Industry Perspective: Making Sense of This Supplier-Consolidation Era in Life Sciences

12/8/2023 Frank Costello

As just about every industry and market discovered during the COVID pandemic, the supply chain can be far from resilient. Life sciences companies were no exception, with many finding themselves suddenly without essential products and supplies, as many providers throughout the supply chain failed to fulfill their obligations. 

Now, with the pandemic behind us, the life sciences industry recognizes that flourishing is no longer just about getting your own house in order. It’s also critical to ensure that every supplier is on top of their own game and capable of being a partner in a company’s long-range success.

So what considerations and factors should a life sciences company take into account when evaluating — and perhaps then modifying and refashioning — their supply chain as a means to adapt to fluctuating market conditions and regulatory changes? And how does supplier consolidation play a vital role in the success of that? 

For the last 25 years, I’ve been fortunate to work with domestic and global clients solving supply chain issues where large, complex regulated and non-regulated cost centers are involved. What follows is my perspective on how to reengineer your supply chain in this era of ongoing supplier consolidation.

Considerations for the present and the future 

Life sciences companies are under increasing pressure to deliver high-quality products to market quickly and efficiently. As companies seek to satisfy customer demands, working with a small pool of trusted, reliable, and regulatory compliant suppliers can be the difference between finding success and being faced with failure.

But how to go about assessing your current supply chain? It’s important to keep the following factors in mind when considering what your supply chain requires in order to achieve not only your current goals, but also your future objectives:

• Reliability: You must be able to have long-term confidence in a supply company. Have they previously proven their reliability to you or to other similar life sciences companies? Do they have a favorable track record — before, during, and after the pandemic? Can you rely upon them for their expertise, advice, and counseling?
• Productivity and efficiency: Just as with your own company, you need a supply company to exhibit a good workflow and exacting standards, and to be able to not only hold to those but expand upon them as the need arises. When you’re operating at high gear, you want your supply company to be able to do the same — without missing a beat. Can they scale up in parallel with your operation? 
• Automation: To be able to support ever-increasing automation efficiency in life sciences manufacturing, organizations are changing internal processes, adding more automation, and reducing human intervention. Utilizing state-of-the-art tools and systems ensures that the aforementioned productivity and efficiency can indeed take place. Plus, automation greatly reduces the possibility of errors and miscommunication to your clients. 

Also, consider this: Assessment of your supply chain and its particulars should be an ongoing, organic process. Ensure that you’re evaluating your supply chain on a regular basis, and that communication with your supplier is continual and transparent.  

Forecasting, demand planning, and contingency plans

Working in a regulated space, life sciences companies must, of course, be compliant with current regulations. Partnering with a supplier to implement quality-control measures and meet company standards are essential aspects of this process. Keep in mind that a recall reflects on the entire supply chain — so suppliers have to be responsible and resourceful as well.

In addition to current regulations, life sciences companies must be able to anticipate and then embrace future regulatory changes as well. Hence, having a supply chain in place that's both nimble and resourceful is critical. Are you working with suppliers in tune with the market and your needs, and can they quickly pivot when shifts occur?

A proven supply partner should be knowledgeable of best practices and, importantly, have the right tools to help a life sciences company succeed. These tools will enable them to assist life sciences companies in informing, managing, and improving their forecasting and demand planning.

It’s also important that companies develop contingency plans in the event a supplier encounters a problem. This could include rostering backup suppliers, and being able to quickly switch to a different supplier if need be.

Generating positive outcomes

With a new year on the horizon, it’s essential that life sciences companies systematically and objectively evaluate their supply chain — determining if and how consolidating suppliers could provide positive outcomes for their operation, including:

• Streamlining the overall supply chain — enabling the company to successfully adapt to regulatory scrutiny and fluctuating market conditions 
• Reduced costs — providing strategies to produce economies of scale
• Improved quality control — working with a smaller pool of trusted suppliers makes it easier to ensure quality and compliance

By formulating the right supply chain now, the proactive life science company can be prepared for what the future will bring. 

Frank Costello is the Market Development Leader for RRD Life Sciences.