Ensuring quality in the management of outsourced activities and purchased materials

When a pharmaceutical manufacturer is unable to see the activities taking place among its suppliers or contract service providers, it will struggle to detect deficiencies or failures in its partners’ quality

In this article, Terrance Holbrook, MasterControl, explains how working closely with suppliers and contractors, coupled with adopting robust automation tools, can yield greater visibility into partners’ quality related processes and, ultimately, lead to higher quality in pharmaceutical manufacturers’ outsourced activities and purchased materials.

The pharmaceutical outsourcing of manufacturing, quality and development functions is expanding. It has become common for pharmaceutical manufacturers to use many suppliers, contract manufacturing organisations (CMOs), contract research organisations (CROs) and contract development and manufacturing organisations (CDMOs). As the pharmaceutical supply chain grows longer, so too do suppliers’ own networks.

Nice Insight’s latest annual survey of pharmaceutical and biopharma professionals indicates that companies have dramatically increased year-on-year spending on outsourcing in the last 4 years and, for the fourth consecutive year, spending on outsourcing is expected to increase during the next 5 years.1

Terrance Holbrook, MasterControl

Pharmaceutical companies benefit greatly from these practices, but they sometimes risk quality when they fail to properly manage their outsourcing partners, ultimately defeating the purpose of engaging them as resources in the first place. From non-conforming components that pose significant health hazards to uncontrolled supplier changes that result in out-of-spec materials, the list of potential quality issues that can arise from the inadequate management of outsourced activities and procured materials is endless.

It is because of these risks that reliance on increasingly complex supplier networks and expanding vendor partnerships is attracting greater scrutiny today. Although regulatory agencies accept that companies may outsource almost any activity, it is understood that there is one thing that cannot be outsourced: responsibility. Ultimately, the regulatory burden is on the sponsor firm, and failure to monitor and control CMO and supplier activities is likely to have heavy negative consequences.

It isn’t just regulatory agencies that are demanding high quality throughout the pharmaceutical supply chain; consumers naturally expect the medicines they purchase to be both effective and safe. As regulatory bodies put greater focus on upstream activities and consumers demand greater assurance of safe products, pharmaceutical companies are focusing more on supply chain quality and visibility.

Increased focus on visibility and quality

Historically, manufacturers have been primarily concerned with cost savings when outsourcing or contracting with suppliers. Today, quality has supplanted cost savings as the top criterion when sponsor companies choose contract manufacturing service partners, according to Nice Insights’ 2016 contract manufacturing market survey results. Likewise, poor product and service quality remains the top source of dissatisfaction. Yet, determining a partner or potential partner’s level of quality and reliability has its own challenges.

It is understood that there is one thing that cannot be outsourced: responsibility

Pharmaceutical manufacturers, like many others working in highly regulated environments, are struggling to gain full visibility into their supply chains and those of their suppliers. In a recent survey of senior leaders across all life sciences industries, when asked about their top quality related challenges, respondents cited the inability to measure quality metrics effectively and problems posed by disparate systems and data sources.

Pharmaceutical manufacturing companies, in particular, said they struggled considerably with visibility into supplier quality, according to LNS Research’s findings published in a joint LNS/MasterControl ebook.2

Until manufacturers can see and understand the activities taking place among their suppliers and contract service providers, they will be at a significant disadvantage in their ability to detect deficiencies or failures in their partners’ quality. By adopting robust automation tools and taking a collaborative position, pharma companies can gain greater visibility into the quality related processes of suppliers and contract service providers, enabling more effective and efficient solutions to three key quality management challenges.

Challenge 1: addressing specification issues

Complications relating to specifications are chief among the most common challenges in managing supplier quality and ensuring supply chain integrity. Often, these complications are driven by unclear, vague or ambiguous technical requirements for suppliers or contract service providers, as well as missing or outdated information.

One of the best ways to resolve and reduce the propagation of specification issues is to clearly lay out expectations upfront. Materials specifications should be strenuously specific, clear and comprehensive, so that the supplier understands exactly what criteria are required to ensure the quality and specifications of the material or product being provided. Corresponding methods of testing and analysis should be aligned, with clearly defined test methods and acceptance criteria.

Suppliers or contract service providers must also understand the sponsor company’s requirements for monitoring quality. If the supplier is expected to provide a certificate of compliance (CoC) or certificate of analysis (CoA), or to submit to quality audits on a regular basis, those expectations should be made clear upfront. Because specifications evolve, these efforts should be ongoing.

As such, it is equally as important to ensure vendors are working according to the most current specifications. This is especially critical during the early phase of a drug product’s life, when changes can occur often. It is always better to catch and correct quality issues early, before they develop into full-blown catastrophes.

Automation’s added value: improving communication and collaboration

Automation tools can serve as the foundation for communicating important information with suppliers and CMOs, and for documenting all crucial aspects of the materials, parts and services they provide. A robust quality management system will enable everyone involved in supplier management — suppliers, CMOs, CDMOs, CROs, consultants, etc. — to stay connected no matter their location, facilitating better communication and collaboration to minimise complications with specifications, materials and parts needed.

Manufacturers can give limited system capabilities such as notifications, task assignments and reports to external parties early in the development cycle. Powered by an automated system, early involvement in the creation of documents and specifications can streamline a wide variety of processes.

Challenge 2: conducting supplier audits

Conducting audits in partnership with suppliers and CMOs will go a long way toward ensuring that these partners are following agreed-upon processes and procedures. These audits generally consist of for-cause audits, which are typically driven by being out-of-specification (OOS), and review audits, which are ‘friendly audits,’ typically scheduled on annual basis.

Suppliers or contract service providers must also understand the sponsor company’s requirements for monitoring quality

Every manufacturer must define its own metrics and key performance indicators (KPIs) for supplier/CMO performance. There are many possible criteria to consider measuring in a supplier or outsourcing partner’s quality performance and related activities, including deviations, non-conformances, regulatory certifications, corrective actions, change controls, complaint history, return rates, raw material chain of custody and batching process and production records. When conducting for-cause audits, it is important to focus the audit agenda on where the supplier is struggling, specifically where the OOS occurred.

After the audit, the two organisations should determine what corrective actions the supplier/CMO will commit to implementing within a specific timeframe. The manufacturer should set up reoccurring mini-audits to make sure the corrective actions have been successful. To successfully implement supplier corrective actions and help a supplier to reach an improved state of quality, it is critical that the manufacturer work together with the supplier, establishing an active and ongoing partnership that values open communication, proactive collaboration and a strong, mutually beneficial relationship.

Automation’s added value: optimising the audit process

Automation tools can help pharma manufacturers to automatically track and store audit information, such as non-conformance reports and corrective actions, according to regulatory guidelines. A robust quality management system will enable manufacturers to optimise their entire audit process — from planning audits and capturing findings to implementing corrective actions and creating final audit reports — and securely store audit information, approval status and links to quality assurance auditing and analytics reports. Maintaining all of this information in a single, centralised place makes it easier for manufacturers to find suppliers and CMOs that meet audit requirements.


Challenge 3: qualifying new contract manufacturers/suppliers

Sponsor companies are ultimately responsible for the quality of their products and the integrity of their suppliers and other partners. As such, they must have processes in place to ensure the adequate control of outsourced activities and the quality of procured materials. Procedures relating to the qualification of suppliers or contract manufacturers are essential elements of this quality management effort.

To determine whether a potential supplier or contract manufacturer can meet specifications and acceptance criteria, the initial qualification will typically include a sampling from the supplier or contract service provider, a pilot batch to test CoA, a validation test, an onsite qualification audit and supply characterisation.

Once the supplier is qualified, the sponsor firm must develop a quality agreement as well as a scorecard that includes a risk matrix for any chemical being outsourced, and then set up a routine audit schedule. From qualification forward, pharmaceutical companies must communicate openly and collaborate as partners with their suppliers and contract service providers. They should work closely with these partners to establish and document the criteria for quality performance at the start, as well as identify quality problems and corrective actions later.

Automation’s added value: minimising duplication of qualification efforts

Automation tools can help pharma manufacturers to improve the management of all qualification documents and processes. Especially for organisations that maintain geographically dispersed teams, the difficulty of centralising supplier qualification activities often results in the duplication of supplier qualification efforts.

A web-based quality management system enables the right people to easily but securely access supplier qualification data and share it with personnel across multiple locations, minimising the potential for costly duplication of effort. With a robust quality management system, companies can utilise routes, steps, high-risk initial audits and qualification audits to ensure continuity of supply, compliance and product quality.


As pharmaceutical manufacturers expand their supplier network and turn more often to CMO, CDMO and CRO services, such practices will require companies to employ more evolved tools of supplier quality and vendor management to minimise risk related to poor quality. Automating important processes can yield greater quality success in highly regulated environments wherein the manufacturer bears the responsibility of adequately managing its suppliers and contractors.


1. www.niceinsight.com/articles.aspx?post=3058& title=Strong+CMO/CDMO+Market+Outlook+for+2016, +but+Beware+Moderating+Factors.

2. www.mastercontrol.com/resource/ ?lne=nmm&nlc=resourcebtn#ar.