Muhammad Asim NiaziFebruary 18, 2025
Tag: Supplier Management , Supply chain , Risk Assessment
Proactive Supplier Management is a dynamic strategy that involves preparing your supply chain for worst case scenarios and enabling them to be resilient in times of disruptions and non – stabilization. It is involving personnel at different levels, available resources and utilizing various tools to tackle problems in the entire supply chain life cycle.
In the past, supply chain managers only had the goal of sourcing items at the lowest possible prices, with continuous flow of items. However, in today's world, supply chain managers have multiple challenges to face. Examples include globalization, supply chain disruptions and vendor incompatibility, which make the supply chain risky for the manufacturing industry, including the pharma.
There are many techniques to adapt to these changing requirements, and one of them is proactive supplier management. It aims to assess the risks involved in the supply chain and develop countermeasures before these risks convert into hazards. It ensures that the supply chain is able to source quality raw materials in the event of unexpected challenges, shortages and delays.
Let's discuss how an organization can proactively develop its supply chain and become resilient
Risk Assessment is identifying risks that could lead to disruption in your supply chain. The result of this activity must be the identification of all vulnerabilities that may impact your supply chain, including globally or locally.
Conduct a risk assessment that could realistically identify hinderance or risks to your supply chain. For example, difficult to reach geographical location, critical strategic value, transportation delays, supplier incapabilities, non – fulfillment of regulatory regulations, failure to complete & provide documentation and emergency unpreparedness
Once all the pain points have been identified, create a detailed list of all these risks from beginning to end. Identify their impact on the organization's overall supply chain.
The risk assessment must be thoroughly performed because it will be used to map the current risk portfolio. It is also used to reflect the organization's capabilities in mitigating these risks in the later stages of proactive supplier management strategy.
After risks have been identified, it is time to develop mitigation plans for these risks. The plan must be designed keeping in view the identified risks and must provide practical solutions rather than theoretical hypotheses.
There can be many dimensions for devising mitigation plans, and it depend on various factors, such as the organization's productivity level, material type, complexity & cost, and source.
Some mitigation plans that could help an organization survive supply chain disruption, are described below
Alternate sourcing is a process of generating sourcing options that could be used in addition to the existing resources. It acts as a backup resource in times of supplier disruption.
Creating a pool of alternate sourcing options is the most effective way of managing supply chain disruptions. It also includes location diversification because when if one country or regional source becomes unavailable, source from another country or region can be used. It helps to develop a flexible and safe supply chain.
It also helps in times when the pharma manufacturer upscales itself and the existing supplier has exceeded its capabilities.
Manufacturing industries, including pharma, require extensive supplier selection due to the criticality of the products being manufactured. This starts with identifying the available sources and qualifying them on the basis of organization-specific criteria. The buyer organization must understand the source organizational structure and develop a relationship with the relevant and authorized personnel.
A backup contract would also be helpful in building alternate sourcing options. It helps to quickly reach the supplier, and order their products without starting the supplier selection work from the beginning.
Supplier Collaboration
Supplier collaboration is the practice of keeping in touch with your pharma supplier to keep them aligned with your goals & requirements. It also helps supplier understand your changing requirements.
For example, if you have opted for new certification, the collaboration will help supplier understand your new need & requirements, and upgrade themselves accordingly
There can be many ways to establish and maintain supplier collaboration, including the following.
● Identifying critical & important suppliers.
● Establishing long-term agreements rather than on a product or time-to-time basis. It helps to develop mutual trust with a deep understanding of both party's needs.
● Understanding and knowing each other's strengths, weaknesses, importance, values & goals.
● Effective communication with the supplier for partnership, conflict resolution, identifying critical information, such as market situation, inventory levels and market forecasts
There can be many other ways to form collaboration between the pharma manufacturer and supplier. This can be sorted out by mutual discussion and coordination. It helps to prevent risks, manage complexity, ensure regulatory compliance, cost management, quality goals and resilience throughout the supply chain.
One major factor affecting the traditional pharma supply chain is its inability to keep check and track the supply, when it leaves the entity's physical location. While it is possible to track the items under movement, this too is dependent on the third-party data, such as the shipping or logistics company. The buyer has no direct means of monitoring and collecting information about the critical product data, such as temperature.
The traditional supply chain approach is only concerned about the time & delay factor of the supplies. The proactive supply chain is more concerned about visibility, security, tractility and other product-level characteristics.
Pharma industry is integrating digital technologies in their supply chain to ensure quality and security, in addition to timely delivery. Examples of some technologies include the following.
● Automation solutions, such as robotics, prevent human error during packing, while enabling fast picking speeds. It allows the supplier to ship items same day and handle their customer's requirements in less time.
● Blockchain to ensure transparency and security in their supply chain life cycle. It provides an opportunity to secure pharma supply chain records. It can be used to identify counterfeit products and pinpoint the troubling point.
● Machine Learning – ML toted harness extensive data genera in the pharma supply chain to optimize its sourcing requirements and build healthy supplier relationships.
● Using IoT to improve manufacturing processes, and hence the supply chain across its entire distribution cycle.
Market forecast is the main driver of an organization's manufacturing activities, and it must be optimized for actual requirements.
Accurate market forecast prevents redundancies in manufacturing activities and inventory orders. This reduces overstocking and prevent un-necessary related costs, such as production, inventory duplication and storage occupancy.
Cold chain logistics are an essential component of today's pharma supply chain due to the addition of temperature-sensitive products. An efficient cold chain is necessary to transport these products timely and securely to their destination.
Investing in cold chain capabilities such as cold chain packaging and temperature monitoring helps in adopting proactive supplier management.
Despite many tools and services, it is not possible to predict what is going to happen in the future. The organization must be prepared to adapt to changing market dynamics by utilizing different tools, technologies, human expertise and strategies.
Some challenges in implementing proactive supply chain management can include the following.
The proactive supply chain is a major shift from the traditional methods and includes the latest technological, strategic and policy enhancements. For some pharma organizations, yielding results with traditional supplier management is enough, and they don't find any interest in a proactive approach. As a result, the organization finds it uninterested in allocating or increasing the budget for a proactive strategy.
The impact of a limited budget can be prevented by taking one step at a time and demonstrating its effectiveness. Communicating success stories to the higher management can also help to prove its effectiveness over traditional supply chain methods and release funds when required.
While proactive strategy is something that a pharma manufacturer finds interesting, suppliers can take it as an odd thing. They can be good with usual and slow communication – further hampering the process.
This can be tackled with a rigorous supplier–onboarding process. Training at the time of supplier selection can be helpful in understanding them about an organization's thinking about the proactive approach. Suppliers can make comfortable in expressing their needs and shortcomings during their entire contract.
In the meanwhile, the pharma manufacturer can also proactively communicate with the supplier to build relationships and express their current needs.
Proactive supply chain has a lot to deal with data. Examples include inventory and market forecasts. While most pharma supply chain are using software, but still these solutions are not fully integrated with supply chain , and requires manual data handling at some point.
Manual data handling can be extremely difficult to handle and record. This is also prone to human errors, causing loss of critical data. When required, there are fair chances that manual records can be overlooked, missed or lost.
To handle manual data handling, use lates technologies that automate the data entering and sorting. For example, integrating software with digital technologies, such as automation, IoT and Blockchain ( as discussed above) can optimize the data collection, sorting and recording.
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