Acute Need for Supply Chain Transparency

Published on: 

PTSM: Pharmaceutical Technology Sourcing and Management

PTSM: Pharmaceutical Technology Sourcing and Management-08-06-2014, Volume 10, Issue 8

Biopharma manufacturers must reduce the risk in their complex supply chains

Supply chain transparency, or the ability to see into the various levels of the supply chain, is an acute need in the biopharmaceutical industry, largely due to regulatory pressures on manufacturers to protect the quality of the final products they sell to end consumers, according to Bindiya Vakil, CEO and founder of supply chain resiliency solutions firm Resilinc.

FDA and equivalent global organizations regulate drug companies to better understand their sources of supply and thus better control the quality of the final drugs being manufactured and sold to consumers. “Today, most suppliers operate in many different countries and thus have global supply chains. In addition, they often use subcontractors that actually own and operate the factories. This type of complex supply chain structure introduces risk; sub-tier suppliers and subcontractors may not follow the stringent regulatory requirements that govern product quality, which is necessary for protecting the efficacy of drugs,” Vakil notes. Consequently, there is a critical need for biopharma manufacturers to gain and maintain deep knowledge of their direct suppliers and their global and sub-tier dependencies, particularly in situations where drug efficacy can have human life or health consequences.

Global complexity
Typical biopharma supply chains are increasingly global and complex, and the complexity continues to expand each year. A drug manufacturer typically purchases active ingredients for a single drug from more than 50 direct suppliers that might have 300 manufacturing sites globally in aggregate, according to Vakil. She adds that the direct suppliers also leverage their own complex supply chains. Direct suppliers can range in size from a relatively small operation with one factory to a large chemical company with more than 80 sites worldwide that supplies thousands of customers across all industry verticals. Each of these suppliers may have hundreds of suppliers of their own, and the entire supply chain across the multiple tiers is critical to the efficacy of the final product.

“Supply chain transparency involves identifying the global supply chain dependencies of all direct suppliers; determining which subcontractors are used; and understanding the customs, norms and issues in the parts of the world where these firms operate and manufacture the various raw materials and ingredients,” Vakil says. The purpose is then to ensure that all of the sites in the full supply chain, including manufacturers providing basic raw materials, comply with regulatory standards around quality as applicable she notes.

To achieve supply chain transparency, biopharma companies need to proactively work with suppliers to map the supply chain in order to proactively identify any dependencies that may create compliance issues, as well as identify sites and companies that may need to be audited.

Critical need
“Given the complexity of the manufacturing process, the quality controls required for conformance, and the regulatory process for obtaining FDA certification, proactive supply chain mapping is a must have for today’s biopharma companies to achieve long term success,” Vakil states. More specifically, she explains that if suppliers shift manufacturing to different sites or source raw materials from different subcontractors, without supply chain transparency, it is possible that the end customer will not know that a change has been introduced somewhere in such an extensive supply chain. Consequently, if a change results in an adverse impact on the final drug product, the end customer could spend many millions of dollars trying to identify the root cause of the problem. In a worst case scenario, Vakil stresses that such changes may negatively affect patient health or put the drug manufacturer at risk for litigation because of a decision that it had no knowledge or control over.

Three major challenges
Achieving supply chain transparency is a challenge in the biopharma industry. The first hurdle that biotherapeutic manufacturers must overcome is mapping and understanding the inter-dependencies of their multitier global supply chains, which involves collecting data from suppliers. “Each supplier may have many manufacturing sites worldwide and manufacture hundreds of different raw materials, and the biopharma company may have hundreds of such suppliers providing various products. In addition, these suppliers generally sell products to multiple biopharma manufacturers that each require slightly different formulations/versions of the same raw material or active ingredient, and therefore different part numbers must be maintained for each customer for a given raw material. If each of the end customers tries to collect information about the suppliers’ supply chain at a raw material level in different formats, a huge burden would be placed on each supplier to support these different requests and formats,” Vakil observes. Furthermore, it is not sufficient to initially collect the supplier information; it is critical that the information be kept up to date, which requires periodic reviews.


Second, biopharma manufacturers must overcome the unwillingness of suppliers to provide full transparency and visibility due to concerns that customers may design them out or use the information to squeeze them for cost savings. The first issue is somewhat alleviated by the fact that a new source would need to go through the FDA approval process, which can take as much as two years, according to Vakil. She notes, however, that while the FDA approval process creates a major barrier against the rapid switching of suppliers, this concern is frequently cited as a reason why suppliers are unwilling to share information with their customers.

The lack of an industry standard around supply chain transparency is the third challenge, and has resulted in the need for each company to create its own methodology and process. “Industry organizations such as BioPhorum, Rx360, and others, will play an important role in addressing this issue,” Vakil says. In fact, these organizations are working together with the FDA to streamline the entire process by developing and publishing a standard that solution providers such as Resilinc can adopt.

Proactive strategies for success
Resilinc, along with its biopharma clients, has adopted specific strategies and approaches to creating a more transparent supply chain. These strategies focus first on identifying the existing and potential risks, followed by mapping of the possible weak spots in the supply chain and then implementing more sophisticated sense-and-respond capabilities that strengthen the organization’s supply chain flexibility and agility, according to Vakil. “By proactively tracking and managing existing and potential risks, biopharmaceutical and life sciences companies will be in a better position to use vital supply chain data to handle disruptions and respond more effectively,” she states. Such a “sense-and-respond” supply chain approach also gives companies an edge over the competition. “Biopharmaceutical manufacturers that can identify potential trouble spots early on, monitor and respond to potential risks, and create transparency with multiple tiers of supply chain partners will mitigate risks that frequently cause financial damage to the top and bottom line,” Vakil adds.

Gaining insights into sub-tier suppliers
Resilinc has focused on addressing supply chain transparency and developed over the last four years a very large repository of supply chain transparency information that enables biopharmaceutical manufacturers and their suppliers to seamlessly share information with minimal effort, according to Vakil. “Our publish once, share multiple times methodology creates real time savings for suppliers using the system to share information across many customers. In addition, we emphasize extensive supplier training, onboarding, and data cleanup, which saves time and effort for the customers, who can then use their valuable resources for enhanced intelligence gathering, rather than for basic data collection,” she says.

A fundamental aspect of Resilinc’s approach has been the creation of a “network effect” in the biopharma industry, which has expanded as more clients and their supply chain partners join the Resilinc platform. “This network effect comes into play quickly,” asserts Vakil, “and each successive new client and supplier derives faster time to value and lower total cost of ownership as they securely, and with their suppliers’ approval, leverage data already existing on the platform.”

In addition, over time the depth and breadth of information on the Resilinc platform increases. Today the company has modules for supply chain visibility at the site, operations, part level, and supplier site level for business continuity planning (BCP), as well as a conflict minerals compliance module and supplier corporate social responsibility (CSR) survey modules.

Amgen’s Executive Director, Supply Chain Patricia Turney mentioned in a recent Supply Chain Brain video that “We see Resilinc as a way to move the entire industry’s collective supply chain forward. With Resilinc, Amgen is able to gain new insights into our sub-tier supply chain that we were unable to see before. And if we do see a potential issue, we have the enhanced intelligence needed to take action before it can impact the company.”

Adds Vakil: “With industry leaders such as Amgen paving the way and actively bringing their suppliers and sub-tier suppliers to the Resilinc platform, the biopharma industry should begin to see the challenges above begin to diminish along with greater transparency and information sharing between supply chain partners.”

Continued need for secure information sharing
Supply chain transparency is only the latest requirement for which companies must reach out to their suppliers and collect a wide range of information at the site, activity, and/ or part number level, according to Vakil. In addition, she notes that new regulatory requirements, risks, and other operational initiatives continue to create an acute need for a secure information sharing capability between customers and their suppliers. “The industry needs to examine this problem holistically and adopt solutions that will be successful at bridging the combined needs of customers and supplier information sharing for many years to come,” concludes Vakil.