Balancing Act

Novartis’ Sammy Rashed talks to NGP about ensuring supply chain security in turbulent times.

“You can asses an individual’s progress by measuring what has been the growth historically versus the level of responsibility”
-Sammy Rashed

As procurement continues to move up the corporate agenda, the switch to Lean processes has put pressure on sourcing departments across the pharmaceutical industry. Sammy Rashed, Head of Global Sourcing at Novartis, explains that security of supply is a priority.

“When looking at the supply chain that goes into making our products, there’s a certain responsibility we have to ensure the continuity of supply. That has to do with ensuring the financial health of our suppliers, certainly given that the current situation is both a threat and an opportunity. For example, if suppliers have a high debt level, if they have a lot of sitting inventory, if they’re exposed with idle capacity, if their prices are linked to very highly fluctuating commodity prices which they’ve hedged, this is information that we must be aware of so we can adjust our strategy accordingly.

“What we’re trying to do overall is look for the suppliers we can keep growing with, that we can keep collaborating with, and we’re getting even closer to than we’ve done before. This is the basis of supplier relationship management. But how exactly the crisis is going to change the landscape, I’m not sure. It’s our job to try to be able to see ahead of time which are the ones we can work with, which are the ones we can help, and which are the ones we feel may become a greater liability, for which we may have to put in contingency plans.

 “We recognize the risk, but also the opportunity. We’re fortunate enough to be working in the pharma industry, which is typically not as hit during a recession. We’re still impacted, but we’re not hit as hard as maybe more variable spend industries, although we certainly have our business pressures to look for efficiencies and economies of scale. On the other hand, the supply base that we deal with is probably even more fragile, and because to that we do have to be a little bit cautious.”

Rashed and his colleagues are working to understand what their suppliers need given the current conditions, what their debt levels are, what sitting or idle capacity inventory they have to carry, how exposed are they to hedging decisions they’ve made or to commodity prices, and to a certain point also how they are being impacted by currency fluctuations.

“Whenever we see some vulnerabilities, as a large, multinational pharmaceutical company, we can offer stability of volume,” he says. “We can offer assistance with cash flow – there’s a high level of certainty that we’ll be able to pay our bills at the end of the day – and we can also look for commitments beyond the immediate short-term future. So we can both leverage the market opportunities and also work with our vendors to strengthen them in those times of turbulence, and that’s how we’re adjusting the strategy.”

The effect of this turbulence on the required skill sets for procurement executives is drastic. In a stable market negotiation is essential, and the relationship between buyer and seller is balanced: following the transaction, one person will lose something and one person will gain. Rashed explains that in the current economic crisis, there are certain situations in which negotiating and pricing is not suitable, and instead take an overall look, not just from a sourcing leadership aspect, but also the business continuity and the business element.

“Now is the time to make some changes; like everyone else, we will seek gains to make it through the market conditions, but we also have to think a bit more longer term, and this goes beyond the purchase order transaction,” says Rashed.

New strategy
A strong department depends on good people, and in 2005 Rashed launched the ‘Talent Management Initiative’ within the manufacturing department, which was considered an unusual move. He did this not because of any personal desire to stand out, but from a logical and business necessity.

“I had just moved into the European role and there were 100 people in the team, spread across 27 different sites, the majority of whom had not come from sourcing. We had some who were new learners coming on board to the function, and it was hard to distinguish who was who and what they knew. So it originally started off as an assessment tool, to understand competency skill levels and requirements – what is the demonstrated versus the need? When the findings came out, they were pretty revealing, but then the question was, “What do we do with that information?

“We identified a lot of gaps. The outcome being that we put together a program, which was meant to not only address the talent gaps but also bridge them, and by doing so the needs of the function were actually evolving faster than we were able to do so, and that’s when it became a more comprehensive program,” explains Rashed.

The initiative originally started as a tool to correctly assess the right people, based on skills competencies, but actual outcome was far greater than expected. It became a talent development program of on-the-job action learning and mentoring, expanding the potential for growth and contribution of each individual.

“In this way, we can make sure we hold the top performers in the organization. It took us about a year and a half to build and is very useful; it was once again applied out of necessity, but we took that as a base to expand and make it a global sourcing program, which is now being carried across all divisions,” he says.

According to Rashed, the difference following the initiative has been huge, “If you look at the quantified numbers, the savings have undoubtedly been a lot more than in the past. We’ve doubled or tripled our savings performance from being probably lower middle of the pack to being among the best in class companies. If you look at the ROI of our functions, measuring the investments versus the return based on salaries, overhead, the fixed costs and so on, ROI has pretty much doubled versus what it was, so it has been a very good investment.

“This has come through a change of requirements in skills and competencies. The support function, the more traditional role, has mainly been either automated, delegated, outsourced or sometimes just purely eliminated, and we’ve constantly moved upstream in the decision making chain getting closer to a customer, but adding value much earlier in the process.”

War for talent
This is a well-publicized war for talent within procurement, which begs the question of what exactly must the hiring organization get absolutely right. Rashed advises that the answer to this involves a variety of dimensions, the first being what is the exact level at which you want to hire?

“On one hand, you want to make the job responsibilities as attractive as possible, and at some point they all convert from the soft skills that we’re looking for, and we’ll talk about this during the required skills. But you get to a certain level where you’re competing with much more established functions, so you don’t want to over-specify the requirements needed from the individual.

“You also don’t want to over-promise what the job will do if the reality is you’re building the competencies that you need two years from now, and it’s not going to be ready to be deployed until then. In other words, if you hire someone with a strategic mindset, who comes with a bag full of ideas and wants to change the world, but you put them behind the desk to tactically negotiate with vendors and ensure compliance, that’s a big mismatch. This has actually happened a few times in the past. From that perspective, it’s about getting the level right.

“The second thing is the environment. If I look at our company specifically, we probably offer more sustained and faster career growth than the average company: every so many years, you can expect to move on to the next level. What comes out of that is the notion of the career curve.

“You can asses an individual’s progress by measuring what has been the growth historically versus the level of responsibility, and if you see someone with a relatively flat curve and the position we’re offering them now is way above the normal trend they’ve had in the past, that should raise some alarm bells. Likewise, if it’s a parallel move by someone who’s fully done the role before, they may not get the same level of satisfaction from coming in and doing the exact same role again.

“From a summary perspective, it’s about sizing the job, not just from an aspiration perspective, but also in terms of reality: what will the job look like, and how does that fit within one’s career growth? The keyword for me is ‘growth’. The function is growing quickly, and we’re looking for people who can sustain the growth, come in for a while, either grow with the function or grow out of the function at some point back into the business. But at the current moment it’s not a place to come and look for stability for the next five years; it is moving too quickly,” explains Rashed.

If there ever was a time for thinking outside the box, this is it. The recent mergers and acquisitions within the pharma industry are producing a knock-on affect on the ability to combine different procurement skill sets. “I can tell you that, from my discussions with the people impacted, this is having a drastic change within their day jobs. The quantity of available talent is going up by a tremendous amount. If anything, when you have mergers and acquisitions, there are usually a number of redundancies that happen as a result of that, and the function as a whole is becoming leaner.

“The market has seen more availability of resources in the procurement field, but the quality is not there. People who can navigate through those turbulent times have got a strategic mindset, a good vision, good engagement skills and are strong communicators. These are not the typical skills of procurement professionals, and these we’re still looking for, referring back to the war for talent. Anyone who has got those qualities will be doing very well in the market despite the number of people available,” he says.

On trend
In terms of how procurement skills will develop over the next few years, Rashed doesn’t see much change from current trends. The things he emphasizes are the ability to understand and align with the business strategy, the ability to engage with senior stakeholders – how you get them to accept that you understand their needs and to trust you sufficiently to give you the leadership of the projects to get their needs met – and being more entrepreneurial, being able to essentially identify, build, initiate and lead cross-functional projects. “You’re not working for the business; you’re working with the business, often in a project leadership role where you rally different team members from different functions together towards a common goal, and you essentially elevate your role internally to a business productivity champion, for instance.

“If I compare skills with technical competencies, the technical competencies can often be trained; the skills are a bit harder to come by. The transferable skills usually play a heavier weight in the decision to hire or not than the technical competencies, and you can usually get a feeling as to whether the person has those skills in the first few minutes of a conversation or an interview, then the rest becomes a set of validation. It’s finding those candidates that are ready now with those skills and behaviors. Again, every other function is looking for the same skills and mindset, we’re not unique in that,” he concludes.

Sammy Rashed has 17 years’ experience in procurement management across various industries, and currently heads sourcing globally across Novartis’ pharmaceuticals sites. His areas of expertise include regional program deployment and talent development in the sourcing function.

Prior to his current role Rashed managed local, regional, and category organizations at Novartis and Merck, and has a project management background in mechanical contracting. He holds a college degree in architecture and an executive MBA from UQAM, Canada.

“We can both leverage the market opportunities and also work with our vendors to strengthen them in those times of turbulence”
-Sammy Rashed