contract manufacturing, pharma, oem, cmo, contract manufacturer

Our health care industry depends on the pharmaceutical and medical device industries, and they, in turn, depend on contract manufacturing organizations (CMOs) for their outsourced manufacturing. In fact, CMOs have become more than just a one-off production option; they’re now an integral part of biopharmaceutical and medical device manufacturing.

In December 2019, Sanofi’s new CEO announced that the company planned to optimize its CMOs and suppliers to improve manufacturing productivity and operational efficiency. Sanofi expects this initiative to contribute to €500M in savings.

Like other manufacturers, CMOs lose efficiency due to the ongoing effects of disruption on their operations. They can, however, carve out efficiencies by rethinking their infrastructure. Here are three areas in which a CMO can improve that will result in bottom line savings.

Optimized Digital Manufacturing

CMOs are held to higher standards. Because they focus on manufacturing in highly-regulated industries, they need to be even more technologically progressive and more adaptive than other manufacturers. They need to innovate, ramp up projects fast, and as projects proceed, perhaps fail fast and try again.

Call it Industry 4.0, the Fourth Industrial Revolution, or digital manufacturing transformation, there’s a movement across industry to automate manufacturing processes and integrate new technologies, such as analytics, AI and the Internet of Things (IoT). The result is an enterprise with more data-sharing and interconnected communication. The benefit of digital manufacturing to CMOs is clear – it’s the way to maintain production speed and strict regulatory compliance while adapting to rapid shifts in demand. An adaptive ERP support can speed the transition to Industry 4.0 and provide CMOs a solid infrastructure.

Digital technology on the shop floor and throughout production activities can intelligently connect manufacturing to the rest of the business and to advanced technologies like machine learning and IoT. Digital manufacturing can fully integrate planning, scheduling, quality, cost management, material movement and process control. It also allows manufacturers to better communicate, analyze and use data to meet cost and quality objectives.

With real-time access to information, manufacturers are in a better position to harness complex biopharmaceutical data and uncover valuable insights, so they can quickly boost production efficiency and meet customer requirements. Digital transformation can also result in more efficient asset utilization.

Contract Manufacturing Supply Chain Continuity

CMOs have to be resilient to adapt to all the challenges they face – from changes initiated by their sponsor organization, to changes in the market, to global disruption. But they also have to be a reliable partner that maintains tight governance over its end-to-end supply chain. An adaptive ERP supporting a connected supply chain can provide the strong but flexible infrastructure CMOs need. 

The supply chain for the contract manufacturer is complex. Depending on the product, there may be a chain that looks something like this:

contract manufacturing, pharma, oem, contract manufacturer, cmo

Every movement in this long supply chain is under strict regulatory guidelines, and the execution must be perfect. A CMO’s challenges include siloed supply chain functions, a lack of supply chain partner visibility, and products, materials and shipments that show up at the wrong time and/or in the wrong place.

Connected supply chain ERP software helps manufacturers effectively connect with supply chain partners around the globe and address the challenges associated with managing complex and ever-changing supply chain activities. With sophisticated forecast modeling and improved planning, management and control of end-to-end supply chains, ERP support can deliver secure supply chain performance as well as up to 30 percent lower inventory costs. 

Manage and Control Risk with Effective Enterprise Management

It’s difficult to maintain efficient, dependable core processes and data when the organization itself is changing. New products, mergers and acquisitions (M&A), divestitures and even restructuring can interfere with core effectiveness and directly impact a CMO’s ability to manage and control risk.

Evolving Modalities and Advanced Drug Delivery Solutions

The pharma CMO pipeline is changing. Small molecule chemistries are being supplemented with biologics, which are now approaching 50 percent of the pipeline. To grow, pharma CMOs will need to support this change and others, including new therapies and unique drug delivery solutions. A company’s capacity, capabilities and infrastructure are affected by how they react to these changes. As the changes occur, a CMO has to continue to communicate data, processes and analytics across the organization to be effective.

Capacity Expansion / Mergers & Acquisitions (M&A)

When demand for capacity or capabilities changes, or a manufacturing location needs to change, a CMO has to adapt rapidly. CMOs have long turned to Mergers and Acquisitions (M&A) to help diversify their capabilities. There were over 130 acquisitions among service providers during the three-year period from 2015-2017.

When organizational changes cause the ground beneath your business to shift, adaptive ERP software like Effective Enterprise Management will help CMOs stay on the growth track. It includes Global Financials and Shared Services, and delivers trustworthy, yet flexible core processes and real-time or near-real-time data and analytics across the business. Accurate, timely and trusted core data and processes support operations and auditing, help perform data discovery and support management decision making.

Click here to see where your organization falls on the adaptability scale.

M&A can also result in CMO organizations with multiple ERPs, often with different time zones and languages. And many CMOs may have to contend with way too many ERPs – one for every business they acquire and maybe some from businesses they’ve already acquired. Most companies realize a 15 percent annual productivity savings when they repair their shared services function with one strong, adaptive ERP.

Become an Adaptive Manufacturing Enterprise and Survive Disruption

It’s well worth the effort to re-evaluate the efficiency of your manufacturing operation regularly, especially as you face increasing disruption in the markets you serve. QAD Adaptive ERP can determine your productivity as well as your future growth. Join our 5-episode webinar series to learn how your organization can become an Adaptive Manufacturing Enterprise.

1 COMMENT

  1. Digital Manufacturing is a necessary part to understand about the SCM that lower supply chain costs tend to create more opportunities, which is far in markets. They affect farm profitability, export earnings and market risk.
    According to the Council of Supply Chain Management Professionals 8% of US GDP increased to 11.4% from 2017, For many organization, more that 10% supply chain and logistics are responsible for overall cost.
    Yes, here we can say that supply chains are creating benefits for organizations.

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