Adam ShayevitzPresidentStrategic Sourcing Dynamics LLC

Adam Shayevitz is a reputed strategic sourcing expert with over 30 years’ experience. We have caught up with Adam for his exclusive insights on how supply chain and procurement have changed over the course of his career – when upon graduation with an MBA he first began as Strategic Planning Manager for Mascon, a multinational trading company sourcing electronic

parts and assemblies from the Far East, to building a Global Sourcing Business Unit at Parker Hannifin Corp, a Global Industrial Conglomerate, to helping the start-up Rethink Robotics build supplier partnerships, to finally founding his own consultancy Strategic Sourcing Dynamics LLC.

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SPEAKER INTERVIEW

3rdAdvanced R&D Sourcing & Procurement in Pharma

May 21 – 23, 2019 | Boston, USA

HW: Adam, would you be able to share your sourcing and procurement career journey with us?

AS: My interest in international business started during college. It was a career choice that allowed me to leverage my integrative skill set across languages, business, economics, and cultural anthropology. After 25 years of climbing the corporate ladder, I realized strategic sourcing is one of the most underutilized, under-recognized, and misunderstood functions in most companies. I decided to make a leap to founding Strategic Sourcing Dynamics LLC, where I can apply apply and utilize my two decades’ experience helping organizations evolve their sourcing practices beyond a cost saving focus to accelerating product development and solving manufacturability issues before the product is launched.

The first 12 months was a white-knuckle ride to build the foundation of clients and internal business systems to be successful. When you jump off a cliff you might as well try to fly. That was 6 years ago and I have never looked back.

HW: Strategic sourcing has become a trending buzz word – what does it mean to you?

AS: Many of the descriptions I have read describing Strategic Sourcing sound more akin to a tactical Purchasing approach. Terms such as spend analysis, supplier metrics, JIT, logistics, and e-auctions are used. Purchasing is the tactical implementation of the strategic sourcing plan.

Strategic Sourcing is the starting point for product realization. It is the first supply chain step in moving from R&D into production. The core function of Strategic Sourcing is the identification, qualification, and selection of an optimal supply base. It also builds and manages high-level relationships, acting as a bridge among the internal and external engineering teams.

From prototyping through volume production, Strategic Sourcing continuously improves the existing supply base while mapping out the future supply chain. It is the cartographer and choreographer of the path from the suppliers to the finished product.

In a sense Strategic Sourcing is the photonegative of New Business Development. The New Business Development function develops the markets for sales while Strategic Sourcing develops the sourcing markets.

HW: Certainly one of the key challenges in pharma R&D is the pressure in time and costs – validating a new supplier, working with a limited supply base and racing for time have added multiple hurdles to sourcing and procurement teams.

AS: Many companies are so focused on bottom line cost reductions the total value proposition offered by suppliers is overlooked. The emphasis has shifted towards a tactical approach of lowering cost through supplier bidding wars and chasing the latest low-cost country. The more strategic concept TCO (Total Cost of Ownership) that takes into account quality, delivery, technical support etc. is overlooked to meet COGS reduction targets. There is a lack of understanding regarding the very different roles of strategic sourcing and purchasing.

During my consulting engagements I often confront a philosophical battle raging between tactical and strategic sourcing. Tactical sourcing can bring short-term gain at the cost of long-term optimization of the supply base.

Tactical sourcing can bring short-term gain at the cost of long-term optimization of the supply base. Companies choosing key strategic suppliers early in the design process, and working closely together to commercialize a product, will gain competitive advantage

Unfortunately, there is a continual temptation to adopt tactical sourcing practices due to the comforting clarity of “we win, they lose”. Would you rather have a supply base figuring out how to offer you the least it can get away with, or so invested in mutual success that it opens the spigot of engineering support? Companies choosing key strategic suppliers early in the design process, and working closely together to commercialize a product, will gain competitive advantage. For many executives, strategic sourcing feels too warm and fuzzy, with its “squishy” judgments about qualitative measures and the value placed on relationships. It is often those relationships that may save your company when it needs help the most.

HW: From your 30+ years’ experience in sourcing and working with new frontier markets, what would be your top tip to offer to the next generation of procurement leaders?

AS: Too often Supply Chain Departments interpret the Golden Rule to mean: “whoever has the gold, rules”. The best negotiators are masters at uncovering the underlying needs of both organizations and finding solutions that are mutually beneficial. Win-win negotiations build trust and commitment. A relationship savings account full of goodwill is an invaluable asset when problems occur.

Great sourcing and procurement managers break down silos and seamlessly integrate with engineering teams. They understand that 70%-80% of costs and many avoidable quality issues are typically designed into the product. Early supplier involvement in design for manufacturability and assembly (DFMA) is crucial. The more typical pattern of tackling costs after a product

has been designed, leaves suppliers’ profit margins as the main “cost reduction” target. Focusing on dictating the level of supplier profitability limits the potential cost savings and breeds resentment.

When Procurement leaders do not have a strategic mindset, their cost savings compensation incentives will have a perverse effect. An unproductive adversarial attitude towards suppliers becomes ingrained into the culture. All the EDI, MRP, ERP, JIT, Kan Ban and onerous contracts will not create a sustainable supply chain. Continuity of supply boils down to selecting suppliers with an aligned management culture and business strategy in conjunction with an ongoing process of building deep mutual trust.

Companies often do not recognize the need to cultivate and invest in the qualitative aspects of supply chain relationships. Strong relationships with suppliers are one of your company’s most valuable assets, treat them accordingly. Supply Chains are a source of competitive advantage, or conversely competitive disadvantage if not managed properly. This philosophy is the very heart of Strategic Sourcing.

Another important change to recognize is the move towards regional manufacturing. Increased automation and rising global wages and transportation costs, have reduced the manufacturing cost differentials between developed and low-cost countries. Procurement leaders need to approach projects without a rigid geographic bias towards specific “low cost” countries such as China. Increasingly having manufacturing close to the major markets to improve lead times and speed of response will be a key component of growing market share.

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3rdAdvanced R&D Sourcing & Procurement in Pharma

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2019 Confirmed Partners:

James TornosSenior Director, R&D ProcurementPfizer

Umar SalahuddinDirector of R&D Sourcing, Global ProcurementBiogen

Olivier SteinmetzHead of Quality – Global Vaccines Strategic Alliances & Third Parties in R&DGSK

Anita GeorgeExecutive Director, Global Procurement – R&D SourcingAllergan

From Tech to Strategy: Integrating Strategic R&D Procurement

to be Your Scientists’ Best Business Partners and Boost Clinical Success

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May 21 – 23, 2019 | Boston, MA

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Great sourcing and procurement managers break down silos and seamlessly integrate with engineering teams. They understand that 70%-80% of costs and many avoidable quality issues are typically designed into the product