Optimizing Global Biopharmaceutical Operations Through Risk Mitigation and Management - A UC Berkeley survey provides insight into biopharma's risk concerns and strategies. - BioPharm International

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Optimizing Global Biopharmaceutical Operations Through Risk Mitigation and Management
A UC Berkeley survey provides insight into biopharma's risk concerns and strategies.


BioPharm International
Volume 25, Issue 12, pp. 38-43

OVERALL VIEW OF RISK


Figure 1: Respondents indicate their level of concern about key risk categories, where the scale ranges from 1 to 5, with 1 meaning not concerned, 3 meaning concerned, 5 meaning extremely concerned.
Overall, respondents are most concerned with the risks surrounding manufacturing reliability and production contamination, followed by raw-material supply and outsourcing risk. Forecast errors, catastrophic natural events, regulatory risk, and IP theft ranked further behind, although all are of concern to respondents (see Figure 1). Interestingly, given risk concerns and the inherent uncertainty in this industry, relatively few respondents rely on quantitative modeling tools to assess risk: 72% or respondents firms use failure mode and effects analysis (FMEA) of risk, but fewer than 30% use discrete event modeling, and fewer than 27% use Monte–Carlo analysis, tools that are standard in other industries. Indeed, while 70% of respondents monitor batches lost and on-time performance, half or fewer monitor safety stock levels or customer-service level, although these are key performance indicators that are useful for measuring the cost and effectiveness of risk mitigation strategies.

Raw-material risk


Figure 2: Respondents, as a percentage, indidcate how they make decisions regarding inventory level and/or the number of suppliers used (multiple selections were allowed).
Of all of the raw-material related risks, single-sourcing stands as the most significant, followed by contamination (other concerns included availability, comparability across vendors, extractables and leachables, and price fluctuations). These results are in spite of the fact that that only 37% of respondents indicate that their firms use multiple suppliers or similar strategies to mitigate the risk, although some responding firms are beginning to identify diversified sourcing as a key goal in the product-development stage. In addition to dual sourcing, firms turn to vendor audits, quality management systems, and large safety stocks of material in order to mitigate these risks. One respondent talked of abandoning a "just-in-time" strategy due to the associated risk. Not surprisingly, inventory costs and inventory levels are the key metrics tracked to assess raw-material acquisition performance (by 58% and 54% of respondents, respectively). Surprisingly, fewer than 15% of respondents explicitly mention tracking quality metrics in this context. In addition, about half of the respondents mention focusing on tracking the fraction of single-sourced raw materials. When determining the appropriate inventory-management policies, a surprisingly large fraction of respondents (40%) of respondents do not use quantitative or scientific approaches. Slightly over half rely on optimization tools to make these decisions, and about 15% (possibly overlapping with the optimization users) also use simulation tools (see Figure 2).


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