Today, most life science organizations turn to outsourcing to release products to the market faster. As such, they must be sure that their product meets compliance regulations and is within acceptable specifications. Negative deviations within a product often affect the brand owner, company image, and regulating agencies. 

Organizations should set rules and regulations in place to avoid such damage. Risk tools create the necessary process visibility and traceability through supplier quality and daily events. Once set, risk tools can be applied throughout the entire supplier management process while providing an added dimension to the inspection and monitoring processes. Risk-based supplier reporting and overall mitigation of supplier risk endow organizations with objective and repeatable means of selecting the supplier that poses the lowest risk to business.

Many companies outsource because it is easier and more cost-effective. However, there are many challenges, including loss of critical skills, intellectual property, and operational control; counterfeiting; dependence on suppliers; different visions and cultural differences; and lower visibility into quality and performance. All of these factors add to the overall risk in the supply chain; this is why it is important to tear down information silos when determining the scope of business. This will ensure the level of visibility and control needed from suppliers. 

Managing risk has its rewards; risk tools serve as the systematic means of building processes and setting actions. Risk management allows businesses to make better decisions, filter events, and mitigate and prevent risks within the system.

Organizations are increasing in complexity, facing the challenges of globalization; larger market size; increasing regulations; M&A; and a vaster, deeper supply chain. There is intense competition in the life sciences because lifecycles move faster and there is constantly new technology, as well as a higher level of compliance.

Suppliers in any industry play an important role in bringing products to market. OEMs rely on the trust of their suppliers to provide them with ingredients to properly manufacture products and meet the constant pressures of industry demand. Without risk tools, this is near impossible; with risk tools, it becomes the norm.

Risk assessment and risk management work hand in hand. The ISO 31000 standard follows a process flow that aims toward risk identification, risk evaluation, development and evaluation of risk assessment methods, risk management decisions, and implemented solutions. This is where risk assessment comes into play—it is necessary to identify all risks and hazards, quantify the risks, implement a process, and either accept, mitigate, insure, transfer, or stop it. Improving controls is the final step to success. Below are some processes that help.

Change Management: Including suppliers in the change management process allows users to conduct design process changes like Failure Mode Effects Analysis, notifying suppliers of changes during the design stage. This way, they will know whether components will conform to a new design and mitigate any risks. The finished product can then factor in supplier components and the product process.

Managing Supplier Performance: Maintaining supply chain quality has many obstacles. One of the biggest is the accountability factor. Suppliers might be held to certain standards, but if they are unable to have visibility into a system, they will be unsure of how they’re being rated. A quantitative supplier rating system tied with risk-based methods provides a business owner with a defined measure for performance inside and outside of the company. Furthermore, this allows suppliers seeking to become more favored to check their ratings at any time in order to note areas for improvement.

Nonconformance and Out-of-Specification Management: Components and materials may be out of specification. In a siloed world, the business can handle the issue, communicate to the supplier, and move on. However, there would be tighter collaboration if users could automatically generate non-conformances and notify the supplier that an item is out of specification. Notifying users in real-time reduces both risk and severity of risk for each product.

Risk Management: Risk management can be applied to all processes. It’s the core methodology and tool needed to level risk measurement. Risk tools help identify all known and potential hazards, measure risk levels, provide tools to react to risks, and proactively identify the need for improvement based on trend data. The impact of change by calculation allows for residual change on threat and risk levels from the beginning. With risk management, the creation of quantitative measure shows criticality of events and allows suppliers to see which event is most critical.

Corrective Actions: The corrective action process manages any systemic issues within the business. In the supply chain, it is important to have a collaborative process to enable the supplier to complete a part of the corrective action. This allows continuous improvement on the finished product and the components that make up the product for the supplier. Designating a workflow step that enforces the supplier to use the same system is a beneficial step in enhancing visibility into the steps, and advances the improvement suppliers are trying to make.

Post Market Involvement: After all finished products are released, the cycle ends with post-market feedback—this includes complaints and adverse events. How they are handled depends on information  known about the product and how much communication of the information occurs between the company and supplier.

Involving a supplier in every lifecycle phase is important to mitigate post-market risks—including remediation of any adverse events. With a notification based on product and supplier material in the system, users  ensure a supplier is notified exactly when an event occurs. Control over flaws and errors before they impact design in future iterations helps eliminate threats and risks.

Risk management in contract manufacturing comes down to visibility and control. Collaboration in these areas can tear down information silos and enables synergies with suppliers. Since outsourcing is a complex concept, it is just as important to communicate with suppliers as it is to a partner working nearby. In the grand scheme of things, that is exactly what a supplier is—a friend at the neighboring cubicle or machine.

Including suppliers in business processes offers visibility, real-time communication, and the necessary overall improvement needed to mitigate risk and maintain quality and compliance within the supply chain. Risk management and risk assessment provide the best routes for making decisions. By building separate levels of risk into a supplier relationship, companies can filter out the high-risk events from the low risk.

A company’s supplier is an extension of its business—a supplier’s failing or demonstration of poor quality is also a reflection of the brand owner. Thinking outside the company’s four walls helps determine how to influence quality within a system to effectively improve supplier dynamic with risk management into contract manufacturing.

Risk management improves compliance across any industry. It provides tools to identify and filter risk, and links with tools like corrective action and reporting to ensure continuous improvement. Managing risks throughout supplier and contract manufacturing is important, but it is also necessary to manage and set controls for risks throughout the organization. An integral part of risk management tools is removal of guesswork. Ultimately, decision-making still relies on the members of the organization, but they will have better insight into the process. Many companies use historical data to help adjust to risk processes over time and ensure the most accurate results.

Everyone experiences risk of some degree daily, but the ability to end it is the best way to build a strong organization. Making risk a universal language within an operational environment creates safe products and compliance with regulatory agencies. The growing demand, market, and competition in the life sciences today is ever changing—stay relevant by keeping ahead with risk tools. 

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Emily Ysaguirre is a writer for VERSE Solutions, a cloud-based compliance management software solution that helps automate the processes surrounding quality, compliance, and environmental health and safety. Learn more about VERSE by visiting www.versesolutions.com or blog.versesolutions.com