Price Negotiation and Cost Saving – Standard Operating Procedure
1) Purpose
To establish guidelines for conducting effective price negotiations with suppliers and implementing cost-saving initiatives within the pharmaceutical purchase department.
2) Scope
This SOP applies to all procurement activities involving price negotiation, supplier agreements, and cost-saving strategies.
3) Responsibilities
Procurement Manager: Responsible for overseeing price negotiations and cost-saving initiatives.
Procurement Team: Responsible for executing price negotiations and identifying opportunities for cost reduction.
4) Procedure
4.1) Supplier Evaluation:
4.1.1) Evaluate potential suppliers based on quality, reliability, pricing, and terms.
4.1.2) Prioritize suppliers that offer competitive pricing and align with organizational goals.
4.2) Market Analysis:
4.2.1) Conduct market research to understand pricing trends, market conditions, and competitive landscape.
4.2.2) Identify benchmarks and leverage market insights during price negotiations.
4.3) Negotiation Strategy:
4.3.1) Develop a negotiation strategy based on supplier capabilities, volume requirements, and cost-saving opportunities.
4.3.2) Set negotiation objectives, including target pricing, terms, and conditions.
4.4) Negotiation Process:
4.4.1) Initiate negotiations with selected suppliers to achieve mutually beneficial agreements.
4.4.2) Discuss pricing, discounts, payment terms, and other contractual terms to optimize value.
4.5) Contract
4.5.1) Draft and finalize contracts or purchase agreements based on negotiated terms.
4.5.2) Ensure contracts reflect agreed-upon pricing, quality requirements, and compliance obligations.
4.6) Cost-Saving Initiatives:
4.6.1) Implement cost-saving initiatives such as bulk purchasing, supplier consolidation, or alternative sourcing.
4.6.2) Monitor and evaluate cost-saving measures to assess effectiveness and ROI.
5) Abbreviations, if any
ROI – Return on Investment
6) Documents, if any
- Negotiation Strategy Document
- Supplier Evaluation Reports
- Contracts or Purchase Agreements
- Cost-Saving Initiative Reports
7) Reference, if any
Regulatory Guidelines: FDA CFR Part 211.28, ICH Q7
Industry Standards: ISO 9001:2015
8) SOP Version
Version 1.0
