Controlling all aspects of the supply chain is essential to the cost, delivery schedule, and quality of the product. Supply chain management (SCM) includes all the activities that must take place to get the right product into the right consumer’s hands, in the right quantity, and at the right time — from raw materials to customer acceptance. SCM focuses on planning and forecasting, purchasing, product assembly, quality control, packaging, storage, and distribution. This is particularly important when there are numerous vendors and suppliers necessary to supply the raw materials and equipment for your product. In managing the supply chain, the CMO must consider if current customer suppliers can be changed without disrupting a successful process. It is imperative to understand how the CMO will accommodate customer-supplied materials. Also, be sure to determine how the CMO controls delivery of long lead items, which can be critical to completing the process train.
The conversation that will ensue when discussing supply chain syncs directly into a discussion about outsourcing and offshoring. In today’s global economy, there will undoubtedly be some process systems, equipment, and raw materials that may have to be imported. In addition, there may be some unit operations that need to be performed in other countries. Ideally, the offshore suppliers will have the same quality standards, equivalent raw material compliance requirements, and the same knowledge of FDA regulations as the U.S. CMO, but you will need to develop a level of confidence that the U.S. CMO can assure that these standards and regulations are being met.
Make sure that the CMO periodically visits these suppliers, and ask to see those records. Ask how long the suppliers have exported goods and materials into the U.S., and ask how the CMO feels about their quality record. Will the CMO stand behind any imports that become part of your product? Be straightforward in asking questions about who would bear responsibility if a reason for failure were determined to be the offshore materials or equipment. Written contracts are best structured when based on these types of discussions.
Additionally, be sure to discuss the CMO’s reasons for outsourcing equipment, materials, and unit operations. Is it less expensive, more reliable, or the only available source? If it is the sole source situation, finding out how they made that determination will be important. Was this a global sourcing situation? Did it include possible sources in the U.S.? Is the CMO willing to use a supplier of your choice if that supplier can meet their selection criteria?
