The 3Cs of Successful Outsourcing:Communicate, Collaborate, Capitalize - Pharmaceutical Executive

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The 3Cs of Successful Outsourcing:Communicate, Collaborate, Capitalize
By Sharing information, Pharma companies can get more out of their relationhips with Vendors.


Pharmaceutical Executive


During drug development, companies must efficiently transfer knowledge and processes internally between R&D and manufacturing functions. A failure to promote dialogue between R&D and manufacturing can result in a high level of scrap material and low yields, or even a lack of product availability-all without the ability to determine the exact cause of the problem. As a case in point, one pharma company specified that a raw material should have a moisture content of less than .05 percent. Assuming that lower levels would improve the product, the production team succeeded in virtually eliminating the contaminant, then discovered that the manufacturing process no longer worked.

After looking into the problem, the company determined that its R&D people had previously identified the need to maintain a specific contaminant level but had failed to share that information with the manufacturing operation. To promote effective knowledge transfer, pharma companies can use electronic collaboration tools and document vaults for efficiently storing and exchanging important information.

Although the industry often hesitates to share information with trading partners out of concern about disclosing valuable data, knowledge transfer with suppliers can help companies receive better service and manage risk more effectively. In the previous case, the company eventually asked its raw materials supplier to examine product batches and identify those with a moisture content of 0.25-0.5 percent, thus opening up a productive dialogue that prevented the problem from occurring again. If the knowledge had been shared sooner, the company might not have risked the loss of its product stock.

Maximize Value Companies that focus only on the risks of sharing information with third parties lose sight of the benefits. To realize exceptional returns on investment, pharma companies must communicate closely with suppliers, giving them clear incentives to improve yield and working with them to continuously improve outsourced processes.

They can begin by moving beyond a stringent contract that is only a statement of work to be done and, instead, collaborate with suppliers to identify opportunities for efficiency improvements and cost reductions as they arise throughout the project. Both parties stand to benefit from the approach. Without effective communication, at the conclusion of the arrangement pharma companies can end up with exactly the same process and data they started with-necessitating further investments of time and energy before launch. Collaborative communication allows companies to track process issues, solve problems, and follow the entire improvement process with a full audit trail.

Some pharma companies have moved beyond a "work statement." One oncology company struck a creative agreement with a contractor to manufacture its new therapeutic product. The oncology group offered to pay the manufacturer a specified price per unit of product, regardless of the manufacturer's yield. Thus, the manufacturer had an incentive to find efficient ways to increase the yield-produce more units of the therapy per batch-which, in turn, lowered its cost per unit and increased its profit margin. The agreement also stipulated that the vendor tell the oncology company how it accomplished its increased yield, so the oncology company could use the information to improve its own internal operations. By offering the manufacturer a financial incentive based on process improvement, both companies benefited.

Another pharma company outsourced the packaging of its clinical trial materials. The packager went beyond the initial work statement by suggesting it could use its superior planning system to help the company better manage its inventory. The contract called for the pharma company to provide accurate supply/demand information and for the packager to enter that data into its planning system and, thus, help the pharma company minimize its inventory while fulfilling demand. Both companies benefited from enhanced collaboration and communication.

Ensure Security In today's environment, any commu-nication carries inherent risks. Confidential information exchanged with third parties must be absolutely secure. Worker identities must be fully protected because, for instance, researchers who work with laboratory animals are often harassed by animal rights activists. But with appropriate safeguards in place, communicating effectively with trading partners enables pharma companies to compound the benefits of outsourcing with the value of supply chain excellence.

The European Economic Community has strict rules about storing and accessing private information. Some countries, such as Germany, go even further with their regulations. But, with appropriate safeguards in place, communicating effectively with trading partners enables pharma companies to compound the benefits of outsourcing with the value of supply chain excellence. Those benefits include

  • more timely and efficient communication
  • asynchronous task completion
  • faster project completion
  • visibility across the value chain
  • ease of adding new resources
  • full audit trail of what worked-and what didn't.

The investment in consultants, contract research, sub-contract manufacturing, and clinical research totals hundreds of millions of dollars. Ensuring that the company captures intellectual capital and key project information in a non-intrusive fashion has the potential to provide benefits on multiple levels, over an extended period of time, saving the company a substantial amount money in the process.


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