Taking Supplier Relationship Management to the Next Level

By Patricia Van Arnum - DCAT Editorial Director

July 25, 2018

Strategic partnerships are key in delivering value in supply management, so what are some ways in which companies are collaborating to achieve such value?

DCAT Sharp Sourcing, which was held in New Brunswick, New Jersey in late June, featured practical insight from pharmaceutical companies, CDMOs, CMOs, and suppliers on the challenges overcome and the benefits derived from such strategic partnerships. The program also examined how digital tools, such as blockchain technology, artificial intelligence, and advanced analytics, are changing the way companies interact with customers and suppliers.

Best practices in supplier relationship management

Supplier relationship management was a key focus of the presentations at DCAT Sharp Sourcing with speakers providing practical insight on specific initiatives on how pharmaceutical companies and contract development and manufacturing organizations (CDMOs), and contract manufacturing organizations (CMOs) and suppliers partnered to deliver value.

 SS18 Wendell Weeks Headcircle

Wendell Weeks
Chairman and CEO
Corning Incorporated

Supplier-enabled innovation is a crucial element in value creation in strategic partnerships. In the keynote address at Sharp Sourcing, Wendell Weeks, Chairman and CEO of Corning Incorporated, shared his insights and lessons learned from his 35-year career with Corning with examples from the company’s work on what it takes to bring supplier-enabled innovation to fruition. He offered his view on the key success factors to build truly collaborative partnerships based on the company’s work with partners such as Apple Inc., Samsung Electronics Co., Ford Motor Company, Verizon, Sharp Corporation and most recently, Pfizer, Inc. and Merck & Co., Inc.

In 2017, Corning announced a planned investment of $4 billion with the introduction of a new product, Corning Valor Glass, for parenteral drug packaging that was the outgrowth of its partnership with Merck & Co. and Pfizer, which provided insights on pharmaceutical formulation and manufacturing processes. As a result of the companies’ common goal to improve glass quality and promising results from initial testing, Corning is making an initial investment of $500 million as the first part of a planned investment of $4 billion. Mr. Weeks discussed the structure and governance of the collaboration and how the companies partnered in new product development, including addressing ways to lower systems costs and improve manufacturing efficiency, in order to bring the product to market.

At the Buyers’ Forum at Sharp Sourcing, speakers provided further insights on how they are using strategic partnerships. Nuria Ramirez, Procurement Program Lead and Senior Director, Janssen Supply Chain Procurement, Johnson & Johnson, provided insight from a recently implemented supplier partnership program by the company focused on enhancing value-chain performance and reliability of supply while achieving total cost reductions. She discussed the partnership process with an emphasis on a differentiated partnering program that identifies and realizes sustained benefits along the nodes in the supply chain.

Investment by pharmaceutical companies and suppliers in manufacturing capacity and technology represents a fully strategic partnership. To provide insight, Roberto Silveira, PhD, Vice President, Biotechnology Aseptic Sciences Group, examined the partnership between Pfizer and GE Healthcare in bringing to fruition a new $350-million Global Biotechnology Center in Hangzhou, China that features an advanced modular manufacturing facility based on single-use biomanufacturing technology.

The role that each partner plays in a strategic collaboration to overcome the challenges in a given project is crucial in achieving the benefits of a collaboration, and speakers at DCAT Sharp Sourcing provided three case studies to illustrate. Prashant S. Savle, PhD, Director, Commercialization Projects, Global Procurement, Merck & Co., Inc. and James R. Gage, PhD, Chief Scientific Officer, Asymchem, explained how the companies partnered to achieve cost-competitive manufacturing through collaboration and relationship management. The partnership centered on Merck’s antibiotic portfolio, which requires compliant, cost-competitive manufacturing of beta-lactam intermediates that are hard to source due to stringent segregation requirements. Merck looked early on to create a cost-competitive manufacturing center of excellence that also provided regulatory, quality, and environmental, health, and safety (EHS) compliance. Merck and Asymchem shared details on that partnership from reconfiguring a CMO site into a beta-lactam facility and the initial challenges to the evolution of collaboration and relationship management that expanded this initial opportunity into further collaboration.

Security and reliability of supply is of great importance. The success of a business’s global supply chain depends on managing and mitigating risks and working with partners to achieve security of supply. At DCAT Sharp Sourcing, Daniel J. Hoey, Senior Vice President, Teva Supply Chain, Teva Pharmaceuticals, Graham Degn, Site Head, Procurement, Teva Pharmaceuticals, and Art Castro, Vice President, Sales, Global Pharma, Amcor, provided lessons learned on how they resolved a potential disruption in supply of packaging materials using an advanced sourcing approach with upstream suppliers. They discussed how they addressed short- and longer-term supply needs, enabled qualification of alternative product choices, and managed inventory and cost.

In partnering, pharmaceutical companies and CDMOs/CMOs face unique issues on the nature of the drug itself in terms of the manufacturing technologies being used and the time lines in development and commercial launch. A case in point are oncology drugs. Oncology is the largest therapeutic market sector in the global pharmaceutical industry, and it presents opportunities for promising drug candidates and commercial products. Those opportunities, however, also can come with unique challenges in drug-substance development and manufacturing. George Wu, PhD, Vice President and Presidential Fellow, Pharmaceutical Sciences, TESARO, Inc., an oncology-focused biopharmaceutical company, and Tangqing Li, PhD, Executive Director, Project Management STA Pharmaceutical, a WuXi AppTec company provided their experience in developing a small-molecule oncology drug and the approaches they took for a project requiring specialized technologies in potency manufacturing under rapid timelines from development to commercial launch.

In a separate presentation in the Suppliers’ Forum at DCAT Sharp Sourcing, Simon McGurk, PhD, Executive Director, Drug Product Development and Analytical Development, TESARO, Inc., provided a perspective from the drug-product side by sharing the perspective of the key factors to consider in CDMO/CMO selection and in project management when working with CDMOs/CMOs with specialized technologies, including high-potency manufacturing.

The capabilities set of a CDMO/CMO is a key consideration for pharmaceutical companies in deciding which CDMO or CMO to use. Under traditional business models for CDMOs/CMOs, that choice would involve selecting one contract provider for drug-substance development and manufacturing and selecting a separate provider for drug-product development and manufacturing. As certain service providers, however, add to their capabilities to become end- to-end service providers (i.e., meaning providing both drug-substance and drug-product development and manufacturing), an additional choice becomes an option. A key question then emerges: are traditional service models where drug-substance and drug-product contract services are segregated into separate providers a preferred option or is an end-to-end service model within one CDMO/CMO the best partnering choice? To provide the perspective from an emerging pharmaceutical company, Rick Panicucci, Senior Vice President, Chemistry, Manufacturing and Controls, QED Therapeutics, provided his insight at the Suppliers’ Forum of DCAT Sharp Sourcing of the benefits and limitations of employing an end-to-end service model by sharing lessons learned on the decision criteria and project-management approach used with end-to-end service providers.

Narrowing the digital divide

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Walter Charles
Senior Vice President and
Chief Procurement Office
Allergan

The use of digital technologies was identified as a key issue in a 2018 survey by PricewaterhouseCoopers (PwC), which gained the feedback from 1,293 chief executive officers (CEOs) from 85 countries, which included 70 pharmaceutical and life sciences CEOs from 31 countries. A key issue identified by pharmaceutical and life sciences CEOs is greater pressure to deliver business results in less time with 71% of CEOs surveyed saying that their organizations face that challenge. As part of the need to address that and other issues, the survey noted that pharmaceutical and life sciences CEOs say they need to step up digitally.

Speakers at DCAT Sharp Sourcing explored digital strategies in sourcing and procurement. In an era when chief procurement officers (CPOs) are trying to unlock the next gear of productivity, a key question for CPOs is how can Big Data capabilities be used to transform procurement and sourcing practices. Walter Charles, Senior Vice President and Chief Procurement Officer, Allergan, shared experience, including from his role as CPO at Biogen, Kraft, and Kellogg’s on how Big Data tools and a new methodology, “constraintless bidding,” can be used to drive savings and value. He discussed how Big Data analytics strategy is a gateway to transition “analog” procurement practices into “digital” practices by enabling the application of robotic process automation, machine learning, natural language processing, and artificial intelligence.

Blockchain technology is an emerging technology to improve supply-chain governance that is gaining much attention. Ben Aylor, Senior Partner and Managing Director, The Boston Consulting Group, discussed how blockchain technology may be applied to sourcing and procurement functions and offered examples from within and outside the industry.