May / June 2017

Mastering the Art of Supply Chain Management

Michael Schmitz
Michael Schmitz
Michael Schmitz is Vice President, Planning and Logistics, of Vetter Pharma-
Fertigung GmbH & Co. KG. In this position he is focused on logistics operations,
production resources, OEE measures and customer service levels, and inventory management

Supply chain management. Three simple words, perhaps, but together they constitute an entire process, one that is critical to a contract development and manufacturing organization (CDMO) and its customers. In today’s market, increased regulation, cost pressures, intensifying competition, and globalization present complex challenges to proper management of the pharmaceutical supply chain and are forecast to increase. If drug manufacturers are to deal with these complex dynamics successfully, mastering the process of supply chain management is essential. They must also maintain flexibility, however, and be prepared to react to changes in demand, maintain a secure supply chain, and a produce a consistently high level of quality.

A rapidly changing market environment has also affected CDMO operations, where customer demands increasingly require the manufacture of drugs in smaller volumes. Customers expect that their CDMO will make every effort to continuously increase service levels and reduce lead times. These constantly evolving requirements are expected elements of a rapidly changing market. Successful service providers are able to modify their services accordingly, reaching the highest machine utilization in regard to capacity/filling possible, and achieving effective overall equipment efficiency.


A well-managed supply chain requires coordination and cooperation. Establishing open communication of expectations between the customer, the CDMO, and other stakeholders (such as suppliers) is essential to prevent disruption in operations. To help, companies are relying on the sales and operations planning process, commonly referred to as S&OP, which involves ongoing business reviews and consultative meetings that align expectations early in the process.

The maintenance of a nimble demand and supply chain that can adapt and maximize the highest level of machine usage also requires quick decision-making. This is why monthly reviews and the incorporation of S&OP as a key supply chain process to iron out any conflicts and achieve the highest possible level of customer service are important.


Being flexible to market changes is a key component in the formula for successful supply chain management. The allocation of resources means anticipating situations and reacting to them accordingly. Cleanroom capacity utilization, for example, must be considered well before beginning production. A reference for high flexibility in the supply chain is the use of multiproduct lines that feature modular equipment.

When security of supply is absolutely crucial, or when a second supply site does not exist, many (bio)pharmaceutical customers prefer to qualify two different cleanrooms at the same service provider. Preestablished and validated equipment and processes offer an advantage to manufacturing one product on different lines.

Inventory And Storage

While there has been significant growth in the number of APIs and final products that require deep-freezing or storage temperatures between 2°–8°C, it is subject to extreme fluctuations in demand. This has a strong effect on the storage capacities of CDMOs who must maintain the cold chain throughout the entire production process. Because shelf life is crucial to customers, CDMOs must provide extensive storage capacity in-house. This includes storage with varying temperatures that will meet the needs of all APIs, ingredients, and final drug products. In this manner, the changing demands can also be more easily managed.

The ability of production to react to unforeseen demand changes with inventory in the short term is one of the key differences that distinguish (bio)pharmaceutical companies from other industries. In the area of fill and finish of injectables, for example, API, primary and secondary packaging materials, glass barrels, stoppers and cardboard packaging are available in storage for production.

Final Thoughts

Changes in the global market will continue to provide new opportunities and challenges for (bio)pharmaceutical companies and their strategic partners. Being prepared to face these challenges is critical to remaining successful. Processes like S&OP help achieve open communication and flexibility while maintaining the highest possible quality and safety standards. Thus, a well-conceived supply chain management plan and advance preparation is the key to an agile supply chain.

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