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Will Standards and Audits Provide Enough Supply-Chain Visibility?

November 16, 2010 – 1:39 pm

daphne_111610happyAxendia has released the findings of its study on the global supply chain, and I wasn’t at all surprised to see that what life science executives say they need is guidance from industry consortia (59%) and regulatory mandates (51%). “Our research shows that industry executives are relying less on internal stand-alone initiatives,” the report reads. “Instead, they are seeking out regulators (U.S. and Global) and trade and industry consortia for direction, standards, and guidance.” I hear this “call to come together” quite often from our readers.

But will standards alone be enough? Axendia suggests that while collaboration is important, “the life science ecosystem must work collaboratively to shape strategies and practices to attain on-demand visibility.”

Axendia’s research shows that the supply chain continues to stretch all around the world. For instance, 78% of respondents say that global sourcing outside the United States is increasing, and 76% say that global manufacturing outside the United States is increasing. And 70% of respondents report that companies in China will be key suppliers during the next two years; 57% indicate that companies in India will be key suppliers.

So why are standards and guidance needed? The survey revealed that 50% of respondents consider raw material suppliers outside the United States to present “significant risk,” while 44% consider them to be of “moderate risk.” The biggest threat is the risk of “contaminated/nonconforming raw materials,” reported 61% of respondents. Interestingly, this worry was stronger than that of counterfeits (44%) or diverted products (35%), although Axendia points out that these concerns are expected to be major concerns moving forward.

Visibility into these global supply chains is lacking, Axendia found. Most respondents rely on periodic audits rather than real-time access to data: “Only 25% stated that they share common practices and information with suppliers, and only 3% have access to supply chain data,” Axendia reports.

The report suggests that establishing systems that enable “on-demand” supply chain visibility will help shift inspections from periodic planned events to more-frequent events that will allow “authorized actors to spot-audit suppliers by reviewing contemporaneous data and changes potentially impacting product safety, efficacy, and quality.”

Such on-demand visibility is essential today because companies have been moving away from “in-process inspections” and “finished goods testing” to “building quality in” through Quality by Design, Process Analytical Technology, and other initiatives. In other words, more trust is being placed in the process, but what if part of that process begins outside of your four walls?

“While we have been very successful at advancing science and risk-based approaches to quality, all our efforts can be rendered moot if we cannot secure the supply chain,” Axendia’s report quotes Gerry Migliaccio, vice president of quality, environment health and safety, and agility at Pfizer, as saying.

Axendia’s research was sponsored by Camstar Systems Inc., IBM Business Analytics, and PricewaterhouseCoopers. To see the report, visit http://www.axendia.com/2010_LS_GSC.html.

Daphne Allen

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