what’s in it for them (WIIFT) as they partner with you and build a “preferred” relationship.
To earn a “preferred” status means that your supplier will have
To earn a “preferred” status means that your supplier will have
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
the first shot to quote on new business, parts and project. In fact you can go so far as to create “earn a point” program every time you achieve your cost
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
eduction goals using these techniques as they apply to your business.
Supplier earns a previously agreed upon point(s) when:
1) Shared tooling costs or sha
Supplier earns a previously agreed upon point(s) when:
1) Shared tooling costs or sha
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
red engineering costs on a project
2) Extended terms: 60 or 90 day billing terms for a period of one year
3) Certified as “ship to stock” on all supplied p
2) Extended terms: 60 or 90 day billing terms for a period of one year
3) Certified as “ship to stock” on all supplied p
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
arts or assemblies for a period of one year and remain compliant for every year thereafter
4) Ship zero defects for a period of one year and continue as suc
4) Ship zero defects for a period of one year and continue as suc
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
for every year thereafter
5) Work with purchasing, manufacturing or engineering to add value
Working with your suppliers to explore these techniques not o
5) Work with purchasing, manufacturing or engineering to add value
Working with your suppliers to explore these techniques not o
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
nly presents opportunities for you to reduce your “total cost of ownership” but also helps your suppliers to review, improve and streamline their processes a
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
nd grow internally to be able to meet your expectations and earn that “preferred” supplier status.
Use this “total supply chain cost” model as your guide to
Use this “total supply chain cost” model as your guide to
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
isolate and focus on the actual cost elements impacting your bottom line profitability.
Total supply chain cost=
Buying price=
+Supplier performance cost
Total supply chain cost=
Buying price=
+Supplier performance cost
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
+Cost of acquisition
+Out-of-sync planning
-Speculation returns
+Speculation cost
+Mfg. cost
+Selling cost
+Distribution cost
+Profit
=Selling pric
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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