By Panagiota (Pam) Rizos, Merck & Co., Inc.
Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., Kenilworth, NJ, USA (MSD)
In order to effectively extend the capacity of our organization using external partners, Merck & Co., Inc. decided to shift from limited, tactical, piecemeal outsourcing to a strategic outsourcing model. Through a robust supplier evaluation and selection process, we established an ecosystem of three strategic partners with capabilities across regulatory affairs and clinical safety. As we established our “Strategic Sourcing Partnerships,” we leveraged best practices, faced challenges, and learned a lot along the way. Summarized here are the first five of 10 key elements — or best practices — that were critical for the successful implementation of our strategic partnerships. The other five best practices will be discussed in a follow-on article.
1. A Dedicated Team
One of the key requirements is having internal resources in place with the appropriate capacity, expertise, and commitment to drive strategic outsourcing, starting from the identification of activities suitable for outsourcing, through to partner selection, transition, and oversight. Our teams include regulatory affairs professionals (business SMEs across different regulatory functions), procurement, finance, IT, quality & compliance, and external operations. The active engagement of the regulatory affairs SMEs is key, as they have the expertise required to ask the right questions, evaluate supplier capabilities, effectively transfer the work, and oversee the partners’ performance. Having IT involved early on helps ensure that suitable connection has been established and helps alleviate latency issues. The External Operations group works with the regulatory affairs SMEs to identify opportunities for outsourcing, provides project management support during supplier evaluation and selection, and plays a central relationship management role once a partnership is established.
Sponsorship from our leaders was key in mobilizing the organization to pursue strategic outsourcing. Leadership emphasized the value drivers behind strategic outsourcing throughout the organization. During the early phases of implementation, a team of sponsors met with the core team leading the effort on a regular basis and provided feedback and concurrence on major decisions. They also ensured that we had the necessary resources in place for implementation.
3. A Sourcing Road Map With A Phased Approach
This was the first time we had implemented strategic outsourcing in our organization. One of the key tasks the regulatory affairs SME team took part in was identifying the actual activities within each function that would be good candidates for outsourcing. The activities were prioritized based on three factors: business need, business process readiness, and complexity. Activities with urgent business need, defined business processes in place, and lower complexity were prioritized and placed early on the road map. This was important because it enabled us to outsource in a phased approach of increasing complexity and helped us to learn and gather best practices early on. Early successes were key to building internal confidence in the strategic outsourcing process as well as in our partners’ capabilities. One of our key learnings was that it is best to outsource activities that have defined processes and leverage systems that will not be changing in the near term. When processes and systems change during the transition to an external partner, it can lead to challenges due to instability.
4. Internal Change Management
Internal stakeholder management is critical when an organization takes on strategic outsourcing for the first time. In any organization where strategic outsourcing is a fairly new approach, there can be resistance and uncertainty, particularly regarding the process, the external partner’s abilities, and also around internal job loss. To alleviate these concerns, we initiated discussions and messaging within our organization at the outset. We also developed a clear mission statement and focused on the benefits we would gain from strategic outsourcing, including extending capacity in a resource-constrained organization and new opportunities for innovation. Our regulatory affairs SMEs, as well as our leaders, shared this messaging throughout the entire organization through email and video communications, staff meetings, and town halls. We also developed a Strategic Sourcing Teamsite and a quarterly newsletter where we continue to detail the activities that are outsourced and share information and perspectives on our oversight and governance model.
5. Supplier Management Capability
Although our regulatory affairs business SMEs possess extensive regulatory expertise, some of them were getting involved in oversight of strategic partnerships for the first time. To provide them with the knowledge and tools needed to conduct effective oversight, we designed and deployed supplier management e-learning and follow-on workshops. The training was focused on oversight responsibilities, such as performance management and issue escalation.
These are the first five best practices, which were critical in preparing the internal organization for strategic outsourcing; the final five focus on building a strong foundation with our external partners and will be presented in my next article.