The COVID-19 pandemic has had an extraordinary impact on supply chains. Across the globe, life sciences organisations that rely on supply chains to provide protective or life-saving products have experienced the pandemic’s disruptive effect, no matter the complexity of their supply chain.
In light of the disruption and the urgency around fast delivery of high-quality products, it makes sense that manufacturers and their suppliers might reassess their relationships and obligations to one another to manage the results of disruption to supply chain partners.
An assessment of supplier relationship roles, rights, and obligations starts with reviewing and understanding relevant supply agreements.
A supply agreement should be used in any business partnership between a manufacturer and supplier. For the purchasing manufacturer, a supply agreement helps ensure they receive the materials or goods they need at specified times and for the agreed-upon price, providing the company some protection from supply issues. For the supplier providing the materials or goods, such an agreement takes the guesswork out of how and when materials or goods should be provided to the customer. For both parties, the supply agreement makes planning easier.
A supply agreement should set clear expectations. It may vary from company to company, but there are some key contract provisions commonly included when life sciences organisations draft supply agreements1,2:
Supply agreements are not supplier quality agreements. Where a quality agreement between a manufacturer and supplier is intended to formally outline specific quality parameters and responsibilities relative to quality and regulatory requirements to ensure supply of safe materials, a supply agreement outlines the parameters, terms, and conditions of a business relationship between a manufacturer or the supplier of the materials.
While the U.S. Food and Drug Administration (FDA) recommends supply agreements and supplier quality agreements be separate documents, the quality agreement may be included by reference in the main supplier agreement.
Manufacturer-supplier relationships should always be built on communication, collaboration, and a mutually beneficial partnership. Otherwise, risks grow greater in likelihood and consequence. If there are issues hindering supplier performance, the manufacturer and supplier should work together to resolve those issues quickly. Working with your supply partners to achieve their obligations starts with understanding your company’s existing supply agreements.
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