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Feature Articles : Nov 15, 2010 (Vol. 30, No. 20)

Encouraging Suppliers to Communicate

Earnest Discourse Early and Often Provides Better Outcomes and Increased Customer Satisfaction
  • Gail Dutton

Last year, when ATM and cash register manufacturer NCR moved its European manufacturing plants to the U.S., one of its early efforts was to gather 260 of its suppliers together at Georgia Tech to leverage their knowledge. “It was fantastic to see the level of innovation,” recalled Peter Dorsman, senior vp of global operations.

Now, a core group of biotech and pharmaceutical companies are realizing similar benefits as they encourage their suppliers to talk with one another. Speaking at “Pharma ChemOutsourcing” held recently in Long Branch, NJ, the suppliers and consultants who formed the loose consortium called the Chemistry Playbook™ discussed the benefits of interorganization conversations and strategies to help everyone involved work better and faster.

The approach is driven by business needs, emphasized Richard Slauter, Ph.D., senior director of drug metabolism and pharmacokinetics for MPI Research. “For example,” he said, “if suppliers understand my requirements well in advance of their portion of the project, they know what to plan for logistically and scientifically. A lot of uncertainty is eliminated.” 

“There’s not a discreet set of tasks,” noted Christopher Kavlick, director of business development at Beckloff Associates. Each portion of a project affects other work. Therefore, it’s important to understand who’s involved—even outside your discipline—and how their progress affects your time line. “This type of project management requires outside-the-box thinking,” he said, and is the hallmark of virtual companies.

For example, Dr. Slauter elaborated, in manufacturing APIs, scale-up may involve ascertaining appropriate salt forms of the drug, determining the best formulations, and other details that often vary from bench-scale tests. Successful scale-ups will involve many calls from the drug sponsor to each vendor. “That doesn’t have to be the case,” he countered. “If the client can tell us what they want at the end of the project, we can have a conference call, trade Gantt charts back and forth, and plan together.”

This early vendor involvement exchanges a linear development process with an overarching project plan that is at least partially parallel. Because each of the companies is in the developmental loop, they know better what to expect in terms of challenges and can work together to resolve them early.

“The big payoffs are in planning and logistics,” according to Derek G. Hennecke,  president and CEO of Xcelience.  “If we know about problems with API, for example, we can think about them and work on our part of the problem concurrently. This is true for other areas of development, too. There’s a lot we can do concurrently.”

The other key benefit is better logistics scheduling. Knowing who’s involved and their role makes it possible for vendors to ship product based upon milestones rather than waiting for instructions at the conclusion of each juncture. Consequently, the project moves among them almost seamlessly and shipping delays are minimized.

Although this consortium has been together less than one year, Dr. Slauter said the approach “can potentially save months in a drug-development program because it overcomes hurdles in the supply chain.”

For Chemistry Playbook members, the concept arose from a project involving Xcelience and Cambridge Major Laboratories. “We asked our client for permission to talk with Cambridge,” Hennecke recalled. In early 2010, the Chemistry Playbook was formed. “It’s just a group of players who created a solution to get things done more effectively, with better quality,” Kavlick explained. “It’s not an exclusive set of suppliers,” Hennecke added. “Clients still pick the companies they want to work with.”

The point, as Hennecke said, is that communicating with each other breaks down barriers, and therefore, provides better outcomes faster and more efficiently, and results in better customer services. And  each company learns through exposure to the best practices of the others.

That’s particularly important in highly regulated industries in which the risks of innovation are great. “No one in this industry wants to be the first to propose anything new,” he pointed out, because of the risks. But, by communicating with others involved on the same project, experts can access the knowledge of other firms in a way that otherwise would be unlikely.

The conversations, Dr. Slauter said, “are largely informational.” The goal is to give the client the best possible outcome. As long as that goal remains at the fore, working with competitors isn’t a problem. It’s not unusual for participants to compete outside the bounds of a given project. For example, “it’s not unusual for one CRO to perform the safety and toxicological studies and another to perform the analytical work.

“We suggest the suppliers go beyond just talking with each other and put their business systems together,” Dr. Slauter continued. Harmonizing procedures among consulting, manufacturing, and analytical groups, as well as harmonizing the legal frameworks—like those ensuring confidentiality—is an important aspect of making this type of business relationship work, Kavlick added.

This level of linkage approximates that of a virtual company, providing a single point of contact to help projects run smoothly and minimize miscommunications. Ideally, it may even extend to a single invoice with line items for each of the suppliers. “That causes the lawyers to shudder, but we can deliver a better, more efficient product that way,” Dr. Slauter said.

“Those efficiencies can outweigh the costs of putting such a system together,” he noted. When they are explained, drug sponsors generally are enthusiastic, he said. Such an open approach forces people out of their comfort zone and requires a certain degree of risk tolerance.

Corporate Culture

“Why wouldn’t sponsors have their suppliers involved to manage time lines and expectations better? It goes back to the culture of the pharmaceutical business,” according to Brian Scanlan, chief business officer at Cambridge Major Laboratories. Traditionally, he explained, functions are placed in silos. “If those groups aren’t talking, there’s little chance the organization is set up for suppliers to do that. Therefore, the integral groups must start talking first.”

Whether the process works effectively depends largely on the corporate cultures of the companies involved, Hennecke emphasized. One key indicator of whether an organization can work effectively with its partners is how well groups within the company work together.

In that regard, the biotech industry excels. Because many lack some internal resources, they are more likely than big pharma to form virtual companies that rely on suppliers, consultants, and independent contractors, Scanlan elaborated. Therefore, biotech scientists and executives often have developed a greater comfort level, based upon experience, in working with dispersed projects.

Whether the vendors can work together well depends largely upon how well their cultures mesh, too. If they have similar cultures, matching the policies, procedures, and approaches to work will be easier and will increase the possible benefits that may be gained by having everyone talking.

Good communication is one of the keys. Hennecke recommended that “the downstream guys know what the upstream guys are working on.” If they don’t know, “perhaps it would be helpful to get reacquainted with each other.” To do this, he suggested sitting in on conference calls, “even if that group isn’t involved yet, to learn the dynamics of the relationships and to learn about potential obstacles early.” According to Scanlan, “The more we talk, the more we learn what is important to them…and that makes handoffs move more smoothly.”

The technological infrastructure needed to help this process work is already in place throughout the industrialized world. Applications for online meetings, file sharing, contact management, and collaborations are ubiquitous. The next step is to harmonize standard operating procedures, master service agreements, quality control release criteria, analytical methods, and contracts, accoding to Scanlan.