How secure is your materials pipeline? Most manufacturers believe they have the pieces in place to properly oversee their raw materials suppliers, says Jaime Velez, head of the supply chain management practice at Tunnell Consulting, but the reality is quite different. Pharmaceutical Manufacturing spoke with Velez on how manufacturers can equip themselves to avoid their own materials-related crisis.
PhM: What’s the significance of the heparin contamination crisis for most manufacturers?
J.V.: It exposed the impact of traceability and the weakness that some companies have in their level of uncertainty about raw materials.
Unfortunately, it’s more common than one would like to believe. Many products are manufactured with raw materials that go three or four levels deep. The end manufacturer often doesn’t have any idea what’s in the materials.
PhM: How should manufacturers be viewing their raw materials from a risk-management perspective?
J.V.: There are two types of raw materials. There are common materials such as sucrose or magnesium stearate that are used outside and inside the pharmaceutical industry. These are very difficult to track back but the occurrence of issues and risk is small. By the time an issue has shown up in pharma, it would have already shown up elsewhere.
The second type of materials are those that are unique to the industry, and carry the risk of being exclusively used. There is no other vehicle to find an issue. When that is in play, the risk is inherent and it’s incumbent upon the industry to be aware of it and mitigate its risk.
You also need to look at the difference between prescription, branded and generic drugs. The tendency is to pay less and less attention to where the raw materials come from as you move from prescription drugs to the other categories. The pressure to keep things moving and keep cost levels down is great.
PhM: How well are manufacturers overseeing their materials supply chain?
J.V.: The majority of manufacturers know there are other suppliers beyond their immediate suppliers. What they frequently don’t know is where those suppliers’ suppliers are getting raw materials from.
PhM: What advice do you give manufacturers in this respect?
J.V.: You need to create a more robust process than is in place now. Invest the time and effort in understanding where all your raw materials are coming from. “Becoming vertically integrated” is no longer a viable answer. Manufacturers must fully staff themselves with people tasked with tracking all materials.
PhM: But is staffing enough? Many manufacturers are adopting external supply groups to handle issues with materials.
J.V.: What’s lacking is a basic methodology. This involves implementing tracking systems and creating visibility of the basic things within your supply chain. You need to methodically work your way through multiple levels of activity. It’s a tedious exercise of capturing what’s involved from the beginning of the supply chain.
PhM: Do regulatory guidelines devoted to quality systems (such as ICH Q8 and Q9) offer help in supply chain oversight? How can manufacturers use these concepts?
J.V.: My philosophy very much aligns with FDA and ICH. It’s based on the concept of focusing attention on a few important things. . . . I see those regulations as helpful in guiding activities. The challenge is in interpreting them—a glass-is-half-full approach is a very different challenge than a glass-is-half-empty one. Those who look at the glass as half-full are taking advantage of these regulations as an opportunity to improve processes. Those who look at the glass as half-empty are being overwhelmed with additional non-value-added work.
PhM: How do you avoid falling into the half-empty mindset?
J.V.: Many external supply groups have evolved themselves into large duplicative organizations. Unfortunately, they’re becoming more bureaucratic. I advise clients to do it carefully. Find out what the appropriate level of emphasis you can have on overseeing suppliers vs. what their expectations are. You also need to improve communications with suppliers, and agree upon the accountabilities of both parties.
PhM: What percent of pharmaceutical manufacturers are doing this the right way?
J.V.: Of the top 25 pharma companies, I’d be hard-pressed to say that more than a half-dozen have evolved their external supply practices to where they should be, though about two-thirds of those 25 have external supply organizations. Of those six, the amount of non-value-added work is small. Among the others, there is a fantastic level of duplication.
PhM: What can smaller companies do since they often don’t have the resources to form their own external supply groups?
J.V.: Their challenge is how to leverage suppliers so that they don’t have to invest in those resources. They need to establish communication mechanisms so that they can rely upon work already done by the supplier and keep a small group for oversight.
PhM: How does a company’s IT infrastructure fit into the mix?
J.V.: Make sure you are leveraging IT as much as possible, particularly as the amount of information captured grows. The focus of our work with clients is on characterizing processes and monitoring how they’re behaving in a multivariate environment. For example, what are the implications to the process of a raw material that is on the upper side of release specifications? PAT can play a role in this.
PhM: I think a lot of manufacturers would be surprised to consider linking their PAT programs with the oversight of their raw materials.
J.V.: The first step in PAT is to understand processes, and that is still the missing link in regards to raw materials. PAT’s intended impact is to include the supply chain, but it has been too narrowly applied.
PhM: What do you see for the next year or so in terms of materials oversight?
J.V.: We’re going to see progress, but not at the speed we would like. I would not be surprised to see another heparin-like event occur. It’s fair to assume that the vast majority of manufacturers have dealt with the implications of the heparin event on large-scale products, but have gotten around to dealing with other products yet.