Building successful longterm customer relationships           Paul Overton, PhD Group Director, Corporate Development    O...
Presentation overview:   Defining value   Defining the relationship       Factors for creating successful relationships...
Defining value:       What is value?
Defining value:  Value = benefits – costs (Neil Rackham, Malcolm MacDonald and other                    gurus)
Defining the relationship:   Do all long term business relationships    need to be consultative or strategic?       Shou...
The value pyramid:                       Co created                         Value                         Solution Value  ...
Value in suppler relationships:High                                                            Strategic                  ...
Value in suppler relationships:High                                                            Strategic                  ...
Defining the relationship:   Objectively review the status of the    relationship   Is the approach fit for purpose?    ...
Defining the relationship:   Effective resource management       Sharing of key “information” components       Studies,...
Successful relationships require:   Excellent communication        Timely,  open and honest        Multi-level communic...
Successful relationships require:   Investment in time…     Relationships take time and effort     High level of commit...
Governance structures:    Executive   leadership      team      Joint   operational     team    Study  management     team
Governance structures:    Executive   leadership      team                 Annual Meetings      Joint      •Top level dire...
Governance structures:    Executive   leadership      team                 Regular meetings      Joint         (quarterly)...
Governance structures:    Executive   leadership      team                     High level                   communication ...
Creating open relationships:   Create a “banking mentality”       100% satisfaction…....nice in theory          Allrela...
Creating open relationships:   Escalation procedures       Ensure a formal process is created to        escalate service...
Effective utilisation of KPIs:   Demonstration that the relationship is    working   Effective metrics can be incisive a...
Example 1: KPIs linked tocosts   Library of defined study designs with fixed    delivery times mutually agreed   Study p...
KPIs linked to costs:   Successfully used to reduce costs of “SD    individualism”   Templates showing consistent high  ...
Example 2: KPIs linked toreport delivery   Formal timelines were established for a    library of standard template study ...
KPI: report delivery metrics
Example 3: KPIs linked to ontime payment   MSA agreement had a volume discount    built in that rewarded on time payment ...
KPIs: On-time payment                % Timely payments                      (based on MSA) Site   Q3 08   Q4 08    Q1 09  ...
Creating value:              Value = benefits – cost   Creating value.....       Tactical relationships...focus on strea...
Creating value:   Cost reduction       Make the buying and selling process efficient        and clear       Standardise...
Creating value:   Increasing mutual benefits       Rewarding performance based on KPIs            Report quality, on ti...
Creating value:   Sharing the benefits of process    improvements          LEAN   and 6 sigma          CROs and the pha...
Summary:   Establish and define the relationship       both parties expectations       define roles and responsibilitie...
Summary   Long term non-clinical partnering is    becoming a critical component in    successful drug development strateg...
Many thanks for your listening!
Expectations of a CRO!
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Building successful long term customer relationships

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Building successful long term customer relationships.
• Defining the nature of the relationship and setting mutual expectations for the future
• The role of governance structures and KPIs in effective relationship management
• Building a “banking mentality” and dealing with “service challenges” using formal escalation mechanisms
• Practical ways of creating long term value for both parties
• Establishing open relationships where honesty, integrity and straight talking can thrive

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Building successful long term customer relationships

  1. 1. Building successful longterm customer relationships Paul Overton, PhD Group Director, Corporate Development Outsourcing Preclinical Development Berlin 2nd December 2010
  2. 2. Presentation overview: Defining value Defining the relationship  Factors for creating successful relationships  Setting mutual expectations Governance structures Utilising KPIs effectively Open relationships  Building a “banking mentality” Creating long term value for both parties
  3. 3. Defining value: What is value?
  4. 4. Defining value: Value = benefits – costs (Neil Rackham, Malcolm MacDonald and other gurus)
  5. 5. Defining the relationship: Do all long term business relationships need to be consultative or strategic?  Should we all be aiming at creating strategic partnerships? Most strategic deals have a tactical component element to them  Templates, unit costs, FTE rates etc There is a need to understand the dynamic of the relationship
  6. 6. The value pyramid: Co created Value Solution Value Offer (packages) Component or Transactional
  7. 7. Value in suppler relationships:High Strategic . .. . ... . Strategic Value . . . .. .. ... .. ConsultativeLow . . Transactional Low Supplier Dependency High
  8. 8. Value in suppler relationships:High Strategic Current Market . conditions .. . ... . Strategic Value . . . .. .. ... .. ConsultativeLow . . Transactional Low Supplier Dependency High
  9. 9. Defining the relationship: Objectively review the status of the relationship Is the approach fit for purpose?  Tactical, consultative, strategic Relationships “evolve”  Need to ensure that both parties have full visibility and understanding  Cross functions, sites, services  Risk management Defining the roles and responsibilities  Who does what…  The buck stops where?
  10. 10. Defining the relationship: Effective resource management  Sharing of key “information” components  Studies, schedules, resource limitations Harmonisation of processes  This drives speed, quality and cost containment Each relationship is unique  A deep understanding of each others processes drives  Efficiency, quality and cost reduction
  11. 11. Successful relationships require: Excellent communication  Timely, open and honest  Multi-level communication  Multi-disciplinary  Study specific  Administrative and financial  Engagement of senior management Both parties understand and agree what success looks like  Intercompanyunderstanding  Commitment to help each other achieve it
  12. 12. Successful relationships require: Investment in time…  Relationships take time and effort  High level of commitment from both parties  Focus on continual improvement (evolution)
  13. 13. Governance structures: Executive leadership team Joint operational team Study management team
  14. 14. Governance structures: Executive leadership team Annual Meetings Joint •Top level direction and future plans for both operational parties team •Discussion of future needs •Aim at long term direction of relationship Study • High level changes in management steerage or focus team
  15. 15. Governance structures: Executive leadership team Regular meetings Joint (quarterly) operational team •Business review meetings •Ensure ensuring compliance and delivery •KPI reporting and Study evaluation management •Process improvements team •Challenge resolution
  16. 16. Governance structures: Executive leadership team High level communication •Hands on at the “coal Joint face” operational •Ensuring adherence to team specific KPIs •Milestones •Real time management of study challenges Study •Feedback on a study by management study basis team
  17. 17. Creating open relationships: Create a “banking mentality”  100% satisfaction…....nice in theory  Allrelationships are built on people  People are the strongest and weakest link  Work towards an open and blame free culture  Formally recognise good service (both ways)  Deal with the challenges and learn from them
  18. 18. Creating open relationships: Escalation procedures  Ensure a formal process is created to escalate service/delivery challenges  Team education…  Educate one another  Different departments sometimes have different priorities  Challenges and implications dealt with at the right level  Small challenges can quickly spiral if not handled professionally
  19. 19. Effective utilisation of KPIs: Demonstration that the relationship is working Effective metrics can be incisive and help drive the relationship forward Metrics should be useful to both parties KPIs can be used to assess:  Timings (study start, reporting etc)  Quality compliance  Study costs and work scope changes  Number of iterations of report  Adherence to partnership goals
  20. 20. Example 1: KPIs linked tocosts Library of defined study designs with fixed delivery times mutually agreed Study prices negotiated annually and fixed Study modifications or amendments are recorded, priced and fed back to procurement Work scope changes expressed as a percentage of benchmark study design cost
  21. 21. KPIs linked to costs: Successfully used to reduce costs of “SD individualism” Templates showing consistent high variance to original design were reviewed and modified as appropriate
  22. 22. Example 2: KPIs linked toreport delivery Formal timelines were established for a library of standard template study designs  Initial metrics focussed on study start date, draft and final reports only  Review showed high level of delays........why? Jointly established key milestones set to monitor critical phases from start to finish  Initially all milestones locked against study start  Updated against milestone delivery times  Additional metric established for complete study timing against plan
  23. 23. KPI: report delivery metrics
  24. 24. Example 3: KPIs linked to ontime payment MSA agreement had a volume discount built in that rewarded on time payment of invoices  Work was outsourced form 4 locations with differing approaches to invoicing  Metrics were collected for on time payment and were expressed as percentage
  25. 25. KPIs: On-time payment % Timely payments (based on MSA) Site Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 A 43 17 44 88 95 B 100 100 100 100 100 C 89 85 91 85 97 D 86 79 94 100 100
  26. 26. Creating value: Value = benefits – cost Creating value.....  Tactical relationships...focus on streamlining costs and process  Strategic relationships...look for mutual benefits and working for a co-developed solution
  27. 27. Creating value: Cost reduction  Make the buying and selling process efficient and clear  Standardise, standardise and harmonise  Study designs, terminology, report formats  Ensure all studies are visible and readily identifiable in scheduling  Reduce re-processing and re-scheduling  Delays cost money
  28. 28. Creating value: Increasing mutual benefits  Rewarding performance based on KPIs  Report quality, on time delivery etc  Link to the volume discount  Sharing best scientific practice  UtiliseCRO expertise and approach study challenges  Joint scientific workshops to share experience and best practice  Joint R&D projects  Creating dedicated teams of “customer educated” staff to keep corporate learning
  29. 29. Creating value: Sharing the benefits of process improvements  LEAN and 6 sigma  CROs and the pharmaceutical industry  Joint process mapping  KPIs on continual process improvement Joint “value chain mapping”  Question the unquestionable  Pathology peer review...  Bioanalytical peer review  In-house v external  Integration rather than “Lego building blocks approach”
  30. 30. Summary: Establish and define the relationship  both parties expectations  define roles and responsibilities Ensure that service and delivery is measureable and honest  Establish and utilise KPIs  Collect real time feedback Manage the relationship openly  share your outsourcing plans and schedules  share the sales plan and capacity challenges
  31. 31. Summary Long term non-clinical partnering is becoming a critical component in successful drug development strategies Always look ways to improve the relationship  It just takes teamwork and commitment
  32. 32. Many thanks for your listening!
  33. 33. Expectations of a CRO!

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