In our earlier blog about the different perspectives of purchaser and supplier in the reconfigured supply chain. you heard in brief how the challenge presented is different for both parties. Let’s look in a little more depth at the journey the tier 1 producer is travelling.
The use of Contract Manufacturing Organizations (CMO) is a relatively recent phenomenon, particularly in pharma, and somewhat less so in the medical devices industry. Prior to outsourcing, the typical pharmaceutical company is a self-contained unit with a well established set of Good Manufacturing Practices (GMPs) and a robust and well embedded set of controls for the procurement of materials, equipment and services.
New or replacement equipment is procured with the assistance of the engineering function, which typically has a robust and mature system of specification & design, validation & documentation, qualification, etc.- essentially all the necessary disciplines for good lifecycle management. Service providers fall in with the established GMP procedures for the site as directed by site management. In the case of substantial capital projects, the service provider (typically a project management and engineering services firm) is retained to oversee the design, installation and qualification of new facilities. While these firms bring their own well established quality practices, the project brief invariably demands adherence to the buyers established engineering practices.
Incoming materials are procured through a well established relationship with the vendor and almost certainly subject to a rigorous quality control check as they arrive at the warehouse. In this example, the outsourcing of any meaningful chunk of manufacturing has not yet happened. Supplier controls have been limited to raw materials, so the risk to patient safety from events outside of the facility have been pretty low, and regulators have not had reason for concern.
The scenario painted above is no longer the story of our industry. Outsourcing has become mainstream and is now of sufficient size as to represent significant risk. Tier 1 and regulators are on a fast trajectory in learning how to manage this risk.