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5 Steps for Pharmaceutical Vendor Management Success

by | Oct 18, 2022 | Supplier

When you are a pharmaceutical company that is conscious of quality and your primary focus is to meet your customers’ expectations by producing the best-in-class pharmaceutical products, you will need to look carefully at all aspects of quality, including vendor management.

Pharmaceutical vendor management is the process by which your pharmaceutical organization works with vendors. This helps enhance the quality of your products, mitigate risks, and control costs.

Effective vendor management is not only essential for maintaining your company’s brand value but is also a core responsibility for pharmaceutical manufacturers. International regulatory standards like ISO 9001:2015, European Union Good Manufacturing Practices (EU GMP), and others expect pharmaceutical companies to have protocols in place for selecting, retaining, and collaborating with approved vendors.

In this article, we will take a deeper look at the importance of effective vendor management in the pharmaceutical industry, requirements, steps for successful supplier management, and various benefits of efficient and modern Electronic Quality Management System (eQMS) can bring when it comes to managing your company’s supplier-related documents, records, and assignments.

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Importance of Effective Vendor Management In the Pharmaceutical Industry

When your pharmaceutical company is driven by quality, and an urge to enhance the quality of life of your end-users, you will need to ensure that the raw materials procured from vendors, as well as other outsourced services- manufacturing, labeling, packaging, distribution- come under stringent quality protocols. This is possible with effective pharmaceutical vendor management.

It is also a core responsibility for pharmaceutical companies. There are several international regulatory standards and guidelines that you will need to comply with when you market your products in international markets. This aspect is dealt with in more detail in the next section of this article.

The current international scenario in the pharmaceutical sector is one of the players, big or small, jostling to successfully research, patent their products, and get the same across to the client. Many pharmaceutical companies now focus exclusively on their core competency, namely, the development of new drugs, combinations, treatments, etc. When you are focused on this competency, you will gain a substantial advantage over competitors who are trying to manufacture, package, label, and sell their products themselves.

Therefore, for many organizations, it might be a good option to outsource many/all of these steps to reliable third-party vendors. They have the knowledge and ability to efficiently accomplish these tasks according to your pharmaceutical quality management system standards.

To re-emphasize, with effective vendor management, you are assured that your vendors will “deliver the goods”.

Let us now look at another key reason to have an effective pharmaceutical vendor management system. Many drug patents are expiring. For instance, between 2020 and 2022 at least 91 drug patents have expired or will expire. There is a lot more ambiguity about whether expensive products will survive. Pharmaceutical manufacturers who have invested in huge, ultra-expensive manufacturing and packaging facilities for their patents would be better off subletting these tasks to reliable vendors.

When your vendor management protocols are streamlined, you will also mitigate supplier risks such as:

  • Financial risks. Is the financial health of your supplier good or dicey?
  • Reputational risk. Is your supplier hiring employees following modern labor laws, or are they involved with modern-day slavery?
  • Operational risk. Are the goods/services provided by your supplier up to your company’s and regulatory standards?

Another important reason to have vendor management protocols in place is to optimize your company’s overall performance. You can measure the supplier’s performance with the mutually agreed contract. This will assure you that suppliers are complying with your needs and requirements.

An equally good reason to manage your vendors according to standard protocols is that you will create a more loyal and mutually beneficial long-term partnership with them. This is particularly important because of the inherent fluctuations in the market.

For instance, there may be times when demand for a particular pharmaceutical drug increases. Your supplier should be able to step up and meet your requirements. At other times, there may be a lull in the market. Your supplier should be aware of this also.

Nowadays, supply chain networks are no longer local or regional. You may have supply chains across the globe. This results in your supplier quality management processes becoming even more complex than before. At the same time, costs significantly rise.

In such a scenario, if you are a pharmaceutical company that is still stuck on outdated methodologies, like manual paper-based processes, your challenges might worsen as time goes on. In the already complex circumstances you are likely to face human errors (misplacement of crucial documents, unauthorized documents in circulation), security issues (storing key documents in an insecure environment), and slower operational process execution (coordination between departments, suppliers, and regulators can become very slow).

Rather than struggling with an inefficient system, it makes more sense to implement purpose-built Pharmaceutical Quality Management Software such as SimplerQMS, with all the needed capabilities for streamlined vendor/supplier quality management. With such a system you will be able to manage a central repository for all your company’s supplier-related documents, and records in a much simpler, more efficient, and more secure way.

Pharmaceutical Vendor Management Requirements

Let us now look at the important regulatory requirements that your company will have to adhere to when vendor management is concerned.

As per ISO 9001:2015 Section 8.4 (control of externally provided processes, products, and services),your pharmaceutical company must ensure that vendors of products, services, or processes are in conformance with your requirements. In addition, you will determine the type of controls to be implemented for these products, services, or processes.

The ICH Q10 III G (Management of Outsourced Activities and Purchased Materials) standards describe pharmaceutical companies’ quality systems and the responsibilities of the management concerning control and review of all outsourced activities and quality of purchased materials.

The EU-GMP Guideline Chapter 7, Section 4 (Outsourced Activities) standards highlight that the contract giver (namely the pharmaceutical manufacturer) has overall responsibility for all processes and protocols for control of outsourced activities.

According to Quality Systems Approach to Pharmaceutical Current Good Manufacturing Practice Regulations (Control Outsourced Operations), the pharmaceutical manufacturer must have a quality system in place to describe all materials/services that are outsourced. Also, quality specification responsibilities and communication mechanisms need to be laid out.

Pharmaceutical Inspection Co-Operation Scheme (PIC/S) – Guide to GMP For Medicinal Products Part I Chapter 7 (Outsourced Activities) mentions that all outsourced activities must first be defined, agreed upon, and controlled. This will prevent future misunderstandings.

Likewise, the Pharmaceutical Inspection Co-Operation Scheme (PIC/S) – Guide To GMP For Medicinal Products Part II Chapter 17 (Agents, Brokers, Traders, Distributors, Repackers, and Relabellers) deals with third-party vendors who repack, relabel, manipulate, distribute, or store an API or an intermediate.

All these regulations, standards, and guidance documents refer to the requirements that you, as the manufacturer of pharmaceutical products, must enforce to manage suppliers(s) and/or purchasing controls.

Overall, these regulatory requirements state the following:

  • You must have a written contract between your pharmaceutical company and the vendor. This will cover all outsourced activities.
  • You should assess the legality and suitability of the vendor for your requirements before signing the contract.
  • You will provide the vendor with all the necessary information for them to give you the product as per current regulations.
  • You will audit the vendor and review their performance. You will identify and implement, wherever required, needed improvements.
  • You are responsible for reviewing and assessing all the documents and records, and for the records of all outsourced activities.

Quality management solution by SimplerQMS helps you address pharmaceutical vendor management requirements of various international regulations and standards like ISO 9001:2015, ICH Q10, CGMPs, and others. With our eQMS solution, you can take complete control of your supplier management process, from assessing the supplier’s quality system to maintaining all relevant documentation. You can also schedule and track audits, perform quality assessments and enforce corrective actions if required – all from a single, centralized platform.

Recommended Reading

5 Steps for Pharmaceutical Vendor Management Success

For your company to successfully implement pharmaceutical vendor management, the following 5-step process is crucial.

Step 1. Define User Requirements

List of requirements with first item checked

You have decided to concentrate on your core competency and outsource all or some activities to reliable vendors. These activities could be the procurement of materials, manufacturing of products, packaging, labeling, or other services.

You will now need to perform a risk assessment of all the outsourced materials and services. The risk assessment will help you understand whether a failure in any of these products will have a deleterious effect on the quality, efficacy, or safety of your manufactured product.

Some vendor-supplied products/services are high-risk.

For instance, sterile vials for COVID-19 vaccines will come under this category. In such an instance, you will need to have rigorous criteria for supplier onboarding.

On the other hand, suppliers of office stationery are obviously a low risk. The materials they supply are non-critical and less rigorous supplier criteria will suffice.

Step 2. Perform Initial Supplier Selection Process

Person standing and selecting options

During the process of vendor qualification, you will evaluate samples of products for confirmation. Check whether the sample meets your quality specifications, as well as confirm the Certificate of Analysis (CoA) provided with the sample via an independent testing process.

The levels of testing should be compatible with the risk assessment of the supplier mentioned in the previous step. In the case of high-risk products, for instance, sterile vials for vaccines, it’s important to do complete testing based on the CoA provided. For low-risk materials, identification would suffice.

You will also need to evaluate the ability of the potential supplier to supply their products without any hassles, their ability to increase production during times of demand, and logistics.

At the same time do not forget to evaluate their regulatory and quality compliance history.

For instance, have they had recalls, quality issues, warning letters, and so on?

With a quality management software suite like SimplerQMS, you will be able to easily and securely store all supplier-related documents and records. External documents like supplier certificates, assessment results, CAPAs, Warning Letters, and Consent Decrees can be easily stored in the Supplier File and retrieved whenever needed.

Step 3. Conduct a Quality Appraisal

Document with a magnifying glass

Once you have whittled down the list of potential suppliers, you will next need to conduct a formal assessment/appraisal of their quality systems. Your company must ensure that the supplier has control over their manufacturing and testing processes, and the release and distribution of products.

For low-risk suppliers of non-critical materials/services, you are recommended to send supplier questionnaires for self-assessment of their conformance to quality and cGMP practices.

For high-risk suppliers of critical materials/services, you should ask your audit team to perform on-site audits of their premises/services. These audits should be tailored in accordance with current GMP, GCP, or GDP guidelines.

Recommended Reading: Guide to Quality Audits in the Pharmaceutical Industry

Step 4. Generate Quality Agreements

File Bundle With Linked Document References

The next step would be to generate quality and technical agreements between your pharmaceutical company and the vendor.

The key documents are:

  • Quality agreement
  • Supply agreement specifications
  • Material/component specifications

You may generate three separate documents or a combination of all three.

Do note that these documents need to be tailor-made for each purchased product/supplier. You cannot do a quick Google search and obtain a document wherein the templates are filled. It will take time and resources, but the end result is worth all the trouble. For a long-term and mutually beneficial partnership with your vendor, it is better to have customized documents.

The quality agreement is a comprehensively written document that will contain (but is not limited to) the following elements:

  • The roles and manufacturing activities of both parties.
  • Ways and means of communication, including key contacts at both ends.
  • Your company will specify the products/services expected from the vendor. Also, the person/department that will provide the final approval.

In general, a quality agreement is expected to have (but is not limited to) the following sections:

  • Scope of the document. This section will highlight the type of services expected from the vendor.
  • Definitions. A clear-cut understanding of terms used in the document.
  • Resolution. Details of how both parties will resolve differences of opinion when issues of product quality or other issues arise.
  • Manufacturing activities. Details of manufacturing processes. Additionally, control of any changes in these processes.

The quality agreement should not contain confidentiality clauses, pricing, delivery terms, and so on. The Non-Disclosure Agreement (NDA) is apt for these purposes.

The supply agreement specifications document will have details on the hows and whys of the products to be supplied. It will also include details of increasing supplies in case of demand and reducing supplies if the demand is reduced.

The third document is the material/component specification agreement. It will give details of the specifications of every product supplied by a specific vendor. Also, if any changes are to be made to the supplied product, the same has to be informed to you (procuring organization), and approvals have been taken.

All these agreements can be generated and managed more efficiently with the help of quality management software like SimplerQMS. With such a system it’s easier to assure that all procedures are being followed as required and that every document is up to date. With features like automated document workflows, reminders about assignments, email notifications, and real-time dashboards, you can be certain that your processes are running smoothly.

Recommended Reading: A Guide to Effective Pharmaceutical Document Management

Step 5. Perform Ongoing Monitoring and Control of Key Suppliers

Person performing an ongoing surveillance

Your pharmaceutical company has created an Approved Suppliers List (ASL) and onboarded suppliers using a stringent vetting process. For this relationship between your company and the vendor to be long-term and mutually beneficial, any future issues, delays, changes, suggestions for further improvement, and criticisms must be communicated in an open timely manner. This is an ongoing task that senior management within the company should be fully aware of.

You will also need to monitor various key performance indicators (KPIs). These will include Out-of-Specification (OOS) results, investigations, customers’ complaints, quality deviations, audit/regulatory notices, batch rejections, and others that are communicated with the vendor regularly.

Another example of performance monitoring is periodic supplier audits. The periodicity will vary depending on the suppliers’ level of risk.

For high-risk suppliers, you will conduct annual audits, and even more frequently, if necessary. For lower-risk suppliers, the auditing is usually bi-annual. Again, the frequency can increase as required.

SimplerQMS helps you streamline continuous monitoring and control of your vendors with the help of its supplier quality management software module. Schedule supplier audits and inspections, or any other reoccurring supplier-related tasks and receive notifications when scheduled assignments are coming due.

SimplerQMS Facilitates Pharmaceutical Vendor Management

It’s evident that nowadays, more than ever, effective pharmaceutical vendor management is essential for your company in various ways. For this to fit into a complex and fast-paced environment, you cannot rely on traditional paper-based documentation methods.

A modern pharmaceutical quality management software solution becomes inevitable for your company. Especially if you are concerned about quality, and wish to manage all your documents, records, and assignments efficiently.

The SimplerQMS software solution is an integrated all-in-one quality management solution that provides you with a seamless supplier quality management experience. Only authorized staff in your company will be able to create, store, and maintain the approved vendor list, and store all documented supplier procedures and records.

The benefits are many:

  • A secure cloud-based storage facility that is accessible at the click of a mouse from anywhere in the globe.
  • Automated workflows, audit-ready dashboards, ready-to-use forms, document templates, reminders, electronic signatures, and much more.

In addition, SimplerQMS allows you to plan suppliers’ quality audits well in advance, and easily link suppliers’ details with contracts, certificates, an audit report with relevant audit findings, CAPAs, incoming inspections, and more.

Final Thoughts

Nowadays, pharmaceutical companies are now concentrating more on their core competencies and outsourcing more activities to reliable vendors. Considering the complexity of today’s world where you are located in one region and your suppliers are located in a different region of the globe, it becomes essential to have an effective supplier management program in place.

This is not only important in terms of customer satisfaction and enhanced brand value, but also a core responsibility since international regulations, guidelines, and standards expect this.

If you are serious about streamlining your pharmaceutical vendor management processes, and at the same time, making compliance with current regulatory requirements easier by investing in an efficient Quality Management Solution like SimplerQMS, we recommend you book a personalized demo and talk to our experts.

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