With the ever-increasing complexity of pharmaceutical supply chains, as more and more companies outsource the manufacturing, the mechanism for assuring your suppliers are reliable and appropriate for your needs becomes more difficult.
The recent burgeoning pandemic that is that Corona virus raises new issues about whether “all our eggs” should be in a certain basket!
Supply chain management is nothing new, and supply chains involving multiple global sources has become the norm.
New tools such as block chain (see our blog dated April 24, 2018), are also working their way into our business and potentially can provide new powerful opportunities. However, the Corona virus situation is perhaps the first scenario we’ve seen which has shut down whole industrial regions within a country, and in the case of China, one which has the potential for massive impact on medicines availability internationally.
Shutting down an industrial region that is 60 million strong, must highlight vulnerabilities to our over-leveraged Asian based outsource strategy. So, as we look at the best practices going forward, it is important that we build in appropriate risk elements which take into account these new factors, which could become more and more relevant going forward.
At the heart of a successful strategy for this is a well-organized plan with appropriate checks and balances to highlight and catch problems before they morph into critical issues! Keeping in mind the old adage “an ounce of prevention is better than a ton of remediation,” one should be using every risk assessed opportunity to mitigate potential scenarios from becoming like the proverbial banana skin. Looking at some of the key factors that should be part of this approach, the following can be considered the most important:
- Working out who you’re going to use as potential supply chain partners.
Some points to consider include:
- The potential technical capabilities that the vendor has to supply the materials/components.
- The appropriate capacity to meet your needs.
- An exemplary regulatory record and a willingness for the supplier/vendor to align their quality principles with those of your company. This is a powerful mitigating factor.
- Financial stability of the supplier for the lifetime of your supply chain needs.
- A cooperative willingness to build a partnership relationship not just a pay per fee vendor.
- Geographical infrastructure which enables ease of movement of materials.
Given that physical auditing is expensive and time-consuming, much of this can be accomplished using a paper or questionnaire mechanism, so make use of that as much as possible to reduce non-value-added work.
- Once you’ve decided on a few supplier candidates, develop an audit schedule that involves a facility visit to assure the quality of the physical infrastructure as well as the quality management approach aspects of how they operate the business. This is critical, but the way to improve efficiency and normalize opinions here is to develop a series of checklists. This way you can assure that nothing is missed, and all suppliers are assessed using a level playing field. Using a related numerical scorecard approach as part of this exercise can add value and reduce subjectivity in terms of supplier to supplier comparisons.
Key here is to assure you always have at least two qualified suppliers for each element in your supply chain.
- In developing your audit plan, build in time elements of the various aspects of the physical audit and keep to these so you don’t have gaps in your assessment information.
- Grade your suppliers and set up a criticality rating that covers all the elements that would enable them to meet your preferred supplier status. For these, decide on a reduced audit schedule based on performance as monitored by scorecard assessments and a zero-regression history. For other qualified suppliers, maintain an adequate rational review (for example, every two years), based upon performance risk assessments and scorecards.
Remember, contact with suppliers is time-consuming but important, so develop a good rapport with the key liaisons and make sure that there is a proactive mechanism for discussion and timely feedback on a regular basis.
Although this is only a brief journey through this topic, the principles discussed will provide audit professionals with a few “Success Principles” to assure a positive outcome for their companies.