Pfizer saves US$370m from centralised procurement organisation

Biopharmaceutical company Pfizer Inc., have claimed savings of US$370 million from October 2007 through September 2010 due to the creation of a centralised procurement organisation and a series of acquisitions, they say. 

These changes have prompted supply management leaders at the company to seize the opportunity for deeper procurement penetration in some of the more non-traditional addressable spend areas of consulting, legal and financial services.

Pfizer's Worldwide Procurement organisation formed a new professional services team to focus on those three areas, known as knowledge management services (KMS), to increase services, savings and success for the company.

From October 2007 through September 2010, the team's efforts resulted in savings of $370m, with an annual average savings of 14 percent, they claim. This is well beyond the average savings of 5 percent to 7 percent for indirect materials and services cited in research from The Hackett Group.

KMS identified two of the spend areas that would provide the greatest opportunities for Pfizer: consulting services and legal services.

Throughout the New York-based company's long history, the areas of consulting and legal services have operated with limited controls in place, explains Robert S. Roseman, senior director, Pfizer Worldwide Procurement.

"In the procurement organisation, the feeling was that legal and consulting were ripe for change in terms of process improvements and discipline," he said.

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