Celgene Corporation is a leading biopharmaceutical company focused on discovering, developing, and commercializing therapies to treat cancer and immune-inflammatory diseases. The procurement function at Celgene has transformed over the past 3 years from being transactional oriented with no strategic sourcing experience to becoming a global strategic sourcing organization through hiring experienced category managers, implementing procurement technology, and establishing a global procurement matrix structure. This transformation has helped capture over $60 million in savings and position procurement as a strategic partner within Celgene.

2. THE TALENT-TECHNOLOGY
CONNECTION
Matt Mehalick,
Director of Purchasing,
Celgene Corporation

3. Celgene Vision
Celgene is Building a Preeminent Global Biopharmaceutical
Company Focused on the Discovery, Development &
Commercialization of Innovative Therapies for Unmet
Medical Needs in Cancer and Immune-Inflammatory
Diseases

4. Celgene: A Leading Biopharmaceutical
Company
Portfolio Of Leading
Fully Integrated Unique R&D Capability
Products
1. Operations in > 50 1. Expertise in
countries hematology, oncology,
and immunology
2. Sales in > 70 countries
2. Diverse
3. Manufacturing facilities technology platforms
in US & EU 3. 19 Programs in
4. Key Research facilities preclinical development
in NJ, CA & Spain 4. 18 Treatments in
clinical trials
5. > 4,500 employees
globally 5. >25 Pivotal / phase III
programs underway

5. Technology & Talent – Global Scenario
“A recent study of procurement
organizations by CAPS Research finds
some 80% reporting they have Innovation
experienced talent shortages in one or „Green‟
Supply
Supply
more functional areas related to Chain
Analytics
procurement and supply management in
the past year. The report also cites talent
management among 8 critical challenges
Extended TALENT
that supply management organizations Global Risk
MANAGEMENT Management
will face in the coming decade. – Steve Supply
Networks
Wade, 2012”
Metrics and Value
Measurement Focused
“According to the 2012 CAPS Systems Transformatio Supply
study, procurement executives feel they n and
Business
will be more likely to automate than to Strategy
Alignment
outsource supply management
work, ranking the former at 3.8 on a
likelihood scale of 1 to 5 and the latter at
just 2.2”

6. Defining Procurement Talent
To excel at procurement one needed to
be:
• Analytical and aware with respect to economies and markets
• Skilled at negotiation
• Ethical (to a fault)
• More interested than average in treating the company's money as if it were something
worth saving rather than squandering
Additionally today‟s procurement
professionals need to be:
• Skilled at selling, marketing and communicating ideas externally & internally
• Technically knowledgeable; possessing sophisticated understanding of engineering
concepts
• Technologically, culturally and socially savvy
• High on business acumen; possessing sophisticated understanding of finance, accounting
and treasury concepts
• Customer/end-market focused
• Capable of analysing, reengineering and/or designing processes and business systems

7. Procurement Function at
Celgene Corporation 3 Years Back
 Transaction oriented. Did not bring value to the organization.
 Two separate purchasing organizations, North America and International
 No strategic sourcing experience in the department.
 Not leveraging spend.
 Department was set up to be reactive and not pro-active.
 No ERP system and no spend visibility globally.
My vision was to become a global strategic sourcing organization
that created value, mitigated risk, and developed strong business
relationships with our suppliers.

8. Bridging the Sourcing Skill Gap
Celgene hired expertise in key spend areas. Ability to
“talk the talk”.
More strategic thinking and able to leverage spend
across all locations globally, bringing increased value to
the organization.
New hires have a consultant mindset. “How can we help
add value to make your area better.”
Supporting a “strategic partnership” environment with our
stakeholders.
Changed the structure of the department to allow
category managers to be pro-active and find savings
opportunities.
These changes over the past 3 years have helped us grow the
“footprint” of Strategic Sourcing globally and create value of $60M+

9. Technology Initiatives Undertaken
Implemented the following technology globally: ERP, e-Sourcing, Zycus spend
analysis and iContracts
Technology helped us to be more transparent globally and have a better
understanding of where and who we procure from
Increased the speed of our sourcing processes
The information that we obtain from our technology allows our sourcing
professionals to present the “facts” to stakeholders, which helps sell our services
Our technology is used mostly in the indirect spend areas of the organization
(Marketing, SG&A, R&D, IT, etc)

10. Key Requirements for Technology
Ease of Use
Global
Dashboard
Support
Capabilities
Structure
Technology
Flexibility
Robust
and
Reporting
Scalability

11. CASE STUDY

12. IT Staff Augmentation
Used a Spend Analysis tool to uncover an opportunity in
this space
Findings from our Analysis:
 IT Staff Augmentation annual spend is $35M
 Spend across 40 suppliers
 No control on supplier management, could use any supplier
 No consistent discounting or volume rebates from suppliers

13. Sourcing Process
Put together clear
Collaborate with IT Consolidate into 6
job descriptions,
to review and job categories of 78
quantity and
identify all jobs total jobs
estimated hours
Auctioned 7 lots:
Narrowed down to Issued RFP to 45
one per job
21 for reverse suppliers use an e-
category, plus the
auction Sourcing tool
combined
Shortlisted 12 to
Selected 8 to enter
come in for on-site
into contract through
RFP review
a VMS
meetings

14. RESULTS
 Standardized jobs and established consistency in this area
 Consolidated Supplier Base (from 40 to 8)
 Generated 35% cost savings, expect > $500K rebates
 Implemented single point of control in suppliers management
through MVS and IT supplier manager
 Current compliance is 90+%

15. PROJECT OVERVIEW – IT Staff Augmentation
THE RESULTS
PROGRAM UP FOR BID:
Category: IT Staff Augmentation
35%
Team Leader: Eric Pei $3.82 $12.3M Savings
Historic Cost: $35M USD (Annual) $35.0M
Contract Length: 12 Months $2.77
MARKET INTELLEGENCE OVERVIEW: $22.7M
Spend Category: US IT Consulting Services
Suppliers: 12 Preferred Suppliers
32 incumbents – preferred and
non-preferred. Historic Low Bid Annual Savings
Program: Corporate out-sourcing initiative
serving11 buying locations
Market Condition: Current market is tightening due
to growing IT demands of about
2.5% in 2012 over 2011.
BID STRATEGY:
Bid Format: Round 1 RFP
Round 2 Reverse Auction of 7
lots and 21 bidders.
Downward, Rank Bidding
OUTCOME:
• 574 total bids
• Consolidated to 8 suppliers
• 35% savings

16. Procurement Function at
Celgene Corporation “Today”
 Experienced sourcing professional in all key spend areas of the
organization globally.
 Procurement technology roll-out globally.
 A Global Procurement Matrix Organization has been created to
drive the global strategy for the organization worldwide.
 Implement a Market Intelligence function to the department.

17. Procurement Function at Celgene Corporation
“Today”
Admin
Director of Procurement
Assistant
Category Lead
Category Lead Category Lead Category Lead
Facilities, Finance,
Marketing, HR, Legal, IT & Travel Strategic R&D Non-Clinical, QC Procurement Ops Lead
Logistics Strategic
Strategic Sourcing Sourcing Strategic Sourcing
Sourcing
Manager Manager Manager Manager Manager
Strategic Sourcing Strategic Sourcing Strategic Sourcing IT & Strategic Sourcing R&D Procurement Ops, E-
Marketing, HR, Legal SG&A, Finance, Logistics Travel Non-Clinical, QC Sourcing, Spend Analyst
Sr. Analyst Sr. Analyst Sr. Analyst
Manager
Strategic Sourcing Strategic Sourcing Strategic Sourcing IT &
Procurement Ops
Marketing, HR, Legal SG&A, Finance, Logistics Travel
Sr. Analyst Sr. Analyst Procurement Procurement
Strategic Sourcing Strategic Sourcing IT & Ops Analyst Ops Analyst
Marketing, HR, Legal Travel
Procurement Procurement
Ops Analyst Ops Analyst
Procurement Procurement
Ops Analyst Ops Analyst

18. Critical Success Factors
 Hire sourcing professionals with expertise in sales, consulting
experience a plus
 Implementing technology to enhance the skill set of the sourcing
professionals
 Use the information that you obtain from technology to present
the “facts” to stakeholders, which helps sell your services
 Develop strategic partnerships with internal stakeholders that add
value

19. THANK YOU