By Steve Cottrell, president, Maetrics
A recent research study asked industry professionals what they regard as the top 10 challenges to improving supply chains in the pharmaceutical sector. The problems highlighted most frequently by the respondents included lack of coordination, inventory management, absent demand information, human resource dependency, order management, shortage avoidance, expiration, warehouse management, temperature control, and shipment visibility.1 Each of these areas has the potential to pose a very real risk to manufacturers’ ability to adhere to industry standards, to their reputations, and ultimately to their bottom lines — and when visibility in today’s increasingly fragmented supply chains becomes clouded, these challenges are compounded. Addressing this issue is a must to prevent risks from escalating and to tighten up business efficiency.
Complex Supply Chains Present Hurdles
The Business Continuity Institute’s (BCI) Supply Chain Resilience Report,2 based on research with more than 400 responses from 65 countries, found that 69 percent of respondents do not have full visibility of their supply chains. It is clear from this that supply chain hurdles are prevalent across all industry sectors; however, the reality is that pharmaceutical manufacturers are grappling with particularly complex supply chains. Put simply, the trend toward outsourcing in order to boost capacity has often outpaced the adoption of the necessary quality, safety, and compliance standards at all levels of the supply chain. We know that Chinese firms are now producing 40 percent of the world’s API and are taking a more prevalent role in global supply chains, alongside numerous Indian companies becoming excipient, chemical, API, and CMO suppliers to European- and U.S.-based manufacturers. It is well recognized that stringent safety regulations are not as ingrained in developing markets as in the western part of the world.
Manufacturers that do not mitigate their risk in outsourcing arrangements will undoubtedly run afoul of regulators. This is evidenced by the FDA issuing double the number of warning letters globally in 2016 than in the previous year, pinpointing serious lapses in standards.
Further supply chain complications arise when it comes to mergers and acquisitions, which are notorious for triggering quality control issues, even if only temporarily. Supply chain gap analyses, supplier assessments, and quality assurance checks (such as nonconformance and out-of-stock issues) often fall by the wayside when manufacturing operations are squeezed and all effort is concentrated on completing the deal as quickly as possible. We frequently see instances where quality, performance, and productivity suffer as a result.
Let’s turn to the risks that these growing complexities in pharmaceutical supply chains pose to operations, relationships, and outcomes, from sourcing right through to customer delivery. The most notable risk factors stem from the inability to ensure compliance and quality control, to understand demand and capacity, and to monitor and react promptly to disruptions. An example of this is when supplied goods arrive without required certification or necessary specifications, which leads to the manufacture of end products being delayed and customer demand not being met.
Further operational delays can result from poor shipping temperature controls, other supplier errors and data integrity issues that internal auditors — possibly due to a lack of appropriate training — have failed to detect, all of which cause products to underperform. Manufacturers open themselves up to substantial risk if they fail to draw up robust quality agreements that leave them unable to enforce broken contracts, impose penalties, or address drug product deficits.
Efficient supply chain visibility is not just knowing where inventory is on its journey from supplier to shipping company through to the manufacturer and end user. It is also about leveraging real-time data from every touchpoint that can identify inefficiencies, monitor suppliers, ensure quality compliance of products, and improve relationships and satisfaction levels with not just the customer but all stakeholders along the way. By treating stakeholders as partners and involving them in the production of agreements and encouraging information sharing, business risks associated with supplier quality — such as reliability, contract adherence, sustainability, fraud prevention, and confidentiality — can be greatly reduced.
According to the research organization Gartner, end-to-end supply chain visibility can be defined as “a capability that provides controlled access and transparency to accurate, timely, and complete plans, events, and data — transactions, content, and relevant supply chain information — within and across organizations and services to support effective planning and execution of supply chain operations."3
Tightening up compliance procedures will not only help maintain a higher level of inspection readiness but it will help reap commercial reward. The following steps will help you improve your supply chain visibility as efficiently and effectively as possible:
- Monitor IT infrastructures: Ensure internal IT infrastructures allow real-time data to be leveraged and shared more efficiently at all points in the supply chain. This will give you an accurate, up-to-date view of the supply chain and allow you to identify and manage disruptions as soon as they occur.
- Assess your supplier and quality agreements: Pharmaceutical companies need to have processes in place to control and review outsourced activities and the quality of purchased materials. Well-planned, well-documented, and successfully executed supplier and quality agreements are essential to control the quality of the final manufactured product. Ultimately, putting these processes in place will also deliver cost savings through a continuous supply in addition to the avoidance of product recalls, complaints, and nonconformances.
- Regularly monitor and review suppliers: Regularly checking and keeping detailed records of the quality and timely receipt of materials means both operational and commercial risks will be avoided. In order to regularly monitor and review suppliers, using periodic scorecard assessments, interim re-audits, investigative reviews, and supplier corrective action reports (SCARs) is suggested. A SCAR is a specific type of report that is issued to the supplier, typically based on one or more nonconformances, that requires root cause analysis of the problem. It will also stipulate any preventive action required on the supplier’s part to avoid any future nonconfomances.
- Implement on-site audits: Ensure you have on-site audits in place, especially the qualification and re-qualifications audit, as well as for-cause investigations.
- Monitor your supplier territory: Some disruptions are unforeseeable, such as, for example, provider delays caused by a natural disaster on the other side of the globe. Having enhanced visibility already creates resilience in the supply chain and the resources to act accordingly, but it is advised that you monitor geographic and geopolitical developments 24/7 to head off potential supply chain interruptions.
Supply chain visibility, operating at its full potential, gives you the power and knowledge to manage, control, and review product quality and compliance across all activities within your manufacturing processes — including those that rely on third-parties. As such, its value to improving your business profitability, reputation, and productivity should not be underestimated.
About The Author:
Steve Cottrell is the president of Maetrics and is responsible for the client service delivery, growth, and overall performance of the company. His experience encompasses leading a wide array of business services within the life sciences sector, including business process outsourcing, strategic sourcing, and clinical trial offerings. Cottrell is a business executive with 25+ years of experience in the life sciences industry. His career has been dedicated to supporting services in the medical device, pharmaceutical, and biotech market segments.