Optimizing Pharma CMO Supply Chains: 3 Steps to Boost Flexibility

Every supply chain is unique. However, when it comes to pharmaceutical contract manufacturing supply chains, one common trait stands out – they’re all predictably unpredictable. To effectively respond to the inevitable batch of unforeseen disruptions that will come their way, contract manufacturing organizations (CMOs) and contract development manufacturing organizations (CDMOs) must demonstrate flexibility to the highest degree. Fortunately, there are practical improvements that can enhance the flexibility of CMO supply chains and help pharma companies adapt quickly to new challenges that may arise.

While there isn’t a one-size-fits-all approach to augment supply chain versatility for every organization, there are three steps that can help CMO pharma companies realize the benefits of flexibility:

Step 1: Improve End-to-End Visibility With CMO Management Software

Flexibility is dependent on the visibility an organization has into the entire CMO supply chain. However, disconnected systems hinder a pharma company's ability to share data and collaborate with suppliers, which has a negative impact on visibility and transparency.

For CMO pharma companies to achieve end-to-end visibility, digital connectivity is absolutely critical. By utilizing CMO management software such as a specialized quality management system (QMS) with built-in supplier management functionality, pharma organizations can access and share real-time information with suppliers. This promotes quality uniformity across the entire CMO supply chain ecosystem.

A purpose-built CMO management software solution helps enhance visibility and transparency by:

• Facilitating the development and documentation of supplier performance criteria.
• Enabling immediate and seamless data sharing between previously disconnected systems.
• Providing a common platform to align quality across the whole CMO supply chain network.
• Identifying serious quality issues and their respective corrective actions.
• Establishing effective communication channels between CMOs/CDMOs and suppliers, clarifying responsibilities and expectations. 
• Simplifying the contextualization of supplier-related data, enabling faster and smarter data-driven decisions.

Integrating processes and digitally connecting supplier-related data with modern CMO management software sets the foundation for a more advanced solution capable of incorporating emerging technologies like artificial intelligence (AI). The AI tools emerging today are empowering pharma companies to optimize supplier management and predict potential disruptions. According to Accenture's supply chain experts, successfully improving visibility and resiliency through modern digital tools requires placing data at the core of the supply chain and leveraging AI at scale to create a connected and intelligent CMO supply chain.¹

Step 2: Continuously Assess CMO Supply Chain Risks

Greater supply chain visibility highlights risks that require continuous evaluation. With change and new obstacles continually being introduced into their predictably unpredictable CMO supply chains, pharma contract manufacturers should regularly reevaluate the threats that risks pose. Depending on your organization's business and regulatory requirements, you can apply proven approaches such as routine stress-testing, scenario planning, simulation models, or other relevant methods.

Deloitte recommends four key actions for developing a resilient CMO supply chain strategy to better manage supply risk:

• Conduct thorough assessments of supply and supplier risks.
• Increase supply redundancy through multi-source awards.
• Increase the safety stock of critical materials.
• Regionalize the supply of critical materials whenever feasible.²

Similar to how CMO management software dramatically enhances visibility and transparency, other advanced digital tools are enabling pharma companies to take a holistic and comprehensive approach to risk management. McKinsey & Company reports that many pharma companies are experimenting with technologies that facilitate rapid changes among suppliers and leverage advanced analytics to predict potential challenges better.³ Digital-twin simulations and similarly advanced software tools help identify risk areas where inefficiencies lead to larger systemic issues, enabling pharma organizations to address issues promptly.

Step 3: Localize or Pursue Alternative Approaches

Pharma companies continue to extend their supply chains ever more globally. However, recent events such as the COVID-19 pandemic and governmental policy changes have triggered a countertrend toward increased localization of CMO supply chains and placed greater emphasis on regional or national self-reliance, as noted in Ernst & Young's "Pharma Supply Chains of the Future" report.⁴

To adapt to the changing global landscape, pharma companies must reevaluate their sourcing strategies. McKinsey recommends that they consider flexibility-boosting options such as:

• Reassessing existing supply hubs, with a focus on high-risk areas.
• Diversifying partner portfolios.
• Increasing the extent of dual sourcing.
• Creating excess capacity within global networks, where feasible.⁵

While CMO pharma companies are typically sought out by larger pharma organizations in times of localization needs, CMOs and CDMOs can apply the same strategy to manage their own suppliers. Whether through transitioning to a hub-and-spoke model or finding joint warehousing opportunities for raw materials, there are constructive options available to localize, streamline, or enhance the flexibility of supply chains.

Learn More About CMO Supply Chain Flexibility

Flexibility is crucial for CMO pharma organizations to respond to supply chain disruptions effectively and expediently. Embracing modern CMO management software tools that simplify data sharing, communication, and collaboration with suppliers is the key to keeping pace with the rapidly evolving, ultra-competitive pharmaceutical industry. To learn how CMO management software can catalyze flexibility in your organization’s supply chain, 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.