Risk Management within the Global Supply Chain

The authors describe a program to identify, prioritize, mitigate, and communicate risks in manufacturer–supplier relationships.
Oct 01, 2008

The global supply chain for the pharmaceutical industry has expanded during the past decade as companies have striven to be competitive and harness emerging technology. Foreign markets have emerged to offer lower costs for various products. Many companies find managing global suppliers and product-quality issues to be challenging. Recent industry events such as the contamination of batches of heparin demonstrate that a lack of control in the global supply chain can lead to patient harm and death, product recalls, loss of integrity, and significant financial liability for a company. Current good manufacturing practice (CGMP) regulations state that companies that design and manufacture pharmaceutical products must ensure that all components, raw materials, and product from suppliers meet predetermined specifications and that suppliers and their operations are in a state of control.

In today's climate, companies should use a risk-management program to assess their suppliers' ability to provide material suitable for the manufacture of medicinal products. A risk-management program should help companies evaluate and control the quality of their suppliers and of the supply chain. The US Food and Drug Administration's Pharmaceutical CGMPs for the 21st Century initiative is intended to enhance and modernize the regulation of pharmaceutical manufacturing and product quality. Its goal is to bring the pharmaceutical industry in line with the risk-management activities the medical-device industry uses to reduce patient and business risk. FDA's expectations are outlined in the International Conference on Harmonization's Q7, Q8, Q9, and Q10 guidelines. Several key elements can help control and limit risk throughout a global supply chain. This article will discuss risk prioritization, risk assessment, risk control, risk communication, and risk review in detail.

Risk prioritization

Deciding how to begin implementing a supplier risk-management program can be challenging for established companies, let alone for startups. A risk-prioritization matrix outlines a systematic and objective approach that helps companies select the best starting point.

One approach to developing a specific company's matrix is to create a list of manufactured and distributed products that includes key data. The following data may be considered in developing a risk-prioritization assessment:

  • Patient risk (i.e., sterile, parental, nonsterile)
  • Quality data such as nonconformances, corrective actions/preventive actions (CAPA), deviations, and customer complaints
  • Volume of product manufactured
  • Supplier history.

Figure 1: Example risk-prioritization matrix. (ALL FIGURES ARE COURTESY OF THE AUTHORS.)
These data can be entered into a table similar to that in Figure 1. The individual data categories are assigned a numerical risk-ranking value as in the following example:
  • Patient risk for parentals—3
  • Patient risk for sterile products—2
  • Patient risk for nonsterile products—1
  • High-risk supplier—3
  • Medium-risk supplier—2
  • Low-risk supplier—1.

Key quality data such as nonconformances, CAPA, deviations, and customer complaints should receive values equal to their number of occurrences.

Likewise, the risk value for the volume of product manufactured is equal to the number of lots or units produced. Typically, this value is weighted to reduce the chance that a low-risk product with a high production volume will become the highest priority. Values are multiplied to obtain a risk-prioritization score. The product with the highest score gets top priority.