How can life sciences companies optimize their supply chains?

To successfully manage their supply chain, life sciences businesses must navigate a variety of complexities, from complying with ever-changing regulatory requirements to controlling costs. Successful businesses have one thing in common: prioritizing quality throughout their supply chain strategy.

“For biopharma and medtech companies, a focus on quality must underpin everything they do in their supply chain,” says Zachary Nelson, a manager in the life sciences practice at RSM. “Supply chains can be unpredictable given shifting economic conditions, access to raw materials and evolving regulatory requirements. Maintaining traceability from an inventory management perspective and creating the quality standards for procurement, receiving and dispositioning are the building blocks to supply chain scalability.”

What makes up a quality supply chain strategy? According to Joe Goldberg, a partner and national life sciences practice consulting leader at RSM, it starts with collaboration across all functions of the business.

“Collaboration and strong communication must be present throughout the cycle,” Goldberg says. “From the procurement team that works with vendors to the warehouse team that manages inventory, as well as the finance team with payments and returns, everyone must be on the same page. Supply chain should not be a siloed function in the business.”

Saving costs, adding efficiencies

A commitment to good manufacturing practice (GMP), the industry standard for quality assurance guidelines and regulatory compliance, is also critical. “GMP means that regulations are addressed, trading partners are qualified, risks are assessed and documentation is highly visible throughout the supply chain,” Nelson says.

Meeting the U.S. Food and Drug Administration’s computer service validation requirement is another layer of complexity, as a majority of companies manage their supply chain using an enterprise resource planning system. Validation activities must be conducted around supply chain activities to ensure quality and documented compliance in preparation for an FDA audit.

Likewise, having a diverse selection of vendors contributes to quality focus. Having a single-source supplier can expose biopharma and medtech companies to business disruption if that sole vendor can’t deliver raw materials when needed, says Nelson. Having multiple strategic sourcing provides options and allows companies to shift with the evolving needs of the business.

Nonmanufacturing supply chain needs in areas like research and development or office supplies could also fall under the quality umbrella. “Having a centralized procurement strategy enables responsible purchasing across departments as well as cost savings from approved suppliers that have already established a standard of quality,” Nelson says.

A quality supply chain can elevate a company’s operations, which in turn can help address a variety of business interruptions, like recalls or regulatory changes.

“Constant reform, like the Inflation Reduction Act, can create stress for companies,” says Goldberg. “The IRA puts pressure on pricing for biopharmas around drug costs, which trickles down to controlling costs within the supply chain, like costs of materials or shipping. Already having supply chain strategies in place keeps costs in check and adds visibility for companies to manage any changes efficiently.”

Embracing quality and resiliency

So, if quality is the answer, what should life sciences businesses do to achieve it in their supply chain? Here are some key considerations:

• Start with your quality controls. Determine the quality touch points in the supply chain and confirm processes are strong enough to prevent disruption to the business.
• Enhance inventory management. Have digital visibility and control of your inventory across the supply chain, with the right measures to prevent tying up cash in slow-moving inventory.
• Optimize your supplier network. Avoid single sourcing, and weigh trade concerns and elevated costs against lowering long-term supply chain risks.
• Upgrade and integrate your technology. Implement sales and operations solutions that integrate with an enterprise risk program to digitize your supply chain.
• Improve your forecasting analytics. Leverage demand planning technology and readily share predicted forecasts with trading partners to prevent capacity challenges.
• Get your arms around costs. Get a full accounting of supply chain costs, from sourcing to taxes, to help make better decisions related to future needs and changes.

_{Originally published on rsmus.com.}

Have you built resiliency in your supply chain?

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