Alan Maloney from Avellana spoke on Wednesday, 18 April 2018, at the Med Tec Europe Start-Up & Innovation Forum in Stuttgart, Germany. Alan talked about the challenges that teams face in solving complex problems when Pharma and Med Tech companies...
Outsourcing of regulatory support has been on the rise over the last decade and it is now a common practice. The Annual RIM Whitepaper 2016 by GENS & Associates stated that “ Since 2014 outsourcing has been considered a common practice with many qualified suppliers having positive satisfaction ratings”. The primary drivers of this push to externalise are cost saving, organizational flexibility (managing peaks) and increasing operational efficiency. Talent management (freeing up internal resources for higher value adding activities, and ensuring the right people are available for the right job) is also an increasingly important business driver. Freeing up scarce internal resources would, in theory, allow companies to devote more attention to extracting the value from their regulatory data, feed intelligence back to the business, and become truly valued partners in innovation and execution.
Anyone with experience of externalizing activities will attest that it is not a decision that can be taken lightly, and a cautious, methodical approach is warranted. It requires careful consideration, evaluation, planning and management in order to fulfill the unspoken mantra of senior leaders (and Radiohead!), “no alarms and no surprises”. The evolution of Pharma regulatory outsourcing strategies has been predictable to date, with companies starting small, with functional activities that are quite obviously non-critical, like publishing of routine life-cycle submissions or document support. A combination of increased confidence in the ability of the partners to consistently deliver, and an improvement in the quality of service from the partners themselves, have moved the game on significantly to the point where companies are now externalizing, or investigating the externalization of, more complex and more business critical tasks, such as life cycle management or full functional outsourcing.
Here we present our top ten tips for successful, low risk regulatory outsourcing:
- Define your “Why?”, your needs and your goals
The first step is to clearly articulate WHY you are investigating the use of partner support. This seemingly obvious, but often overlooked, exercise is a critical step in effective change management and your “Why” statement should be a key part of your communication strategy. It also informs the next critical step: To document and prioritize your needs. These needs may reflect pain points in delivery of existing services or the inability to meet the needs of your customers. A clear articulation of needs and requirements will improve focus when selecting targets for externalisation. The plan to externalize MUST have a solid line connection back to the needs of the business and primary customers.
- Identify critical control points and targets for externalization
An assessment of regulatory processes complete with listing of critical control points is an important step in the journey. A Critical Control Point (CCP) is the point where a failure could cause harm to customers and/or to the business, or even loss of the business itself. For every CCP, the risks of both internal delivery and outsourcing strategies should be thoroughly documented, and accompanied by risk management and appropriate risk mitigation tactics to ensure that everyone knows what they are signing up for, and to begin the process of avoiding the dangers associated with unacknowledged assumptions. This risk assessment should be a key input to choosing the initial targets for externalisation.
- Assess the value
It is important at this point to assess if the chosen targets for externalization will deliver the value anticipated, meet the goals, and fulfill the Needs and “Why” from Step 1 above. Overlooking or paying insufficient attention to this step is a common pitfall, as teams can make assumptions about the level of value and move swiftly on with vendor selection without adequately testing the validity of these assumptions. Being completely aware of “the things which need to be true” in order to achieve this value is enormously helpful, as “death by a thousand cuts” can eat in to the potential gain as the detail is ironed out.
- Define your requirements from an external vendor and select a partner
Once you know what elements you want to outsource, it is time formally to describe what you require from a vendor in terms of description of services, quality of service and capacity requirement. This is a critical document in the negotiation process and ensures that there is full transparency on what is required and expected from both parties. This should be a “two way street” and a good partner will inform you of their requirements also. Careful consideration and attention to the requirements of both parties is vital in establishing trusting relationships. Obviously the selection process itself is detailed and complex involving cost, competency, geography and a myriad of other considerations too numerous to describe within this article.
- Plan for the benefits
Planning for the benefits is not as simple as you would imagine, especially when a key benefit is freeing up high value internal resources. Sure, if you have 5 people who exclusively perform the task that you outsource, it is relatively easy to repurpose these individuals to other activities. But what happens, as is most often the case, when you remove only part of many people’s daily activity through an outsourcing initiative? I have seen it claimed many times that removing an activity which takes 20% of a person’s time equates to a 20% efficiency gain or productivity improvement. It does not. Unless you plan for the new, higher value contributions that you desire, that theoretical 20% of time will quickly be absorbed by other tasks. In some circumstances, creating this “breathing room” this may be sufficient value add and can be warranted, but if so this should be the pre-articulated goal. In general, I would recommend identifying higher value adding activities and planning to introduce the new activities in tandem with removing the old.
- Harmonize and standardize your process
The requirements discussion from earlier will have copper-fastened the need for harmonised and standardised processes. It is imperative that everyone in your organisation needs to be following the same process when interacting with an external vendor. In order to be able to manage service levels and quality, and avoid issues with execution of process, it is a necessity that all appropriate standards, templates and work aids have been rigorously applied by both parties. Failure to do so will lead to problem after problem.
- Manage the handoff
The hand-off to a partner has many elements, but the over-arching principle should be that things cannot be “thrown over the fence”. The most important thing is that the handover is completed with due care and consideration of what was to follow, and that the interface is visual. We often use online visual management boards (but low tech approaches can also work) as these tools allow you to design in data integrity through standard lists and required fields. Visibility of tasks also allows continuous real-time visibility of the status of tasks and issues arising, and gives an accurate overview of the volumes that are externalized at any given time. This is also critical in ensuring that commitments in terms of volume are not being breached, thereby overwhelming a partner and impacting on their performance.
- Manage the transition
Outsourcing is not a turnkey activity. It requires careful support and babysitting for a period of time. Start small and build from there. Move forward only when you have learned enough to do so and be agile, react to feedback and make changes. Behave like a start-up. It is better to start is a small way, and learn rapidly from your experience, than to plan a large scale transition that is reliant on untested assumptions.
- Manage the relationship
Creating appropriate governance structures and key performance indicators will ensure the sustainability of the relationship. Maintaining open and honest communication will nurture it and helps it to grow. Be willing to listen and learn from partners as they have a breadth of knowledge that your company does not have, through support of many different companies, regions and countries.
- Grow and evolve
By embarking on this journey you will have learned a lot of important things which are worth making an effort to build into your corporate memory. Document your methods and outputs so there is a record of how decisions were made, and convert your knowledge into organisational wisdom so that others will know how to do this again. Continue to look for opportunities to add more value and save cost. Continue to forge partnerships and learn from others with a different perspective.
As confidence grows in the ability of external providers to meet and exceed expectations, and as you learn how to leverage them more effectively, so too will the willingness to attempt more ambitious targets. You can learn your way to effectively managing and mitigating the risks, and realising the benefits that drove your plan from the beginning. With a commitment to proceed in a manner, and with a process, that manages that risk effectively, you can avoid unpleasant surprises, and instead of wasting time reacting to foreseeable alarms going off, you can celebrate productive new partnerships and higher value internal capabilities.
Med Tec 2018- “Speaking the same language- How to co-innovate and collaborate when Med Tech meets Pharma”
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