BioMarin Gives Supplier Scorecards Failing Grades

By Louis Garguilo, Chief Editor, Outsourced Pharma

Let’s be clear whom we’re grading: The CMOs and suppliers aren’t the one’s failing. The methodologies biopharma sponsors use to measure them – particularly the “supplier scorecards” – are the real underachievers.

In fact, Isaac Young, senior director, supply chain operations, BioMarin Pharmaceutical Inc., gives a lot of them an “F.”

He’s on somewhat of a mission to spread the word about what’s not quite right with this part of the industry. He also has some examples of scorecards that’ll jump to the head of the class. Here’s one we’ll get to in detail, after a few preliminary points of consideration.

Metrics That Matter

“First, let’s stop pretending,” says Young. “I’d say few of us are really in the position where we’re going to walk a supplier out the door because it hasn’t done well on a vendor scorecard. We just don’t have that kind of luxury, and with today’s multi-category suppliers, it’s going to be even less likely.”

That’s item number one. Item number two is the scorecards themselves. Young says they are misconceived and misapplied. It starts with metrics. “‘Metrics that matter,’ should be the mantra,” he says. “Stop making scorecards and saying, ‘Bad supplier, get rid of them.’ Or those with suppliers showing 90 or even 100 percent approval. You’re measuring the wrong things, if that’s what you’re doing.”

Young says many metrics today are used simply because they are easy to track. An example is an overall grade for delivery time. “A delivery came three days early, or six days late,” says Young. “What does that really matter, as opposed to tracking something like: ‘It was a four-month lead time but took eight months after placing an order.’ Now I’ve got a real problem to work on. Those are the things you want to be talking about with your suppliers.

“Stop confusing precision with accuracy – we waste too much energy on that. Too often, I don’t see things on a scorecard list that I actually want to talk about when I sit down with my supplier. Most of us have had a situation where you’ve got a supplier with a great scorecard, but you can’t wait to walk them out the door. And as often, you have a supplier with a bad scorecard, and you want to work with them more. Let’s figure out what’s really going on there. Obviously, those precision metrics aren’t so accurate, and don’t provide actionable information.”

Scorecards That Speak

According to Young, most fundamental is that scorecards guide providers and sponsors to the areas they should be speaking to each other about. He already sees a growing realization in the industry that scorecards aren’t really assisting in supplier relationships or productivity improvements. Scorecards should become vehicles for further education, and raise questions such as: What insights might we gain into what is working well, what isn’t, and what is really going on with both?

“And by the way,” says Young, “you can absolutely use more subjective metrics. It doesn’t matter if a metric is off by ten percent or even twenty percent. What you’re saying is we want to talk about a certain area when we get together next time.”

Perhaps most antithetical to almost everything we’ve heard on the subject, Young believes scorecards don’t necessarily have to be the same for every supplier.

“It seems intuitive to do so, because you feel as if you’re comparing suppliers. But that’s not really happening that often,” he explains. “Let’s start considering scorecards that are unique to a particular supplier. It doesn’t have to be cross referenced across the board of your CMOs. This isn’t a question of leveling any playing field. If you’re a single source, or trying to develop a closer relationship with a supplier, stop holding your scorecard up and saying, ‘You’re bad, go fix this.’ You’re in the game together, so let’s consider not doing that.”

Young feels this point isn’t as strange sounding as it once was. One reason is that he knows of few colleagues in the field that base a sourcing decision on their current scorecards anyways. They’ve become more involved in understanding whether the CMO is aligned culturally. “What’s relevant are questions such as: Is this an area where more innovation is needed? How does that get determined, and then measured?”

Of course he’s got a scorecard for that, too.

The Dual-Party Subjective Scorecard

If you haven’t already, please open Young’s Dual-Party Subjective Scorecard.

What we see are a series of sliding scales that capture what the supplier and the biopharma sponsor think about the importance of certain attributes, and how well the relationship combined is performing. (The upper scale for each attribute shows the importance, and the lower scale the “grade” each gives for the collective performance of that attribute.)

For the first attribute (Communication), the top assessment tells us that both sides believe this is of the highest importance. However, in Young’s words, “The customer thinks actual performance is about a seven and a half, while the supplier thinks they’re about a five and a half. There’s a little misalignment there. Maybe that’s worth talking about.”

Moving to the next attribute (Optimization of Collective Competencies), we see quite a distinction between assigned importance, though both agree they deserve a pretty low score in overall execution. “This definitely necessitate some serious discussion,” says Young.

The third attribute (Innovation) raises more red flags. There appears to be a disconnect both in terms of importance and how well innovation is being addressed. This insight, says Young, might be missed in more traditional scorecards. The consequences of not addressing this difference in understanding would let fester a deeper, cultural misalignment, which could continue to negatively impact projects and the entire relationship.

The final attribute (Coordinated Strategic Development) brings us to an area where both sides agree on importance and performance. Besides its self-importance, an identified alignment and successful attribute in one area can also be used as a base to help improve other areas in need of remediation.

Young believes this Dual-Party Subjective Scorecard presents a way to “move from hard percentage numbers, which might tell you less than you think, to deriving information that prompts action.” With this type of education, he says, “a sponsor will go to a CMO and say, ‘Here’s something we’re going to be talking about a lot at our next face-to-face meeting. This is an item we think is important, but you don’t seem to, and here’s something we think is going well, but you don’t. Let’s figure this out.’

 “That’s the value of this scorecard,” he sums up for us. “It’s your agenda for your next quarterly business review, and not just a pat on the back because it looks good, or a kick in the pants because it doesn’t. You can’t get very far with that anymore. Maybe you never could.”