In 2018, a shortage of a key cancer drug forced hospitals across the United States to ration doses, leaving patients anxious and uncertain. The drug was vincristine, a chemotherapy used to treat pediatric leukemia, lymphoma, and brain tumors. The shortage was caused by one of the only two suppliers of the drug, Teva Pharmaceuticals, suspending production due to manufacturing issues. The other supplier, Pfizer, was unable to fill the gap.
Scenarios like this are not uncommon in the pharma industry, due to our industries unique challenges when it comes to supplier sourcing challenges. For many companies, supplier reliability is critical to ensuring the safety and efficacy of their products. However, this is easier said than done, particularly given the complex and rapidly evolving regulatory landscape.
This situation with Pfizer and Teva Pharmaceuticals highlights the critical importance of supplier risk management in the pharma industry. While it’s impossible to predict every possible supplier risk, effective supplier risk management can help pharmaceutical companies identify and mitigate potential risks, ensuring continuity of product supply and patient safety.
In this article, we’ll explore best practices and strategies for supplier risk management in the pharma industry, as well as actionable steps on how to implement effective communication strategies with your suppliers.
Develop a Robust Supplier Selection Process
A robust supplier selection process is the first step in effective supplier risk management. It involves carefully identifying and evaluating potential suppliers to ensure that they are capable of meeting the company’s requirements in terms of quality, delivery times, and pricing. This process should be comprehensive and should take into account various factors that could impact supplier reliability, such as their compliance history, location, financial stability, product characteristics, and capacity to meet demand.
Conduct Regular Supplier Assessments
Regular supplier assessments are essential for ensuring ongoing supplier compliance and identifying potential risks. These assessments should be conducted on a regular basis and should involve a comprehensive evaluation of supplier performance across various metrics, and can include things like:
On-site audits: On-site audits are an important part of supplier assessments, as they allow companies to evaluate supplier operations, quality systems, and compliance with regulatory requirements.
Documentation reviews: Documentation reviews are an important part of supplier assessments, as they allow companies to evaluate supplier documentation related to quality, compliance, and other critical areas.
Communication with suppliers: Effective communication is critical for managing supplier risks. Regular, timely communication with suppliers can help to identify potential risks early and ensure that suppliers are meeting your requirements.
By conducting regular supplier assessments that involve on-site audits, documentation reviews, and communication with suppliers, companies can ensure ongoing supplier compliance and identify potential risks before they become significant issues. These assessments also provide opportunities for companies to collaborate with suppliers to identify areas for improvement and drive continuous improvement across the supply chain.
Monitor and Manage Supply Chain Risk
Supply chain risk can arise from many sources and can have a significant impact on companies in the pharma industry. Some common sources of supply chain risk in the pharma industry include non-compliance from suppliers, shortages, natural disasters, geopolitical instability and cyber threats.
To manage these risks, pharmaceutical companies must have a robust system in place to monitor and manage supply chain risk. This can include contingency planning, dual sourcing, and regular communication with suppliers to ensure they have robust risk management procedures in place.
By implementing these strategies, pharmaceutical companies can proactively manage supply chain risk and ensure continuity of supply, even in the face of unexpected disruptions.
Ensure Compliance with Regulations
The pharma industry is highly regulated, and compliance with regulations is critical to ensuring patient safety and product quality. The regulatory landscape is complex and rapidly evolving, with new regulations and standards being introduced on a regular basis.
To ensure compliance with regulations, companies must stay up-to-date with regulatory changes and ensure their suppliers are also compliant. This involves regular audits and ongoing communication with suppliers to ensure they are meeting regulatory requirements. Companies should establish clear lines of communication with suppliers and encourage them to report any potential regulatory issues promptly.
It’s also important to consider the potential impact of regulatory changes on your supply chain. New regulations and standards can impact supplier compliance, product quality, and patient safety. Companies must stay up-to-date with regulatory changes and ensure themselves and their suppliers are also compliant with these changes.
In summary, compliance with regulations is critical to patient safety and product quality in the pharma industry. To ensure compliance, pharmaceutical companies must stay up-to-date with regulatory changes, conduct regular audits, and maintain ongoing communication with suppliers. By proactively managing regulatory compliance, companies can mitigate potential risks and ensure the quality and safety of their products.
Implement Effective Communication Strategies:
Effective communication is critical for managing supplier risks. Pharmaceutical companies should establish clear lines of communication with suppliers and ensure they understand their requirements and expectations. They should also encourage suppliers to report any potential risks promptly. Here are our 5 top tips when it comes to communicating with your suppliers.
- Establish clear lines of communication: Effective communication starts with clear and open lines of communication. Procurement professionals should establish regular communication channels with suppliers, such as email, phone, or web-based tools. This ensures that suppliers have a direct line of communication with the procurement team and can report any issues or concerns promptly.
- Communicate expectations clearly: Procurement professionals should communicate their expectations clearly to suppliers and ideally put them into supply agreements. This includes communicating product specifications, quality requirements, delivery schedules, and any other relevant information. Clear communication of expectations helps to ensure that suppliers understand what is required of them and can meet those requirements.
- Encourage two-way communication: Effective communication is a two-way street. Procurement professionals should encourage suppliers to ask questions and provide feedback. This helps to ensure that suppliers have a clear understanding of what is required and can provide feedback on how they can improve their processes or products.
- Regularly review performance: Procurement professionals should regularly review supplier performance and provide feedback. This helps to ensure that suppliers are meeting the company’s requirements and expectations. Regular performance reviews can also help to identify potential issues early and prevent them from becoming significant problems.
- Use technology to facilitate communication: Technology can be a powerful tool for facilitating communication between procurement professionals and suppliers. For example, web-based tools can be used to share product specifications, quality requirements, and other relevant information. This helps to ensure that suppliers have access to the information they need to meet the company’s requirements. Additionally, procurement professionals can use technology to track supplier performance and identify potential issues early.
In conclusion, effective supplier risk management is critical to the success of the pharma industry. To ensure continuity of supply and patient safety, pharmaceutical companies must develop a robust supplier selection process, conduct regular supplier assessments, monitor and manage supply chain risk, ensure compliance with regulations, and implement effective communication strategies. By following these best practices and strategies, pharmaceutical companies can mitigate potential risks and maintain a reliable supply chain.