Securing reliable supply chains is fundamental to the success of bringing any product to market. Global supply chains are incredibly complex in the pharmaceutical sector, and new technologies, specialist components and tough regulatory environments are combining to make managing supply chains challenging.
Therefore, robust supply chain quality control is required to safeguard manufacturing and future business success. Manufacturers must develop a detailed understanding of supply chains and nurture these relationships in order to promote business growth. David Brown, vicepresident of technical operations at Alcresta Pharmaceuticals, says the benefits of securing your supply chain are obvious.
“When you find a good supplier, you can focus on the future and not the present,” he says. “If you have a difficult supplier, you generally end up having one or more of your own people on-site overseeing the project. You end up making the product shoulder-to-shoulder with the folks you’re meant to be paying to do it for you. This can be a huge distraction from innovating products or product variations that can really help to perpetuate your business.”
Companies need thorough systems in place to acquire – and keep – reliable suppliers. “When trying to find a new supply chain, I start out with a survey of contenders in the industry, [as] there are obviously different specialists in different fields,” says Brown. “I work through the kinds of critical success features or characteristics an ideal partner would have for a given job. You can very quickly narrow down a large list to a select subset. From there, you can narrow it down further with conversations until you get to the point of meeting candidates.
“I think, in my last case, I only met about five candidate firms after doing all the paper research. It then comes down to the people, the structures they have in place and the metrics you see at the site. Generally, the decision becomes very easy,” he adds.
Making a shortlist
Which companies are on the shortlist depends on a number of factors. “Regulatory history is generally first. Usually they won’t be in my topfive list unless I have a good sense of their regulatory history – not only for the firm, but also for that particular site,” explains Brown.
Evaluating a company’s history of quality and compliance can be challenging, but it’s a critical objective, and metrics are key. “It’s always reassuring to see metrics, and to talk to people and understand that they live by the metrics, that it’s not just something they use for show,” Brown continues. “It’s always an interesting conversation when you start to ask, for example, ‘What percentage of batches are right the first time, without deviation?’ and ‘What percentage are delivered on time?’”
He then looks to references, using, for example, industry knowledge based on a candidate company’s reputation and prior projects, to back up the metrics.
Brown says that, while cost depends on the sector and the product being delivered, it’s not always a deal-breaker. “Generally, firms are competitive. The more commoditised the formulation you’re trying to make, the more publicly known the sensible price will be. If you’re trying to make something quite unique, you can still make general assessments; for example, work out how much a certain amount of time at the chemical plant should cost, and divide by your units and make some sensible estimates.
“Personally, I haven’t had the need to let costs singularly drive decisions. I know some companies – such as large pharma generics who are dealing with larger volumes and many competitors – might be constantly looking for the least expensive site, and they need to do that to compete in the later product life cycle. In my experience, though, I’ve generally worked with more innovative products where cost is not the most important consideration,” he says.
What is vital, he explains, is the ethos of the company and its core business practices. Ensuring that you’re on the same page when it comes to business goals and quality expectations is critical. “The site’s charter and mindset are very important. This goes back to the interview process. In some places, you can go in and you’ll see that the folks are purely process-oriented or perhaps the staff are generally unhappy or inexperienced. With other companies, you can go into [their offices] and they’re very well managed, they have a discernible level of passion for the work they’re doing, [and] they really care. I base a lot of this on personal interactions and I also go back to those references.”
Working with new suppliers
Once a new supplier has been secured, it’s essential to ensure the right systems are in place to maximise the delivery of the contractual obligations. This phase of any joint project lays the groundwork for ongoing evaluation and can make or break a new partnership.
Ineffective equipment, staffing issues, or delays and quality concerns in a supplier’s own supply chain can have a devastating effect on the product, costing a company time and money. Benchmarking and supply chain audits promote communication and provide visibility for more effective monitoring of the quality and outcomes. Ongoing evaluation and constant communication are essential for reducing risk.
The early days of a contract are fundamental to ensuring these systems are in place and that lines of communication are open. “The inception of any relationship involves some development phase or a tech transfer phase,” says Brown. “In these instances, I like to have someone who is a leader for that site from my own team ‘live’ the project with the supplier. However, I’m not a proponent of having that person be there all the time long term. You are contracting this work and you cannot do it for them, but in this industry, you need to know each other pretty well. You need to establish a system for continual communication. You need to meet periodically to ensure there aren’t any big surprises, and you need to act on any surprises that do arise.
“The best suppliers have systems in place so that, if and when complaints come in, they are usually of a low severity. But when you have a more difficult relationship, the reason [can often be] because those systems [aren’t] in place [and] communication hasn’t happened, so you’ve got to correct it immediately,” he adds.
According to Brown, it’s possible to take steps to safeguard a project from the worst-case scenario: a supply chain failure. “I think sacrificing exclusivity is something people often undervalue or overlook. To be able to make your products at two locations is your ultimate leverage. A lot of partners ask for exclusivity to ensure [that] they’ll have all of your business, but this can be dangerous. Usually, suppliers are amenable to taking the lion’s share of the business and allowing some percentage to run outside. This gives you the freedom to establish a secondary supplier, even if it’s one that you don’t use or don’t use very often.
“Sometimes, you can use two different sites within a bigger supplier, but you’re still beholden to their fate across the organisation, whereas if you use different organisations, you get more security,” he continues.
“If you get a great supplier at a great price with great performance, you may well make 100% of your material there. But at least when starting out, especially with a new partner, both sides know where they stand and you always have the legal safeguard in the contract to go elsewhere for some portion of your project if things go wrong.”
While hedging your bets in this way is smart business, it’s even smarter to ensure that your systems are in place for choosing and managing the best suppliers from the onset.
New players in the market
Trusting unknown vendors can be difficult, and new players in the market can make choosing partners challenging. However, it’s even harder for new companies that are looking to break into an existing market to prove their credentials.
“As an innovator, using a newer, smaller start-up for your prized commercial product is not immediately the most attractive partnership. It’s helpful to know that a company has already been there and done that,” says Brown. “One of the first things I look at when considering [using] a new technology provided by a newer company, is whether or not they have anything commercial at all. If it’s a small site/firm, they may not. Or maybe they have something they hope is going towards phase three and perhaps that’s how they’ve become big enough to talk to you in the first place.
“Often, if the company is not commercial yet, but has a unique technology, their specialism might be more towards their technology and not commercial manufacturing. In these cases, the best partnerships are with companies that admit this [lack of experience], and work with you and the larger, more established commercial company to create a partnership [that is] able to commercialise using established systems and speciality technology,” he concludes.
Benchmarking checklist
Benchmarks set a standard or threshold for your suppliers to meet or exceed. These standards are driven by your business goals and standards as the outsourcer. They can be used to evaluate suppliers on an ongoing basis across a range of factors relative to their contract.
Benchmarks should be tailored to each business and each project. They challenge you to identify if a supplier is:
- delivering quality products
- meeting delivery deadlines
- delivering value for money
- providing reliable communications
- providing adequate response times in terms of service
- providing adequate reporting.
These areas – and others – can be further broken down to provide additional evaluations across subsets that are vital to your business. For example, you may choose to run more in-depth benchmarking for areas such as quality control, safety or regulatory processes. It’s important to share your benchmarking analysis with suppliers where possible, and where appropriate, to help drive improvements and to set mutually beneficial targets.
