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Pharmaceutical Manufacturing and Packing Sourcer

Delivering the Goods


The argument for sourcing just one global supplier, rather than employing a number of single-purpose companies for different tasks, appears to be gaining in strength according to recent market trends

Global sourcing is a ‘business-essential’ that continues to be of increasing importance to life science companies. As manufacturers adapt to changing market conditions, consolidating their operations and thought leadership to work as one company across borders, continents and markets, the drive to make cost and efficiency savings becomes ever more demanding. Stakeholders want better performance, reduced costs, improved efficiency and, in the case of global temperature-controlled supply chains, improved reliability.

Several recent forces have expedited the formalisation of strategies around cost reduction and better operational performance. Two of them – the global recession and the continued increase in generics – have forced branded life science companies to find cost-saving solutions across all operational segments. However, if cost saving remains the only motivation, it misses the salient point of global sourcing – to also improve overall service. What cold chain managers crave is a globally available supplier of a range of qualified thermal solutions who can provide reliable, consistent and measureable performance, along with cost savings.

An Alternative Option

For example, in the case of cool chain logistics, using a single global supplier for thermal protective packaging or for actual transportation could mean the difference between valuable supplies arriving on time and being usable or, because of poor temperature management in transit or improper routing, arriving in a spoilt or unusable condition.

Spending a million Euros with an individual supplier at each individual manufacturing plant location or distribution centre is no longer viable. Instead, supply chain managers are looking to bundle these purchases with fewer global suppliers. This offers an opportunity to reduce their packaging costs, eliminate redundancy, ensure consistency, standardise processes to provide for operational efficiencies and allow for more strategic supplier partnering that can identify and capture additional cost savings in the supply chain. Global sourcing can also add value through an easing of the qualification process and improved supplier management, making performance a far more visible and measureable activity.

Take clinical trials as a specific example. The globalisation of large pharmaceutical companies means that laboratories, testing and administrative staff are frequently in different cities, countries or continents, and moving samples and drugs from one facility to another is virtually impossible without a similarly global resource that can:
  • Meet the challenges of security
  • Have built-in contingency
  • Comply with rapidly increasing local regulations
  • Provide a consistent approach to quality
  • Have easy tracking and traceability

Not to safely deliver a shipment because it was packed in containers that were not robust enough to cope with the challenges of global airport tarmac temperatures, loading delays and customs procedures can often turn out to be a very expensive failure. Delays in any stage of the clinical trial process can often result in costly delays to eventual commercial product launch.

Imagine though if these clinical products had survived the airport and passed through customs, but there were no onward temperature-controlled containers available to take the shipment to a warehouse and then on to the lab, hospital or clinic? The end result would be the same – a lost shipment and a lost opportunity. One global resource can obviate this as their seamless service should ensure that there are no lost-in-translation communications, poorly maintained or insufficient equipment, or noncompliance with local regulations.

Better Business Partnerships


Global sourcing works best when the supplier/client relationship is a strong partnership. The vast majority of casualties in global sourcing in the last decade were created when the partnership broke down or was built on unsound foundations such as unachievable targets, false promises, lack of performance, or poor financial management between both parties. Success, however, inevitably comes when both companies mutually invest in growing their business relationship.

One of the biggest strengths in global sourcing is the power of negotiation – not simply costs, response times, payment terms and so on, but in a growing shift towards negotiating performance-based contracting. All businesses want to feel that they are getting the best service for their dollar, but ‘best’ does not necessarily mean the cheapest or quickest service. On the contrary, performance reliability and innovation are measurable quotients in any business relationship and, therefore, they are as important as the costs and terms of business when negotiating.

A Bigger Pool of Talent

With global sourcing an inescapable reality for anyone in business, it has to have a positive outcome for the company. There is a fear or reluctance in some businesses to entrust so much in one supplier, and that is why choosing, nurturing and trusting your global partners is fundamental to the success or failure of the relationship. Global sourcing, when undertaken with clear goals and realistic timescales, gives life science companies access to a bigger talent pool: better supply risk management, extended market reach, faster access to markets, optimal solutions and reduced wastage.

At a recent supply chain conference, this topic was discussed in detail. Several global life science companies gave presentations on how they are planning to, or already have, consolidated their procurement for certain purchased categories. Their goal is to leverage buying power and ease the operational implementation and regulatory processes through consistent packaging solutions. Targeted cost savings are in the 10-15 per cent range, just from the reduction of the number of suppliers via consolidation of purchases of like products.

Furthermore, the benefits that come from improved collaboration with selected suppliers is an added and purposeful outcome from this centralisation process. Many suppliers have started to collaborate more to help deliver an optimal solution to the shipper. In fact, several packaging and logistics providers have gone so far as to create software programmes to help calculate potential cost savings in the supply chain on behalf of their shippers.

Companies offering individual client business reviews can look for improvements to reach the optimal solution for the shipper in terms of cost and performance. Factors such as a faster delivery time, which would increase utilisation on high volume lanes and create additional savings from longer-term equipment leases, can be analysed, or clients might be encouraged to consider how they can optimise shorter ‘trip leases’ in order to lower costs.

Conclusion

The key to realising the benefits from successful global sourcing is communication and measurable performance. Open communication enables us to anticipate and rapidly adapt to changes in our customers’ needs while recognising the need for a more visible execution process. The global market, the recession and new business practices have brought new challenges, and global sourcing needs to be embraced as an important outcome of this change.

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Brian Kohr was President and CEO of CSafe LLC and AcuTemp Thermal Products and continues in the same role for the newly merged company CSafe Global. He has held senior executive positions with other technology and healthcare companies and serves on the Board of Directors of several privately held businesses. He has a BSc in Finance and Accounting and holds an MA from the Mendoza College of Business at the University of Notre Dame.
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