AstraZeneca has a real need for cash: it can take $1bn to bring a new drug to market, said Andrew Wilson in introducing the pharma company’s new SCF programme. Market expectations of dividends also put pressure on cash generation. But cash was not part of the balanced scorecard two years ago, he said.
But everything has been done in collaboration with suppliers, with the supply chain in mind. Around $600m has been generated by putting suppliers onto standard terms – but because of the science background some of these suppliers are at the forefront of new science. “We have a key desire to work ethically with our supply chain,” he said.
The objective in 2017 was to offer the SCF programme to every single supplier within the UK, US and Sweden – AZ’s main operating bases. There wasn’t a huge project team so it had to be easy to manage it and to implement it quickly. There are about 3,500 suppliers across those three hubs, with spend of around $4bn. They have now all been invited to join the programme which launched just four months ago. “As of 30 minutes ago we were up to 902 [suppliers enrolled].”
Unusually, this was a procurement-led project, not finance- or treasury-led. “We spent time on the engagement piece,” he said. Time was also spent on cleaning up vendor master data – which spawned a separate project on defining what vendor master data should look like.
Next steps include ensuring that the SCF programme is part of the company’s “way of working” – it’s part of the procurement toolkit and not a “project”. Geographic expansion will take the programme into the Asia-Pacific region and Latam, though the three current hubs cover about 85% of company spend.
AZ will also look at options such as mixing SCF with dynamic discounting and simplifying the P2P process.