Airnov Healthcare Packaging – Global Procurement Transformation

Airnov Healthcare Packaging

Airnov’s mission is straightforward: to make life better for healthcare patients by creating active packaging
that better preserve and protect medicines by producing the highest-quality and active packaging of the future.

Airnov is committed to the people it serves and the 600 plus employees who drive this niche pharma focused business. Operating with five state-of-the-art manufacturing facilities located in France, USA, China and India, Airnov is a true global organisation. Bruno Gaborit joined the business to facilitate the development of a global procurement function at the end of 2020. Here he openly discusses the ambitions and challenges the organisation faces.

Hi Bruno, after a significant and successful period working internationally you returned home to France and joined Airnov to head up their procurement function. What attracted you to join Airnov? What was the initial remit?

After 22 years of expatriation life, I felt the need to move back to France to get closer to my roots and family, I guess it comes with getting older. The challenge was to find the right opportunity and France is not known for hiring atypical profiles like mine. When I discussed the position with Airnov management team I felt connected with Airnov. We were both transitioning from leaving a large group and needed emancipation to prove we can make it on our own.

Airnov, is a small company with an international presence in a pharmaceutical niche and was exactly the type of company I was looking for. We had the same vison making the procurement team a central actor in Airnov’s global organisation. It was an opportunity to create a more agile but robust procurement department. Being on the pharma market, Quality and Regulation play a big part in supplier management but a good quality system is not enough to rate you as good supplier. Having experience in other industries and having experience working with different cultures, I think it brings a different vision of conducting business that caught the interest of Airnov management than just being a Franco French pharma expert that will remain in his comfort zone.

I am striving forward, implementing my way of doing business with the support of a management team that is not afraid to try new options.

As a global business which had previously operated without a centralised procurement function the task of consolidating the function was going to be a challenge. What did you set out in your initial weeks as the primary priorities? How easy were these to execute?

Airnov managements priority was the implementation of a global supplier code of conduct. It was a great opportunity to present myself and set the tone about who Airnov is and what is expected from them. Today, the message is clear and loud, we take social and environment responsibilities seriously. We have recently been rewarded by EcoVadis and received their appraisal of the work we conducted.

In a normal situation, I would have met all the teams and strategic suppliers in person. With the Covid situation it was not possible, so I used conference calls and virtual events in order to listen to my colleagues and strategic suppliers. It saved time, but I am impatient to meet my foreign colleagues in person quickly. Within a month I was in front of the board introducing global procurement strategy and cost saving key initiatives. Which the board approved. The next steps were to unite my team around the new strategy and also add to the existing expertise with new hires in France and the USA. We have made good progress and are on track to deliver in the first set of initiatives.

Bruno Gaborit

Covid certainly created more issues than opportunities initially, in particular the limited ability to meet suppliers face to face due to travel bans. You have been able however to make serious inroads into your ultimate goal. The development of a global strategy, supplier code of conduct and incorporating csr should be seen as positive. How did you adapt to the challenges of creating a strategy during the height of a global pandemic? Where you surprised at the buy in from your suppliers?

It is tough for everybody and starting a position of head of global procurement when all prices are historically high is not easy. Every day discussing massive price increases is not the best way to start relationship with suppliers you do not know. At the same time, I had to learn faster to be able to rebound and set agreements with suppliers by being transparent and straight forward about the price increase proposed. It helped to bond with suppliers, the crisis affects all of us at different levels. At the end we need each other to cross this storm and securing supply is my priority number one.

When the storm is gone, I will catch up with each of them and reward the suppliers that played by the rules. If some did not, they will assume the consequences, for now, I am glad to see it is going well. Nothing better than a crisis to see who is on your side.

I also banked on highlighting regional strength and built bridges to make it accessible to other regions. It’s a way to
reward good local suppliers and give them a global opportunity. The best example I can share is about sea freight forwarders. Today’s international logistic is a nightmare and to receive an order on time is becoming a true challenge close to impossible. Each region had one company working for them and struggling to book our weekly containers. In China, by working with a local Chinese forwarder, it proved to be much more efficient. Not having all our eggs in the same basket has enabled us to get more containers than if we had worked exclusively with our usual forwarder. I think the covid situation tested our business continuity plans and showed some dependencies from certain countries. Developing local sourcing and bridging them to other regions solved several supply issues. Part of my task is working on our supplier globalisation so whatever happens, Airnov can produce with the same standards in each part of the globe. For our suppliers who are performing well there are great new future opportunities.

Content Supported by Zeochem Supplier to Airnov Healthcare Packaging

The ultimate aim is to create a robust strategic supply chain that can adapt to challenges and importantly a procurement function that can become the bridge between R&D and your suppliers to drive innovation. How far away from this utopia are you? What current challenges outside of covid are you facing?

In my previous experiences I rarely went to visit a supplier without QARA or R&D members. If the three of us do not work hand in hand, especially in the pharma market, then we are doomed. For me, this is not an utopia, but a real fact. The proof is in the pudding.

We have 3 R&D centres working on tomorrow products, by involving procurement at the beginning of projects it helps the process to move faster and smoother. I am also a firm believer that if you have a good relationship with your suppliers, they will introduce you to their innovation pipeline that will create new opportunities. In our portfolio we had opportunities waiting, I just had to initiate the conversation.

My challenge was to demonstrate to our teams the benefits of working in tandem and the added value of having a buyer on their side. The easiest way to overcome this challenge is to offer training on supplier interaction that will show them all of the sales technics required to extract information that will then determine the price they will offer. This training also includes risk and outcomes for the company and their project by not involving procurement. The training was well received, has kicked-off several projects where procurement was involved at the very beginning. It was also done with operation managers for capex investments. The feedback from the managers is very positive and they see the benefits of not interacting directly with suppliers allowing them more time to focus on their expertise.

Innovation and working collaboratively with suppliers are a key driver as mentioned. This can often come with challenges no matter what the industry, however, you operate in a highly regulated and technical field. What complexities does this create? Does the regulated and sometimes unique nature of product development tend to lead to longer term supplier relationships that maybe are not always overly focused on innovating?

You are correct, the pharma industry does not allow procurement teams much frivolity or infidelity with our suppliers. Change controls are very regulated and can have big impacts on our many customers that need to approve them all. To become a new supplier or let one go is a big decision to make. The relationship you have with your supplier is key to get access to their innovations. You also need to be very clear about the expectations, NPD can take years before the supplier can see the benefits of it. It is my job to demonstrate that Airnov is the right partner and set expectations on the deliveries of any project. It goes with your previous question on how key it is to have procurement involved from the very beginning.

Airnov is working to improve product sustainability and developing packaging that obviously will keep preserving and protecting medicine and nutraceuticals into a more sustainable way that is required more and more by the end user.

Related Content: Optos – Keeping and eye on supply chain – click here

You have a globally spread, multi-cultural procurement team. Was this by design or luck? The diversity and ability to negotiate in multiple languages with people who understand their territories specific business culture must surely be a huge advantage as opposed to operating with a central team?

I feel lucky to work into a multi-cultural environment, like I mentioned before it was by choice. Having my teams spread in each region with locals, it is a plus for the reasons you mentioned. I hired two new talents and both profiles are opposite, and both make the team stronger and bring different experiences. I think it is the force of a good manager to be able to mix and manage different personalities and culture because each of them brings something different: Captain Kirk was not the smartest one of the Enterprise, but he had a reliable team of smart people that helping him to take the right decisions.

Covid has previously been mentioned but what do you see as the short-term risks this will continue to pose to your supply chain over the coming months?

First thing in mind is international logistics that delay orders with costs multiplying up to 5 times compared to last year. The lack of boats and containers, the Suez Canal issue, ports closed due to covid contamination plus docker strikes unbalanced the global logistic flow creating lots of disturbances on supply chain and massive price increase. The next one is cost and rarefication of polymers where negotiation is limited because based on index and lots of cases of force majeure disturbed the global market. This is only two examples, but these two give me a hard time.

Today, energy is very strategic and is a big risk factor for 2022 not only linked to China’s current situation imposed by the government. If we look at China, there is a situation for 2022, positive commitments by the central government to curtail energy use and subsequent actions in last few months. A significant depletion of fossil fuel inventories and specifically coal that has led to power shortages that delayed production. The upcoming Winter Olympics February 4-20, 2022 also typically results in temporary suspension of manufacturing of some industries within a 200-mile radius of Beijing. Outside China the situation is different, but energy cost increase has an impact on supply chain. In Europe for example, the cost of energy increases brought upward the price increase that needs to come for spring 2022. Some companies have already looked into shortening production because their cash flow cannot support running full time with new energy cost. Let’s hope for a clement winter or it will be painful for our wallet.

Your career to date as seen you embrace a multitude of industries, Countries, and cultures. You joined Airnov for a purpose but what have you learnt most about the business since you joined in December 2019?

Despite the industry, many procurement rules apply and remain the same. The challenge is how fast you can get acquainted with the technology and regulatory surrounding your business. Being in a niché market and partnering
with giants of the industry often it is a David vs. Goliath situation. I do not have the big powering leverage of the previous large group I worked for, and I had to think outside the box or simply remain humble and patient about
the situation I could not leverage. I remain confident and carefully pick my battles, at the end, we all know how David story ended…