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How to create better partnerships with Intermediate Contract Manufacturers

Partnering with intermediate contract manufacturers can provide numerous benefits, including cost savings, flexibility, and access to specialised expertise.

However, effective collaboration and management of such partnerships are essential to ensure seamless operations, maintain quality standards, and manage costs, especially during periods of high inflation.

The following steps are recommended for pharmaceutical procurement teams on how to partner better with intermediate contract manufacturers while managing costs without compromising quality. 

1. Establish Clear Communication Channels

Clear and open communication is key to successful partnerships with intermediate contract manufacturers. Establishing effective communication channels and maintaining regular contact can help align expectations, address concerns promptly, and ensure a smooth flow of information. Regular meetings, both virtual and in-person when possible, can facilitate proactive collaboration, risk management, and decision-making.

2. Define Roles and Responsibilities

Clearly defining roles and responsibilities is crucial to avoid confusion and ensure accountability. Establishing a detailed scope of work and a well-defined agreement that outlines the respective responsibilities of the pharmaceutical company and the contract manufacturer will help manage expectations and streamline operations.

Regularly review and update these agreements to accommodate changing needs and evolving market dynamics.

3. Foster Collaboration and Knowledge Sharing

Encourage collaboration and knowledge sharing between the pharmaceutical company and the contract manufacturer. This can include joint problem-solving sessions, cross-functional teams, and technology transfer initiatives. By sharing expertise, insights, and best practices, both parties can optimize processes, improve efficiency, and enhance the quality of the intermediates.

4. Emphasise Quality Management

Maintaining quality standards is of paramount importance. Establish a robust quality management system that aligns with regulatory requirements and industry best practices. Conduct regular audits, both internal and external, to ensure compliance and identify areas for improvement.

Implement a thorough supplier qualification process and regularly monitor the performance of the contract manufacturer to maintain consistent quality throughout the partnership.

5. Cost Management Strategies

During times of high inflation and rising costs, managing expenses while upholding quality becomes crucial. Here are some strategies to consider:

• Long-Term Contracts: Negotiate long-term contracts with contract manufacturers to secure pricing stability and avoid sudden cost fluctuations. This provides both parties with visibility and enables better financial planning.
• Supplier Consolidation: Consolidate your contracts with a smaller number of contract manufacturers to leverage volume discounts and streamline procurement processes. This can result in cost savings and improved efficiency.
• Value Engineering: Collaborate with contract manufacturers to identify opportunities for value engineering and cost optimization. Analyze the manufacturing process, identify inefficiencies, and explore alternative materials or processes that can reduce costs without compromising quality. 
• Supply Chain Optimization: Optimize your supply chain by reducing lead times, improving inventory management, and implementing just-in-time practices. This can help minimize holding costs and inventory write-offs.
• Continuous Improvement: Implement a culture of continuous improvement and cost-consciousness. Encourage contract manufacturers to suggest cost-saving initiatives, foster process optimization, and reward efficiency gains.

6. Risk Mitigation and Contingency Planning

Identify potential risks in the partnership and develop contingency plans to mitigate their impact. This can include alternative sourcing options, backup suppliers, and crisis management strategies. Regularly assess and update risk profiles to stay proactive in managing potential disruptions.

7. Performance Measurement and Key Performance Indicators (KPIs)

Establish performance measurement metrics and KPIs to monitor the contract manufacturer’s performance. Regularly evaluate their adherence to quality standards, delivery timelines, responsiveness, and cost management. Engage in constructive dialogue to address any performance gaps and identify opportunities for improvement.

8. Long-Term Relationship Building

Building long-term relationships with contract manufacturers is beneficial for both parties. Invest in fostering trust, open communication, and mutual understanding. Encourage collaboration beyond the transactional level and strive for a strategic partnership. Regularly review and evaluate the contract manufacturer’s performance and provide feedback for continuous improvement. Celebrate successes and recognize the contributions of the contract manufacturer to reinforce the partnership.

9. Embrace Innovation and Technology

Stay abreast of the latest advancements in pharmaceutical manufacturing and encourage contract manufacturers to adopt innovative technologies and processes. Embracing automation, digitalization, and data analytics can enhance efficiency, reduce costs, and improve product quality. Collaborate with contract manufacturers to explore opportunities for process optimization and innovation that can drive mutual benefits.

10. Continuous Evaluation and Benchmarking

Regularly evaluate the performance of the contract manufacturer against industry benchmarks and best practices. Benchmarking allows you to identify areas of improvement, compare performance against industry standards, and drive excellence. Engage in open discussions with contract manufacturers to align goals, implement feedback mechanisms, and drive continuous improvement.

Partnering with intermediate contract manufacturers in the pharmaceutical industry offers numerous benefits, but effective management is crucial. By establishing clear communication channels, defining roles and responsibilities, fostering collaboration, emphasizing quality management, implementing cost management strategies, and building long-term relationships, pharmaceutical procurement teams can enhance their partnerships with contract manufacturers while managing costs and maintaining quality. Embrace innovation, continuously evaluate performance, and engage in open dialogue to drive mutual success and achieve strategic objectives.