3. Clearly define the operating processes.
Often overlooked is a brief but critical set of activities designed to properly establish an effective working relationship
with a partner. Reliable performance against mutually agreed upon goals depends on clearly articulated expectations.
"Without a doubt, the most difficult issues we have experienced revolve around the difference in quality or compliance standards
between the CMO and the client company," remarked Mickey Koplove, vice president of the Operations Network at Wyeth BioPharma
(Andover, MA). "The implications are substantial, and affect both supply and financial payments. Significant effort must be
given to working out these issues in great detail before anything gets signed."
The success of the relationship ultimately hinges on open communication and clearly outlined processes at the onset of the
relationship. It is imperative to define expectations and responsibilities on both ends, implement a frequent review process,
and work contingencies into the plan so that if something goes wrong, all parties know what to do.
Work together with the CMO to develop a Partnership Operating Framework, or a set of Joint Op-erating Procedures (JOPs) to
avoid confusion and inefficiencies. A well-structured operating framework will clarify:
- Scope and goals of the partnership
- Individual roles and responsibilities
- Lines of communication and decision-making
- Issue resolution and escalation
- Performance expectations and metrics
- Annual budgeting and planning processes
While not typically included in the formal supply agreement, the framework may be referenced within the agreement as the mechanism,
which will guide the day-to-day operating relationship. Development of JOPs should begin during contract negotiation.
4. Identify performance-based metrics.
An issue that consistently arises is the limited use of metrics and data for ongoing performance management of CMOs. Typically,
there is a lack of formal processes established for periodic performance reviews, mechanisms for joint performance improvement
initiatives, and joint ownership of improvements and benefits.
"One thing we would like to do differently," says Vin Kosewski, executive director of Supply Chain Operations for Sepracor,
Inc.(Marlborough, MA), is "to build in stricter remedies and recourse for non-performance."
Because of the complex and uncertain processing environment of many biologics and other pharmaceutical products, performance-based
metrics are used, not to be punitive, but to limit liability, specify compensation, and provide alternatives in the event
of real non-performance.
5. Leverage information technology.
A major challenge in managing CMO relationships is the lack of visibility of the CMO's internal operations. Biopharmaceutical
companies rely on contract manufacturers to act as an extension of the supply chain; the need for integration among systems,
visibility into the supply chain, and reporting capabilities such as dashboards and scorecards, has never been greater. Inventory
levels, lot tracking, and release status are the most commonly mentioned data elements requested by supply chain managers.
By increasing proactive visibility into the manufacturing process, providing overall supply chain monitoring, and ensuring
quick access to data, biopharmaceutical companies can accelerate supply cycle times, speed decision making, and improve overall
Information technology can be deployed in several ways, including portal visibility, data exchange, and true integration.
Establishing the proper technology framework allows the outsourcing life sciences company to monitor production processes
and status as closely as if they were internal, without the additional overhead costs.