3 Ways to Enhance Flexibility in Pharma Contract Manufacturing Supply Chains

Every company’s supply chain is unique. But all pharma contract manufacturing supply chains share one common trait: they’re predictably unpredictable. Responding to the next inevitable batch of unforeseen disruptions requires contract manufacturing organizations (CMOs) and contract development manufacturing organizations (CDMOs) to demonstrate a high degree of flexibility. Fortunately, there are practical improvements contract organizations can start making today to ramp up the flexibility of their supply chains and improve their ability to adapt quickly when new challenges arise.

Although there isn’t a blanket approach that will enhance supply chain versatility for every contract organization, initiatives involving any or all three of the following steps will help pharma contract manufacturers realize the benefits of flexibility.

Step 1. Enhance End-to-End Visibility With Supply Chain QMS 

Flexibility is contingent upon the visibility into and transparency of your entire supply chain. But visibility and transparency are impaired when a pharma contract manufacturer’s ability to share data and collaborate with suppliers is hindered by disconnected systems.

Digital connectivity is the key to achieving end-to-end visibility. With specialized contract manufacturing software like a quality management system (QMS) solution that offers supplier management functionality, pharma contract manufacturers can access and share up-to-the-minute information about and with suppliers and establish quality uniformity across the supplier ecosystem.

Pharma contract manufacturers can benefit from a purpose-built supply chain QMS solution that is specifically designed to help life sciences companies meet requirements for current good manufacturing practices (CGMP) in contract manufacturing. This type of specialized contract manufacturing software enhances visibility and transparency by:

• Facilitating the development and documentation of criteria for supplier performance.
• Allowing for the immediate and seamless sharing of data between systems that were previously disconnected.
• Providing a common platform for aligning quality across your entire network of suppliers.
• Identifying serious quality issues and their respective corrective actions.
• Establishing a two-way communication medium between CMOs/CDMOs and their suppliers, making it easier for all parties involved to identify responsibilities and define expectations.
• Simplifying the contextualization of supplier-related data so pharma contract manufacturers can make smarter and faster data-driven decisions.

A modern supply chain QMS that integrates processes and digitally connects supplier-related data lays the foundation for an even more advanced solution that incorporates emerging technologies like artificial intelligence (AI). Emerging technologies like AI are enabling pharma contract manufacturers to predict potential disruptions and further streamline supplier management. The success of any efforts to improve visibility and resiliency through the use of modern digital tools “hinges on putting data at the core of the supply chain and applying AI to it at scale to create a connected and truly intelligent supply chain,” according to Accenture’s supply chain experts.¹ There’s no better way to put data at the core of your supply chain and pave the way for innovative AI capabilities than by implementing a modern, proven supply chain QMS software solution.

Step 2. Continuously Assess Supply Chain Risks 

Once a contract manufacturer gains greater supply chain visibility, risks become more evident. Since change and an endless stream of new challenges are two constants in predictably unpredictable supply chains, it’s critical for pharma contract manufacturers to continuously reevaluate the threats risks pose. Routine stress-testing, scenario planning, simulation models, or other proven approaches should be applied as appropriate based on your organization’s business and regulatory requirements.

To develop a supply chain strategy that fosters resilience, there are four key actions Deloitte recommends companies take:

1. Conduct thorough supply and supplier risk assessments.
2. Increase supply redundancy through multi-source awards.
3. Increase safety stock of critical materials.
4. Regionalize the supply of critical materials where possible.²

Just as implementing a supply chain QMS dramatically enhances visibility and transparency, advanced digital tools are helping pharma companies take a more holistic and comprehensive approach to managing risks. As Gartner recently reported, “Many companies are experimenting with technologies that enable quick changes among suppliers and advanced analytics that help predict potential challenges better.”³ Technologies like digital-twin simulations and similar types of contract manufacturing software tools can help identify risk areas where inefficiencies lead to larger systemic issues, thus enabling organizations to fix problems sooner.

Step 3. Localize or Pursue Other Alternative Approaches

For years, the expansion of pharma contract manufacturers’ supply chains seemed to stretch further and further across the globe. But the pandemic, policy changes, and other world events have sparked a reversal of that trend, as recounted in Ernst & Young’s “Pharma Supply Chains of the Future” report.

“In recent decades, we have witnessed increasing globalization of pharma supply chains,” the EY report states. “The policies in the three major trading blocs suggest that we are seeing the start of a countertrend toward increased localization of supply chains and greater emphasis on regional or national self-reliance."⁴

McKinsey’s pharma researchers have also noted the “gradual shift from global supply chains to self-sufficient local supply chains” - a change that is requiring pharma contract manufacturers to reevaluate their sourcing strategies. As part of this reevaluation (which should take place as part of a broader risk-mitigation and flexibility-enhancement initiative), McKinsey recommends that pharma companies consider options such as:

• Reassessing their existing supply hubs, paying particular attention to the areas of highest risk.
• Diversifying their partner portfolios.
• Increasing the extent of dual sourcing.
• reating excess capacity in existing global networks, if possible.⁵

While pharma contract manufacturers are usually the ones big pharma companies turn to when the need to localize arises, CMOs and CDMOs can apply the same strategy to managing their own suppliers. Whether it involves making a radical transition to a hub-and-spoke model or finding new joint warehousing opportunities for raw materials, there are a variety of constructive options pharma contract manufacturers can pursue to localize, streamline, or otherwise enhance the flexibility of their supply chains.

Conclusion

Pharma contract manufacturers must develop some degree of flexibility in order to appropriately and expediently respond to supply chain disruptions. Embracing contract manufacturing software tools that simplify data sharing, communication, and collaboration with suppliers is the key to developing the flexibility a CMO or CDMO must have to succeed in a rapidly changing, ultra-competitive industry. To learn how supply chain QMS software can catalyze flexibility in your organization, visit MasterControl’s supplier management solutions page.

Resources:

1. "Scaling AI in the supply chain to improve intelligence,” Jaime Lagunas and Patricia Riedl, Accenture Insights, July 15, 2022.
2. "2022 Global Life Sciences Outlook – Digitalization at scale: Delivering on the promise of science,” Deloitte, 2022.
3. "Four ways pharma companies can make their supply chains more resilient,” Tacy Foster, Parag Patel, et al, McKinsey & Company Life Sciences Insights, Sept. 23, 2021.
4. "Pharma supply chains of the future,” Derron Stark, Olaf Zweig, et al, EY, 2022.
5. "Pharma operations: The path to recovery and the next normal,” Katie Kelleher, Ketan Kumar, et al, McKinsey & Company Life Sciences Insights, May 12, 2020.